Traditional IRAs

Tax-advantaged growth

Contributions and earnings from a traditional IRA grow tax-deferred until withdrawn at which time they are taxed at your current rate.(If contributions are not tax-deductible, then they can be withdrawn tax-free under a pro-rata rule.) If withdrawals occur before you are age 59 ½ then you also may be subject to a 10% additional tax.

Contributions may be fully tax-deductible if any of the following apply:

• Neither you nor your spouse is an active participant in an employer-sponsored retirement plan
• You participate in an employer-sponsored retirement plan and your 2012 MAGI is $58,000 or less as a single taxpayer or $92,000 or less as married taxpayers filing jointly
• You do not participate in an employer-sponsored retirement plan, but your spouse does, and joint MAGI is no more than $173,000 for 2012

Contributions

• If you are under age 50 you can contribute up to $5,000 for 2012
• For each year during which you are age 50 or older, Traditional IRA annual contribution limits increase by $1,000.

Traditional IRA Tax Deduction Guidelines

Tax Deductibility of Traditional IRA Contributions

Tax deductibility of your Traditional IRA contribution is based on several factors:

• Your federal tax filing status
• Your modified adjusted gross income
• Whether you or your spouse participates in an employer-sponsored retirement plan such as 401(k), 403(b) or pension.
• Your age

Eligibility

Anyone under age 70½ who has earned income equal to or greater than their IRA contribution amount.

• If you contribute to an employer-sponsored plan like a 401(k) or 403(b), you are still eligible to contribute to a Traditional IRA account
• If you have no earned income but your spouse earns enough income to cover your contribution as well as their own, you can contribute to a Traditional IRA account

© Copyright 2012 Veritas Federal Credit Union All Rights Reserved.
Privacy Policy :: Electronic Services Disclosure :: Legal Disclaimer :: Website Design by: VolCorp Design

Visit Veritas FCU on...