 Local Shared Branches
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Individual Retirement Accounts (IRAs) let you augment your pension and Social Security income with a potentially tax deferred* savings vehicle. You can reduce your current tax bill by deferring income tax on the dividends the account earns until you begin withdrawals, usually after retirement when your tax rate may be lower. Part or all of the money you deposit may be tax-deferred, depending on your overall income and pension plan participation status.
Grossmont Schools FCU offers a wide variety of accounts for IRA savings available as either Traditional or Roth IRAs. Choose from a tiered rate from our Dividend Rates or get any of several types of IRA Certificates, with terms as short as 3 months or as long as 60 months.
- Similar to a share savings account in that there is a $5.00 deposit requirement and additions to the principal can be made at any time, up to the maximum contribution allowed, per year by law.
- Dividends are calculated daily and paid monthly.
- You can contribute up to $4,000 per year plus an
additional $500 catch up if you are 50 or older.
- "Amount sensitive," generally offering higher Dividend Rates for higher balances. Balances of up to $9,999 earn dividends at one rate, those $10,000 to $49,999 earn at a higher rate, and those of $50,000 or more earn the highest rate.
- No Grossmont Schools FCU penalties for early withdrawal. However, the Internal Revenue Service imposes penalties for withdrawals prior to age 59½.
- 3 months to 60 months certificates are available
- Minimum purchase amounts of $1,000 or more.
- "Maturity sensitive," generally paying higher Dividend Rates for those with longer maturities
- Grossmont Schools FCU imposes penalties for early withdrawals.
- Terms of up to one year – 30 days of dividends or $25.00, whichever is less
- Terms of greater than one year – 90 days of dividends
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- Maximum annual contribution is $4,000 if under age 50 or $4,500 if
over age 50, or 100% of your earned income, whichever
is less.
- IRS penalty-free withdrawals are allowed prior to age 59½ when the funds are used for first-time home purchases (up to a lifetime limit of $10,000) and/or higher education expenses.
- The Roth IRA, like the Traditional IRA, has a maximum annual contribution
limit of $4,000 if under age 50 or $4,500 if over
age 50 from earned income.
- Contributions to a Roth IRA are not tax-deductible.
- Your eligibility to contribute to a Roth IRA is not dependent on whether you are covered by a retirement plan at work.
- Dividends grow tax-free.
- Withdrawals of both contributions and earned dividends are tax-free after age 59½, as long as the money has been in the account for five years.
- Tax-free distributions from the Roth IRA are permitted prior to age 59½ for disability and/or first-time home purchases (up to a lifetime limit of $10,000), as long as the money has been in the account for five years.
- Unlike Traditional IRAs, the Roth IRA allows you to make contributions after the age of 70½.
- The Roth IRA does not require mandatory minimum distributions once you reach age 70½.
- Converting Traditional IRAs to a Roth IRA:
- You can convert your Traditional IRAs to a Roth IRA, using special rules developed by the IRS.
- Amounts in Traditional IRAs can be transferred to Roth IRAs provided the tax payer's Adjusted Gross Income is $100,000 or less for the year in which the transfer is made.
- Part of the transferred amount is subject to income tax, but is exempt from IRS early withdrawal penalties.
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Adjusted Gross Income
Eligibility Restrictions |
Almost everyone with earned income may participate |
Individuals earning $ 95,000 or less
Married couples earning $150,000 or less |
Maximum Annual Contribution |
$4,000
(if under age 50)
$5000
(if over age 50) |
$4,000
(if under age 50)
$5000
(if over age 50) |
| (Does not imply that $4,000 or $5000 can be contributed to both IRA types. A maximum of $4,000 or $5000 can be contributed to one or the other -or- split between both.) |
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Non-wage Earning
Spousal Contribution |
$4,000 (if under
age 50)
$4,500 (if over age 50) |
$4,000 (if under
age 50)
$4,500 (if over age 50) |
Tax Deductibility of Contributions |
Up to 100% depending on Annual Gross Income and participation in an employer-sponsored retirement plan. |
Cannot deduct |
Tax treatment of dividend earnings |
Grow tax-deferred until withdrawn |
Grow tax-free |
Taxes Upon Withdrawal |
Withdrawals of contributions and dividend earnings are taxed as ordinary income at the then current tax bracket |
None |
Withdrawal Restrictions |
Currently, most withdrawals before age 59½ result in IRS penalties. Some exceptions are made for catastrophic medical expenses or disability. The new law allows for early penalty-free withdrawal for first-time home purchases and/or college expenses. |
IRS penalty-free withdrawal after age 59½, so long as the money has been in the account for five years. Penalty-free and tax-free withdrawals prior to age 59½ if the funds are used for disability or first-time home purchase. The five-year-in-the-account rule applies. |
Age at which withdrawals must begin |
70½ |
None |
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