Some Details on IRAs | Cleveland Bradley County Teachers Federal Credit Union

IRAs are among the most common retirement tools, providing financial security through individual and employer-connected accounts. They are an attractive option, with accounts that offer tax deferrals now or in retirement, and the possibility for significant annual returns.

The bad news is many Americans don’t have nearly enough saved for retirement, and 15% of us have no retirement savings at all.

The good news for you is you can get started with a CBCTFCU IRA today and take yourself out of one or both of those categories.

But how do you know which IRA option is right for your situation? Here’s some information that could help.

IRA Options Explainer

CBCTFCU offers the two most-popular IRA options, the traditional and Roth accounts, as well as an option that enables you to convert a traditional IRA into a Roth.

Traditional IRA: These provide tax benefits now, with the IRS allowing full or partial deduction of most contributions to traditional IRAs. However, that means you’ll pay taxes on the funds when you take distributions from the account. Before this year, you could not make additional contributions to a traditional IRA after you reached the age of 70.5 years, but as of 2020 that restriction has been lifted. There are annual limits to tax deductions for traditional IRA contributions.

Roth IRA: Contributions to Roth IRAs are not tax deductible, but for most people these accounts offer tax-free distributions in retirement. That can mean you have more money coming in when you need it most.

In most cases you’re locked into whichever option you choose for the life of the account, but CBCTFCU offers a game-changing opportunity to our members. Our Roth Conversion IRA allows members to roll over, transfer or make a conversion from a traditional IRA to a Roth Conversion IRA.

This option is only available to those whose adjusted gross income, whether single or married and filing jointly, does not exceed $100,000 in the year in which the fund is established.

Limits on IRA Contributions

Despite the differences in the two options, they both fall under the same contribution limits and if you have more than one IRA, including of different types, all contributions toward them count toward the cap.

The limit is reviewed by federal officials every year, but typically only changes every few years. It changed at the beginning of 2015 and stayed at that level until 2019, holding at that figure in 2020.

That number is $6,000 for those under age 50 and $7,000 for those older than 50, or less than your taxable compensation if it’s below $6,000. The limit doesn’t apply to rollover contributions or qualified reservist repayments.

Some people may face additional restrictions on Roth IRA contributions based on certain conditions and circumstances. Everyone with a traditional IRA is also subject to IRS deduction limits.

If you need help deciding between your IRA options, you can trust Cleveland Bradley County Teachers Federal Credit Union to provide the guidance and tools you need to build a secure financial future.