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  Traditional IRA Roth IRA
Am I eligible? You must have earned income and be under age 70½ in the year the contribution is made. No age limit, however for full contribution you must have a modified adjusted gross income (MAGI) below:
  • (2011) $107,000 if single or $169,000 if married and filing jointly
  • (2012) $110,000 if single or $173,000 if married and filing jointly
How much can I contribute each year?
  • Individual: $5,000
  • Married filing jointly: $10,000 (up to $5,000 each)
  • Individual: $5,000
  • Married filing jointly: $10,000 (up to $5,000 each)
What is a "Catch-up Contribution?" If you are age 50 or older in the year of contribution, eligible IRA account holders can make an additional contribution of $1,000. If you are age 50 or older in the year of contribution, eligible IRA account holders can make an additional contribution of $1,000.
Can I deduct my contribution?

If you are not an active participant in an employer-sponsored retirement plan, such as a 401(k), your entire contribution is tax deductible.

If you are an active participant in an employer-sponsored retirement plan, your contribution may be completely or partially deductible.

 Contributions are not tax deductible.
Is there a deadline for account opening and contributions? Opening the account and making contributions for a specific year must be made by the tax filing deadline for that year. Opening an account and making contributions for a specific year must be made by the tax filing deadline for that year.
Is there a penalty tax on excess contributions? Yes, the IRS imposes a 6% penalty tax on excess contributions. Yes, the IRS imposes a 6% penalty tax on excess contributions.
When must I begin taking distributions?

You may begin taking contributions at 59½ without any penalties.

Distributions must begin by April 1 of the year after turning age 70½.

 There is no mandatory age for taking distributions.
Do I pay income taxes on withdrawals? Yes. Any withdrawals (except nondeductible contributions) are subject to regular income taxes. Qualified withdrawals of contributions are tax-free. (see below)
Can I make withdrawals prior to 59½

Penalty-free withdrawals before age 59½ are allowed if:

  • You are a first-time homebuyer ($10,000 lifetime limit).
  • You are using the withdrawal to pay for certain higher education expenses.
  • Certain conditions are met for unemployment or qualifying medical expenses.
  • The distribution was a result of disability or death.

You have the ability to withdraw your principal and earnings completely tax-free if the IRA has been open for five or more years and at least one of the following conditions are met:

  • You are a first-time homebuyer ($10,000 lifetime limit).
  • You are disabled when you make the withdrawal.
  • Withdrawals are made by your beneficiary after you die.
Is there a penalty tax on insufficient withdrawals after age 70½? Yes. The IRS imposes a 50% of amount that should have been withdrawn Not applicable

Fore more information on which IRA may be most appropriate for you or to discuss your retirement planning options, you can contact our financial planners at 877.367.5428 or financialplanner@lgfcu.org


This is for information purposes only and is not to provide tax or legal advice regarding your situation. For tax or legal advice, please contact your tax or legal professional.

/ To improve the lives of our members /
© 2012 Local Government Federal Credit Union. All rights reserved.
Rate comparisons used throughout the LGFCU site are based on the
lowest rate available or when payment is made by automatic draft.
Local Government Federal Credit Union | To improve the lives of our members

© 2011 Local Government Federal Credit Union. All rights reserved.
Rate comparisons used throughout the LGFCU site are based on the lowest rate available or when payment is made by automatic draft.

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