What is an Individual Retirement Account (IRA)?

An Individual Retirement Account is a retirement savings account that offers tax-deferred or tax-free benefits to help members save for retirement.

What is the difference between a Traditional IRA and a Roth IRA?

A Traditional IRA allows eligible contributions to grow tax-deferred until withdrawal, while a Roth IRA offers tax-free qualifies withdrawals because contributions are made with after-tax income.

How does a Traditional IRA work?

Traditional IRA contributions may be tax deductible, and dividends grow tax-deferred until funds are withdrawn during retirement.

How does a Roth IRA work?

Roth IRA contributions are mad with after-tax income, allowing qualified withdrawals to be tax free after meeting eligibility requirements.

Are IRA withdrawals taxed?

Traditional IRA withdrawals are generally taxable. Qualified Roth IRA withdrawals may be tax free.

When can I withdraw money from my IRA without penalties?

In many cases, IRA withdrawals made before age 59 ½ may be subject to taxes and early withdrawal penalties unless an IRS exception applies.

What is the difference between tax-deferred and tax-free retirement savings?

Tax-deferred savings delay taxes until withdrawal, while tax-free savings allow qualified withdrawals without federal income taxes.

Is an IRA good for retirement planning?

IRAs are designed to help members save for retirement with potential tax advantages and long-term savings growth.

Can you help me choose the right IRA?

Weber State Credit Union offers free retirement planning guidance from financial professionals to help members compare IRA options and retirement goals.

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Individual Retirement Account (IRA)

An Individual Retirement Account (IRA) can provide a tax-deferred or tax-free way of saving for retirement.

Waiver of Early Withdrawal Penalty

The CARES Act waives the 10 percent early-withdrawal penalty on IRA distributions taken before an IRA owner attains age 59 ½. Under the CARES Act, an IRA owner affected by the coronavirus pandemic can withdraw up to $100,000 in 2020 without incurring the 10 percent penalty. Withdrawals are subject to income tax; however, members can elect to ratably spread the income over a three-year period beginning with taxable year 2020.

Furthermore, if you end up not needing the distribution, you can repay some or all of the distribution back to your plan within three years of receipt.

An IRA owner affected by the coronavirus pandemic is defined as an individual who is diagnosed with COVID-19, whose spouse or dependent is diagnosed with COVID-19, or someone who experiences financial hardship because of quarantine or other coronavirus-related factors.

Traditional IRA

With a Traditional IRA, you can defer taxes for the dividends on your contributions until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which you make them.

IRA Contributions after 70 ½

For 2020 and later, there is no age limit on making regular contributions to traditional or Roth IRAs.

Roth IRA

The Roth IRA allows only nondeductible contributions and features tax-free withdrawals for certain distributions reasons after a five year holding period. Since Roth IRA contributions are nondeductible and taxed in the year they are earned, if you expect to be in a higher tax bracket when you retire, you may benefit more from a Roth IRA than from a traditional IRA.

You are eligible to establish a Roth IRA if you or your spouse currently have compensation and your modified adjusted gross income (MAGI) does not exceed certain prescribed limits.

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Retirement Planning Advice

Weber State Credit Union offers free advice from experienced financial professionals. Meet with a free financial advisor for more information on which IRA option you qualify for and what will work best with your retirement plan.

Contact a Financial Advisor

Frequently Asked Questions

What is an Individual Retirement Account (IRA)?

An Individual Retirement Account is a retirement savings account that offers tax-deferred or tax-free benefits to help members save for retirement.
What is the difference between a Traditional IRA and a Roth IRA?

A Traditional IRA allows eligible contributions to grow tax-deferred until withdrawal, while a Roth IRA offers tax-free qualifies withdrawals because contributions are made with after-tax income.
How does a Traditional IRA work?

Traditional IRA contributions may be tax deductible, and dividends grow tax-deferred until funds are withdrawn during retirement.
How does a Roth IRA work?

Roth IRA contributions are mad with after-tax income, allowing qualified withdrawals to be tax free after meeting eligibility requirements.
Can I contribute to an IRA after age 70 ½?

Yes. There is no age limit for making regular contributions to Traditional or Roth IRAs for eligible members.
Are IRA withdrawals taxed?

Traditional IRA withdrawals are generally taxable. Qualified Roth IRA withdrawals may be tax free.
When can I withdraw money from my IRA without penalties?

In many cases, IRA withdrawals made before age 59 ½ may be subject to taxes and early withdrawal penalties unless an IRS exception applies.
What is the difference between tax-deferred and tax-free retirement savings?

Tax-deferred savings delay taxes until withdrawal, while tax-free savings allow qualified withdrawals without federal income taxes.
Is an IRA good for retirement planning?

IRAs are designed to help members save for retirement with potential tax advantages and long-term savings growth.
Can you help me choose the right IRA?

Weber State Credit Union offers free retirement planning guidance from financial professionals to help members compare IRA options and retirement goals.

Coming November 2nd