IRAs & ESA
Purpose
Retirement Savings
Consider If
You would like to reduce your taxable income now, and you don't plan on making withdrawals until retirement.
Tax Advantages
You may be able to reduce your current income taxes now. You don't pay taxes until you take money out, typically when you are in a lower tax bracket.
Contribution Limits
For 2021, you can contribute up to $6,000, or $7,000 if you were age 50 or older by the end of 2020.
Withdrawals
Withdrawals are taxable income. Withdrawals made before age 59 ½ could include a 10% penalty.
Mandatory Withdrawals
At age 72 (or if you turned 70 ½ before January 1, 2020).
Purpose
Retirement Savings
Consider If
You would like more flexibility for withdrawals, want to reduce your taxable income or are planning to work past age 70.
Tax Advantages
All earnings grow tax-free, and you don't pay taxes when you take money out of the account.
Contribution Limits
For 2021, you can contribute up to $6,000, or $7,000 if you were age 50 or older by the end of 2020.
Withdrawals
Earnings are tax-free if they've been in the account for 5 years and you are at least 59 ½. Withdrawals made before age 59 ½ could include a 10% penalty. Contributions are non-deductible and can be withdrawn anytime with no penalty or taxation.
Mandatory Withdrawals
None
Purpose
Retirement Savings
Consider If
You are self-employed or are a small business owner.
Tax Advantages
You don't pay taxes until you take money out of the account.
Contribution Limits
For 2021, your employer's contribution cannot exceed the lesser of: 1) 25% of the employee's compensation, or 2) $57,000 for 2020 and $58,000 for 2021 ($56,000 for 2019). Note: Elective salary deferrals and catch-up contributions are not permitted in SEP plans.
Withdrawals
Withdrawals are taxable income. Withdrawals made before age 59 ½ could include a 10% penalty.
Mandatory Withdrawals
At age 72 (or if you turned 70 ½ before January 1, 2020).
Purpose
Education Savings
Consider If
You are a parent or grandparent who would like to save for a child's education.
Tax Advantages
Tax-deferred growth. Tax-free distributions if used for qualified education expenses.
Contribution Limits
Limit of $2,000 per year, per student total from all contributors. Income limits may apply. Beneficiary must be under 18 when contributions are made.
Withdrawals
Tax-free if used for qualified education expenses. Income tax and a 10% early withdrawal penalty may apply if used for non-qualified expenses. May withdraw at any time.
Mandatory Withdrawals
Must be distributed or transferred to another family member by the time the beneficiary reaches age 30.
Other Retirement Savings Options
If you are interested in exploring other investment alternatives for your retirements savings, you may contact FCCU Financial Advisors 3 at 920-563-7305 or schedule an appointment for a no-cost, no-obligation consultation here .
1 IRA = Individual Retirement Account. Early withdrawals from accounts could result in fees. Fees can reduce earnings.
2 ESA = Education Savings Account. Non-education withdrawals from accounts could result in fees. Fees can reduce earnings.
3 FCCU Financial Advisors Financial Professionals are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America. The FCCU Financial Advisors program is offered through CUNA Brokerage Services, Inc.*, a broker/dealer focused on serving credit union members. CUNA Brokerage Services, Inc. is an affiliate of CUNA Mutual Group. For more information about CUNA Brokerage Services, Inc., please visit cunabrokerage.com.