Back to BasicsIndividual Retirement Accounts

IRA’s

January 2009

Agenda• Basic IRA Information

– Compensation– Contribution Limits– Catch up Rule– Spousal Contributions– Rollovers & Direct Transfers

• Traditional IRA• Roth IRA• Coverdell ESA• Forms (IRA Direct)• Resources & Questions

Write Down One Question

that you would like to have answered

during today’s session

– Wages, salaries, fees, tips, bonuses, commissions, taxable alimony, and separate maintenance payments.

– Not included are:•Interest, dividends, rental income, retirement income (Social Security), disability, child support payments, and unemployment compensation.

CompensationMust have

earned compensation

Contribution Limits2008-2009

– For individuals who are 50 and older by the end of the year for which the contribution applies can make additional contributions.

– Catch up limits•2008 = $1,000•2009 = $1,000

Catch Up Rule

Spousal Contributions• Contributions can be made if

a spouse makes little to no income.

• Requirements:– Each owner must have

separate IRA’s.•Able to contribute to

both up to the maximum annual contribution limits.

– File joint income tax return.If you have any other questions regarding Spousal Contributions, please seek help

from a CUNA representative, Cora , Michelle G. or Karrie

Rollovers & Direct TransfersRollovers:• Withdrawn assets from an IRA

and then re-deposits them within 60 days into the same or another IRA.– 60 Day Rule– Once a Year

Direct Transfers:• A direct transfer is a

transaction in which the owner moves assets directly from one IRA to another.– No 60 Day Rule– Unlimited

January 1st, 2009

Pay to the Order of $8,592.37

C100123456789

322173149 10012345678910100123456

Wells Fargo (name of the institution)

FBO: John Smith (member’s name)/IRA Account

Eight thousand five hundred ninety two dollars and 37 cents

TSCU Representative

QRP (Qualified Retirement Plan) to IRA = Direct Rollover

Check Must be Made Payable as shown belowIRA to IRA = Direct Transfer

Check Must be Made Payable as shown below

Pay to the Order of

IRA to Member = RolloverChecks that are made payable directly to the

member are considered a Rollover and the 60-day rule would apply.

January 1st, 2009

$8,592.37

C100123456789

322173149 10012345678910100123456

John Smith (member’s name)

Eight thousand five hundred ninety two dollars and 37 cents

TSCU Representative

Pay to the Order of

If check is payable to:

Treat as a:

Owner Only Rollover

Credit Union Only Direct TransferCredit Union AND

OwnerRollover

Credit Union OR Owner Rollover

Quick Reference Guide to Understanding how to code IRA

funds

Traditional IRA• Tax deductible contributions

(depending on income level)• Withdraws begin at 59 ½ and

are mandatory by age 70 ½.• Taxes are paid on earnings when

withdrawn from the IRA.• Available to everyone, no

income restrictions (must have earned income)

• All funds withdrawn before 59 ½ are subject to a 10% penalty.

ROTH IRA• The Roth IRA was born on January

1st, 1998 as a result of the Taxpayer Relief Act of 1997.

• Contributions are not tax deductible.• No mandatory distribution age.• All earnings and principal are 100%

tax free if rules and regulations are followed.

• Available only to single-filers making up to $95k or married couples making a combined maximum of $150k annually.

• Principal contributions can be withdrawn at any time without penalty (subject to the 5 year rule).

From January 1st thru Tax Day (April 15th) of each

year, member’s are required to sign a

contribution form to contribute to the prior

year.

1. Permanent disability of an IRA owner.

2. Death of an IRA owner3. Withdrawals used to pay non-

reimbursed medical expenses. 4. Withdrawals used to pay for 1st

time home purchase.5. Higher education costs.6. Funds used to pay back taxes to

the IRS after a levy has been placed against the IRA.

7. Withdrawals used to pay medical insurance premiums.

8. Made on or after the day the IRA owner turns 59 ½.

8 Ways to Avoid Penalties

• Created as a part of the Taxpayer Relief Act of 1997.

• A special type of savings with the sole purpose of helping to pay for higher education expenses of the child named on the account (designated beneficiary).

• Parents & Guardians are allowed to make non-deductible contributions for a child (under the age of 18) or special needs beneficiary.

• Contributions are not tax deductible.

• Amounts deposited grow tax-free until distributed.

Coverdell ESA

• The annual contribution limit is $2,000 for each beneficiary.

• Distributions may be tax-free if they are not more then the beneficiary’s adjusted qualified education expenses for the year.

• Amounts must be distributed when the designated beneficiary reaches age 30.

• Transfers to members of the beneficiary’s family are permitted.

Coverdell ESA - Contributions

Traditional IRA

Contribution Form

Roth IRA

Contribution Form

Resources• CUNA Mutual

– By Web at www.cunamutual.com

– By phone at #1-800-356-9140 (For IRA and IRA Direct questions)

• www.irs.gov or #1-800-829-1040

• IRA Projection Table• IRA post 70 ½ Periodic Paym

ent Estimator• Silver Cloud

– Traditional IRA Contribution Form

– Roth IRA Contribution Form

Questions