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Traditional IRA
 
Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation) can contribute. Certain contributions are tax-deductible. All earnings are tax-deferred. Distributions for a first-time home purchase or higher education expense are penalty-free.

Roth IRA

Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following Modified Adjusted Gross Income, or MAGI, up to $95,000(single filers) or up to $150,000(joint filers). Reduced contributions for higher incomes. Contributions are nondeductible. Earnings may be withdrawn tax-free for a variety of conditions. There are no required minimum distributions.

Coverdell Education Savings Account IRA

Anyone who has income (or who is filing jointly with a spouse) with the following MAGI: up to $95,000 (single filers) or up to $150,000 (joint filers). If your income exceeds $110,000 as a single taxpayer or $160,000 as a joint filer,you can't make a regular Educational IRA contribution for that year. Contributions are not allowed once the beneficiary of the Education IRA reaches age 18 or in any year that a contribution is made to a state tuition program for the same beneficiary. Contributions are nondeductible, but withdrawals of contributions and earnings for qualified higher education expenses are tax-free. Funds are transferable from one child to another in the family.

• Annual contributions to a traditional and/or Roth IRA must not exceed $3,000. or 100% of compensation, whichever is less. Annual contributions to all Education IRA's opened on a child's behalf must not exceed $2,000.
• Consult with your tax advisor to verify.

FREQUENTLY ASKED QUESTIONS ABOUT IRA PRODUCTS

Your employer will tell you what portion, if any, of your retirement plan payout qualifies for rollover into an IRA. This portion is called the "eligible rollover distribution." Here are some general checkpoints-

Is it a qualified retirement plan (QRP)?
This includes any pension, profit-sharing, stock-bonus, or Keogh plan under Internal Revenue Code section 401 ir 4039a), as well as the Federal Thrift Savings Plan and annuity contracts or custodial accounts under IRC section 403(b).

Whose plan is it?
You must be a plan participant, surviving spouse beneficiary, or ex-spouse entitled to the funds due to a divorce agreement or decree.

What type of funds are being distributed?
Ineligible distributions include the return of nondeductible contributions and payouts required after age 70 1/2.
There are no age, income, or dollar limits on QRP-to-IRA rollovers, nor any restrictions on the number of these rollovers per year. For more information, check with your tax consultant.

If I roll my pension plan payout into a traditional IRA, does it have to be the whole amount?
No. If you're eligible for a rollover, it's up to you how much you put into a traditional IRA. But be aware that the portion of an eligible rollover distribution that you do not roll over to your IRA or another eligible retirement plan will automatically become taxable income-plus you'll owe a 10% early withdrawal penalty on the funds if you're under age 59 1/2.

Why should I move my retirement plan or IRA funds to Holston Methodist FCU?
When you save money, you count on it to be there when you need it. Rather than losing valuable chunks along the way to high fees and unstable investments, you can put every bit of your retirement fund to work on building tax-deferred savings with a credit union IRA. Plus, consolidating your retirement funds into an IRA at your credit union means more control over your transactions- and an end to juggling multiple financial statements. Here are some of the benefits of HMFCU IRA's:

• Insured deposits
• Low or no fees for account maintenance or individual transactions
• Competitive rates
• Convenient access to account information via phone or Internet
• Personal answers to your questions
• One-stop shopping for all your financial services

Can I withdraw from my traditional IRA for a first-time home purchase?
Yes, if you qualify, you can withdraw up to $10,000 (or $20,000 as a married couple) during your lifetime for a first-time home purchase. And the distribution is completely penalty-free, regardless of your age! Normally, if you're under age 59 1/2, you'd pay a 10% early-withdrawal penalty on distributions. This way, you only have to pay income taxes on the money you take out.
If your plan falls through, you can redeposit the money into your IRA within 120 days of withdrawal and avoid taxes. Although most IRA rollovers are restricted to one per year from a particular IRA, this one doesn't count toward that limit. Plus, you can still use the funds for a future first-time home purchase.
You can take money from a Roth IRA for a first time home purchase too-- and it's not only penalty-free, but also tax-free as long as you've had a Roth IRA for at least five years!

Do I have to make my entire annual contribution to an IRA at one time?
If you wish, you certainly can put your whole year's contribution in at once. But, you can make it a lot easier on your pocketbook with payroll deduction at the credit union. This convenient method spreads your IRA contribution over the entire year, helping you to save regularly and avoid the hit of a lump-sum payment. For example, if you're eligible to contribute $2,000 to a traditional or Roth IRA, simply tell us to automatically deposit $166 from your paycheck into your IRA at the end of the month. It won't seem like much, but it adds up in the end. After 25 years earning 5% compounded monthly, you'll have $98,855--all without a single reminder to yourself to save for your future.

• Are my retirement plan dollars eligible for rollover into an IRA?
• Is it a qualified retirement plan (QRP)?
• Whose plan is it?
• What type of funds are being distributed?
• If I roll my pension plan payout into a traditional IRA, does it have to be the whole amount?
• Why should I move my retirement plan or IRA funds to Holston Methodist FCU?
• Can I withdraw from my traditional IRA for a first-time home purchase?
• Do I have to make my entire annual contribution to an IRA at one time?

Are my retirement plan dollars eligible for rollover into an IRA?