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Whether it’s far in the future or right around the corner, an Individual Retirement Account (IRA) can help you save and earn for your retirement. You can contribute money annually based on what you’ve earned or up to IRS-established limits on age and income.
Which type of IRA is right for you?
The decision on type of IRA is whether it’s most beneficial to receive an upfront tax break or tax-free withdrawals at retirement. Here are the two options:
Traditional IRA (think Federal tax benefit now)
Tax-deferred dividends make IRAs one of the most effective ways of saving for your retirement. The Traditional IRA is a retirement savings account that allows eligible individuals to save for retirement by contributing up to a certain amount each year. Visit IRS.gov to see if you meet eligibility requirements.
The earnings on investments in a Traditional IRA grow on a tax-deferred basis. That means you don’t pay taxes until the amount is distributed or withdrawn.
Roth IRA (think Federal tax benefit later)
Roth Certificates offer you tax-free earnings at retirement and tremendous flexibility for withdrawing funds prior to retirement. Although contributions are not deductible when the funds are contributed, earnings accumulate tax-free and remain tax-free at distribution or withdraw. You cannot withdraw your funds within the first five years after the establishment of the Roth without a penalty.
Ready To Get Started?
Our Retirement Central website has practical ideas you can use today to help you achieve financial security in retirement.
- Educational articles
- Planning tools
- Open an IRA online
- Manage your existing IRA
1st United Credit Union cannot give tax advice. Please consult your tax advisor or visit IRS.gov.