An IRA (Individual Retirement Account) is designed to help you save for retirement while allowing you to reap tax advantages along the way.
Understanding Roth & Traditional IRAs
Learn more about Roth IRAs
- Any earnings are tax-free if withdrawn at or after age 59� and the individual retirement account has been open five years or more1
- Contributions (not earnings) can be withdrawn free of tax and the 10% additional tax at any time
- Contributions are not tax-deductible
Learn more about Traditional IRAs
- Any earnings are tax-deferred until withdrawn at or after age 59� at which time they are taxed at your current rate
- Contributions and earnings can be withdrawn free of the 10% additional federal income tax at or after age 59�
- Contributions may be tax-deductible
Certain restrictions apply.
Fees and expenses are subject to change. Please note that other fees and expenses may apply, including early withdrawal penalties. Please review our Fee Schedule.
Any earnings are tax-free if you are at least 59� or unless you qualify for an exception and the Roth IRA has been funded for at least five years from the year of conversion. There is a 10% additional tax for withdrawals of earnings taken before age 59 �.
For Traditional IRAs � If you withdraw before age 59 � you may be subject to a 10% early withdrawal additional tax unless one of the following exceptions apply: qualified higher education expenses; qualified first home purchase (lifetime limit of $10,000); certain major medical expenses; certain long-term unemployment expenses; disability; or substantially equal periodic payments.
For a withdrawal from a Roth IRA to be federal (and, in most cases, state) income tax free, it must be considered qualified. There is a five-year holding period when determining whether earnings can be withdrawn tax-free as part of a qualified distribution from a Roth IRA. This period begins January 1 of the tax year of the first contribution or the year of conversion to any Roth IRA. The distribution must be made after the five-year holding period, and the individual must have reached age 59 �, be deceased, disabled or use the funds for a first-time home purchase (lifetime limit of $10,000). There is a 10% additional federal income tax for non-qualified withdrawals of earnings taken before age 59 �, unless one of the following exceptions apply: qualified higher education expenses; qualified first home purchase (lifetime limit of $10,000); certain major medical expenses; certain long-term unemployment expenses; disability; or substantially equal periodic payments. A special provision applies for converted assets. If a non-qualified withdrawal is made within five years of the conversion, the earnings withdrawn will be subject to income tax, and the entire withdrawal may be subject to an additional 10% federal income tax unless an exception applies.
Neither Veritas Federal Credit Union nor any of its employees are tax or legal advisors. We strongly suggest you consult your personal tax or legal advisor before making tax or legal-related investment decisions.