Traditional IRA
Roth IRA
Traditional retirement savings account. Can be used to rollover your 401(k) from a previous employer.
Mostly used for retirement savings, but can also be used for qualifying first home purchase, education and medical expenses.
Contributions
Contributions are tax deductible depending on your income, marital status, and whether you have a retirement plan at work.
Contributions are not tax deductible.
Withdrawals
Taxes are deferred on earnings. Withdrawals can be made IRS penalty-free at age 59-1/2 and are taxed as ordinary income. Additional benefit comes from possibly being in a lower tax bracket at retirement age.
The original contributions can be withdrawn at any time. Withdrawals of earnings are tax-free if the account has been open for at least 5 years plus one of the following:
You may also make IRS penalty free withdrawals for other qualifying expenses.
If you have a 401(k) from a previous employer or are retiring, there is generally a deadline to rollover the funds in order to keep its tax-deferred status. Use the following steps to do a direct rollover:
Direct Transfer - Unlimited direct transfers, which move IRA funds from one IRA to another, requires no IRA reporting.
Direct Rollovers - Funds withdrawn from qualified plans to be put in an IRA. This is reported to the IRS but allows the member to avoid the mandatory 20% withholding that would take place if they took cash distribution. Direct distribution from a qualified plan may be placed in an IRA.
Warren Federal Credit Union PO Box 3200 Cheyenne, WY 82003 307.432.5400 800.368.9328 - Toll Freeezmail@warrenfcu.com
Annual Percentage Rates (APR) are based on approved credit and are subject to change