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South Central Credit Union
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Individual Retirement Accounts (IRAs)
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Traditional IRAs are special types of savings plans designed to help the owner save for retirement. It offers tax deferred earnings and the possibility of tax deductible
contributions.
Eligibility is based on:AGE - You must be under age 70 1/2 years and must not reach age 70 1/2 at any time during the year for which the contribution was made.
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Income:You must have earned compensation* during the year for which the contribution is being made, or you must have filed a joint federal income tax return with a spouse who earns compensation* during the year for which the contribution is being made.
Roth IRAs were named after Sen. William Roth of Delaware, a longtime IRA advocate. The Roth IRA allows you to contribute up to $5,000 under age 50 and $6,000 age 50 or older for the tax year 2008. But these contributions are not tax deductible and there are income limits to be followed. For single filers you can contribute the entire $5,000 if your income is less than $101,000. Contributions gradually phase out as income reaches $116,000. For married couples filing jointly this range is from $159,000 to $169,000.
Eligibility: Roth contributions are allowed at any age, as long as the IRA owner (or spouse filing jointly) has compensation* for the year to which the contribution is attributed.
Coverdell Education Savings Account: allows parents, grandparents or any other interested persons to establish a special savings account for children under the age of 18 to save for any postsecondary education. You can invest up to $2,000 per child younger than age 18. Earnings will accumulate tax free and withdrawals will be tax free if used for qualified educational expenses before the child reaches age 30. Contributions are not tax deductible. Funds are transferable to a qualified family member.
Eligibility: Beneficiary must be under age 18. Compensation* is not needed, only income.
* Compensation includes amounts derived from or received for personal services actually rendered. As an alternative to using this definition, the IRS allows an employee to use the information shown as "wages, tips & other compensation " on the IRS form W-2 to determine the compensation received from an employer. Taxable alimony is also treated as compensation.
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