Investing & Retirement - Wheatland Federal Credit Union

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When we say the word “retirement,” what image pops into your mind? Is it a tropical vacation somewhere? Is it a golf course with friends? Maybe relaxing with your grandkids? Whatever it is, we hope it’s a happy image. Because retirement should be just that – happy, healthy, and wealthy.

WFCU and our business partners WILL NOT provide tax advice or assistance. Please contact your tax professional for tax related questions. Consult a tax adviser regarding deductibility and tax deferment.

Wheatland FCU offers NCUA-Insured IRA Share Accounts & IRA Share Certificates. Annual fees, minimum deposit amounts, and early withdrawal penalties may apply. Benefits include:

Qualified contributions are tax-deductible.
Earnings on qualified contributions are tax-deferred.
Rollover or transfer contributions eligible from employer plans, other retirement plans or IRAs.

Traditional IRA Share Savings Account

A Traditional IRA is a type of IRA account for retirement savings. With a Traditional IRA account, contributions are tax-deductible (for most people) and only subject to income taxes at the time of withdrawal.

A Roth IRA is a type of IRA account for retirement savings. The advantages of a Roth IRA include no withdrawal requirements and tax-free qualified withdrawals after age 59½.

The main difference between a Roth IRA and Traditional IRA is the way they are taxed. Your Roth IRA contributions are not tax-deductible, but your qualified withdrawals in retirement will be tax-free. (Tax questions should be confirmed by your tax professional, WFCU cannot provide tax assistance.)

Traditional IRA

Contributions may be tax-deductible.
Anyone with earned income can contribute.
Pay no taxes until your money is withdrawn.
Must begin making withdrawals by age 73.

Roth IRA

Contributions are not tax-deductible.
Eligibility is based on how much you earn. Contribute at any age.
Never pay taxes on qualified withdrawals after age 59 ½.
Withdrawals are never required.

Roth IRA Conversion

You can roll over most retirement plans including Traditional IRAs, 403(b)s and Roth 401(k)s to a Roth IRA. With a Roth IRA conversion, you pay taxes when you convert, but you can withdraw your money tax-free in retirement. (Tax questions should be confirmed by your tax professional, WFCU cannot provide tax assistance.)

Converting might be a good choice if you want to:

Receive income-tax-free earnings in retirement.
Keep funds in a retirement account as long as possible.
Leave income-tax-free assets to your family and your heirs.

Also consider:

Money converted today is taxed at your current income tax rate.
Anyone can convert retirement savings to a Roth, regardless of income.

Coverdell ESA (Education Savings Account)

Wheatland FCU offers both a savings account (Coverdell Accumulation) and fixed-rate Share Certificate investment plans for Coverdell Education Savings Accounts. Annual fees, minimum deposit amounts, and early withdrawal penalties may apply.

A Coverdell Education Savings Account (Coverdell ESA) is a trust or custodial account set up in the United States solely for paying qualified education expenses for the designated beneficiary of the account. This benefit applies not only to qualified higher education expenses, but also to qualified elementary and secondary education expenses. There are certain requirements to set up a Coverdell ESA:

When the account is established, the designated beneficiary must be under the age of 18 or be a special needs beneficiary.
The account must be designated as a Coverdell ESA when it is created.
The document creating and governing the account must be in writing, and it must meet certain requirements.
Tax questions should be confirmed by your tax professional, WFCU cannot provide tax assistance.

Contributions

You may be able to contribute to a Coverdell ESA to finance the beneficiary’s qualified education expenses.

Contributions must be made in cash, and they’re not deductible.
Any individual whose modified adjusted gross income is under the limit set for a given tax year can make contributions.
Organizations, such as corporations and trusts can also contribute regardless of their adjusted gross income.
Contributors must contribute by the due date of their tax return (not including extensions).
There’s no limit to the number of accounts that can be established for a beneficiary; however, discuss with a tax advisor what the total contribution to all accounts on behalf of a beneficiary in any year can be.

Distributions

In general, the designated beneficiary of a Coverdell ESA can receive tax-free distributions to pay qualified education expenses. The distributions are tax-free to the extent the amount of the distributions doesn’t exceed the beneficiary’s qualified education expenses. If a distribution exceeds the beneficiary’s qualified education expenses, a portion of the earnings is taxable to the beneficiary. Amounts remaining in the account must be distributed when the designated beneficiary reaches age 30, unless the beneficiary is a special-needs beneficiary. Certain transfers to members of the beneficiary’s family are permitted.