Individual Retirement Accounts

Choose the IRA that meets your needs

Relax and watch your money grow, when you're tucking it away in an Individual Retirement Account. Our Traditional, Roth or Coverdell Education Savings Account IRAs can meet your future financial needs.

Follow these general rules of thumb in chosing the right IRA*:

1. Choose a Roth IRA if you don't need the tax break right now. It's a more flexible investment because:
   1. You can withdraw regular contributions at any time, tax-free and penalty-free.
   2. You do not have to take mandatory distributions at age 70 1/2.
   3. Earnings are tax-free if account is open 5 yrs and withdrawn for a qualifed reason.
2. Choose a traditional IRA if you want the tax deduction right now. It also makes sense if you anticipate paying taxes at a significantly lower rate in retirement.

Coverdell ESAs offer tax-free distributions for certain qualified education expenses and unlike section 529 plans, can be used for elementary and high school expenses at most public, private and parochial schools.

2012 IRA Contribution and Deduction Limits

2012 Combined Traditional and Roth IRA Contribution Limits:
If you are under 50 years of age at the end of 2012: The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional IRA and a Roth IRA but the combined limit is $5,000.The maximum deductible contribution to a traditional IRA and the maximum contribution to a Roth IRA may be reduced depending on your modified adjusted gross income.

If you are 50 years of age or older before the end of 2012:
The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional IRA and a Roth IRA but the combined limit is $6,000. The maximum deductible contribution to a traditional IRA and the maximum contribution to a Roth IRA may be reduced depending on your modified adjusted gross income. www.irs.gov

For more information on IRA changes or to open an IRA at Diamond Valley Federal Credit Union, email DVFCU or call 425-5152.