IRA’s

Minimum Earning Balance	Pay Frequency	Annual Percentage Yield
$25.00 to $9,999.99	Monthly	0.85%
$10,000 and up	Monthly	1.00%

Long-standing IRS Rollover Interpretation Changing
If you’re considering rolling over your IRA assets to an existing or new IRA, you need to be aware of an upcoming change that will affect IRA rollovers. The IRS is changing its interpretation of the one-per-12-month rule following a recent U.S. Tax Court ruling in Bobrow v. Commissioner. The court ruled that a taxpayer is limited to one rollover per 12-month period, regardless of the number of IRAs he/she has.

The IRS for decades stated that you could roll over one IRA distribution per 12-month period for each IRA that you own. The IRS issued guidance in March 2014, stating that it will apply the tax court’s new interpretation going forward. But that ill not apply before January 1, 2015.

For 2014, therefore, you are still allowed to roll over one distribution for each IRA you won during any 12-month period. The 12-month period begins on the day that you receive the IRA distribution. In addition, the IRA assets that are rolled over may not be rolled over more than once during the 12-month period.

When the IRS applies its new interpretation effective for distributions taken on or after January 1, 2015, you may roll over only one IRA distribution in any 12-month period, regardless of how many IRAs you own. You still may perform an unlimited number of transfers.

You should consult with a competent tax advisor if you are rolling over an IRA distribution.

INDIVIDUAL RETIREMENT ACCOUNTS (IRAs):
Education Credit Union is your financial partner for life, so there’s no better place to start planning for your retirement years. Choose a Traditional IRA or a Roth IRA. Each earns competitive interest rates, requires no additional set-up fee or a maintenance fee and provides all the tax advantages you need. Deposits may be tax deductible, and your investment grows with tax deferred interest. You can open an IRA with us for as little as $50.

If you already have an IRA somewhere else, you can transfer it to ECU and take advantage of our better rates. ECU IRA’s accept rollovers and direct rollovers from Qualified Retirement Plans. Also, ECU accepts transfers and rollovers from other IRA’s. Members can convert a Traditional IRA to a Roth IRA. Conversion means exchanging the tax deferral offered by a Traditional IRA for tax-free withdrawals offered by a Roth IRA. Taxes must be paid when converting a Traditional IRA to a Roth IRA.

ROTH IRA:
Roth IRA’s allow investors to annually contribute a limited amount of money towards retirement. The contributions are not tax deductible. Earnings are tax-free if account is open for five tax years and withdrawn for qualified reasons such as age 59½, disability, death, or first-time home purchase with a lifetime limit of $10,000. Also, Roth IRA account holders are not taxed when they begin withdrawing money at or even before retirement.

You can contribute up to $5,500 annually to your Roth IRA ($6,500 if you are 50 or older by the end of the year), assuming you have at least $5,500 ($6,500) in earned income for the year.

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• Contributions are not tax deductible
• No Mandatory Distribution
• All earnings and principal are 100% tax-fee (if rules and regulations are followed)
• Available only to single-filers making up to $95,000 or married making a combined maximum of $150,000 annually)
• Principal contribution can be withdrawn any time without penalty (subject to some minimal conditions.)
• Funds may be used for a first-time home purchase (lifetime limit is $10,000 per person.)
• Contributions are allowed after age 70½

TRADITIONAL IRA:
The Traditional IRA is an account, which allows investors to make tax-deductible contributions. The earnings grow tax-free until the account’s owner turns 59½ years old (if money is withdrawn before this age, a 10% penalty is incurred). At this time, the account holder is allowed to begin withdrawing money from the account to fund their retirement. These distributions are fully taxed by the U.S. government. Traditional IRA accounts must begin taking distributions no later than April 1st following the year the owner turns 70½.
You can contribute up to $5,500 annually to your Traditional IRA ($6,500 if you are 50 or older by the end of the year), assuming you have at least $5,500 ($6,500) in earned income for the year.
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• Tax deductible contributions (depending on income level)
• Withdraws can begin at age 59½ and are mandatory by 70½
• Taxes are paid on earnings when withdrawn from the IRA
• Available to anyone who has earned income
• All funds withdrawn (including principal contributions) before 59½ are subject to a 10% penalty (subject to certain exceptions)
Qualified distributions are penalty-free for first-time home purchases with a lifetime limit of $10,000, higher-education expenses, disability, qualifying medical expenses exceeding 7.5% of adjusted gross income, payment to beneficiaries upon premiums while unemployed for 12 weeks or longer.

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