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Individual Retirement Accounts (IRAs)

Stark Federal Credit Union has three types of IRAs available...

Roth IRAs

What is a Roth IRA? Working people can now contribute up to $5,000 per year of their earned income. Your qualified withdrawals will be tax free - both principal and interest!

What Makes a Withdrawal "Qualified"? To avoid early withdrawal penalties as well as paying taxes on the amount withdrawn, you must hold the Roth IRA account at least five years (beginning with the tax year in which you open the account). In addition, aqualified withdrawal must also be:

  • Paid to you when you are at least 59 and a half years old; OR

  • Paid to you if you become disabled (as defined by the IRS code); OR

  • Paid to your heirs or estate after your death; OR

  • Used to purchase a first home

Are there other benefits to the Roth IRA?

  • Individuals earning up to $95,000 and married couples filing jointly with a combined income up to $150,000 are eligible. These income limits are much higher than for a regular IRA.

  • You can fund a Roth IRA even if you are covered by a company retirement plan such as a pension, 401(k), or profit sharing.

  • Unlike regular IRAs, there are no time limits for making contributions. (Regular IRAs forbid contributions after age 70½.) As long as you continue working, you may make contributions to your Roth IRA.

  • Similarly, you are never required to make withdrawals from a Roth IRA.


What is a Traditional IRA? Contributions into the plan may be tax-deductible (consult your tax advisor regarding the deductibility of IRA contributions) and the earnings grow tax-deferred until retirement. You don't pay taxes until you withdraw the money, which if taken at retirement, may be taxed at a lower rate. And you must start using the money by age 70½.

What are the benefits of a Traditional IRA? The plan may allow you to redue your income tax liability for the year you're making the contribution, plus your tax-deferred earnings grow faster than a comparable taxable investment.

Coverdell Education Savings Accounts

What is a Coverdell Educational Savings Account?  An Education Savings Account (ESA), formerly Education IRA, is a terrific way for parents, grandparents and others to help meet the rising costs of a student's education.

What are the benefits of an ESA?  For taxable years beginning in 2002, the annual contribution amount has been increased from $500 per beneficiary to $2,000 per beneficiary. The earnings grow tax-free. And now, your ESA can be used to pay qualified elementary school and secondary school expenses as well as those for higher education.

For more information on the new ESA program, call 330-493-8325.



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