Carolina Collegiate Federal Credit Union

Individual Retirement Account (IRA)

Share IRAs and IRA Certificates:
A Share IRA may be opened for as little as $25.00. Deposits may be made through payroll deduction on a regular basis or through a one-time contribution. Once a balance of $500.00 is reached in this account, the balance can be transferred to an IRA Certificate. These accounts are for terms of 18, 24, or 30 months.

IRA accounts may be opened for Traditional and/or Roth IRAs. A CD, IRA, or Pension that has matured at another institution may also be transferred to Carolina Collegiate FCU, often at better terms and higher rates of return.

What are the eligibility rules for Roth and Traditional IRAs?

Roth IRA Eligibility: You are eligible to contribute to a Roth IRA if:

- You have earned compensation during the year and
- Your taxable compensation is less than
- $177,000 for married filing jointly, (phased out between 167k and 177k)
- $120,000 for single, or head of household, (phased out between 105k and 120k)
- $10,000 for married filing separately, (phased out between 0 and 10k)

Traditional IRA Eligibility: You are eligible to contribute to a Traditional IRA if:

- You, (or if you file a joint return, your spouse) have earned compensation during the year and
- You are below age 70 ½ at the end of the year
- (Keep in mind that the deductibility of your contributions will depend on several other factors including income, and filing status.)

What are the main differences between a Roth IRA and a Traditional IRA?
- With a Traditional IRA you get a tax benefit in the current year. Provided you meet certain qualifications, you get to deduct your contribution from that year’s taxable income. With the Roth IRA you do not get a deduction.
- With a Traditional IRA all of your distributions/withdrawals will be taxed at your current tax rate in the year withdrawn. With the Roth, all qualified withdrawals are tax free and penalty free, (after age 50 ½ and the plan has been open for 5 years).
- With the Traditional IRA you cannot access funds in your account prior to 59 ½ without paying a 10% penalty for early withdrawal, (there are a few exceptions, (death, disability, first time home purchase, qualified education expenses, 72t distributions, etc.). With the Roth IRA you can, at any time and for any reason, withdraw up to the amount you’ve put in, tax free and penalty free.
- With a Traditional IRA you are not allowed to make additional contributions after age 70 ½, and you must start making minimum distributions. With a Roth IRA, neither of these rules applies.
In general: the Traditional IRA’s big benefit is the deductable contributions in the current year. The higher the income bracket, (i.e.: tax rate), the more important a current year deduction might be. The Roth IRA tends to be more flexible and the potential tax free growth is a big benefit.

What are the IRA contribution limits?
The 2010 contribution limit for both Traditional and Roth IRAs is the lesser of $5000, or your taxable compensation. Keep in mind that the Roth IRA has the income limits and phase outs, (see Eligibility Rules section above). It is anticipated that in subsequent years the limit will be $5000 plus a possible cost of living adjustment.
Note: you do not have to make the maximum contribution, and you do not have to do it all at one time.
Note: you can make a contribution for a specific tax year within that year or up until April 15th of the following tax year.

What is a “catch-up” IRA contribution?
If you have attained age 50 by the end of the taxable year, or older, you are eligible to make a catch-up contribution of up to $1000. Thus, for 2010, the total contribution limit for those ages 50 or older will be the lesser of $6000 or your taxable compensation.

Will my contributions to a traditional IRA be tax-deductible?
There are several factors used to determine the deductibility of Traditional IRA contributions, including whether you are covered by a retirement plan at work, your tax filing status, and income limits. It is rather complicated and the income limits tend to change each year. For that reason we suggest you visit and type in “Traditional IRA, Deductible Contributions” in the Search box at the top right corner of the page.

Can I contribute to an IRA if I already have a retirement plan through my employer?
Traditional IRA: Yes. If you have an employer provided plan you can still make contributions to a Traditional IRA, HOWEVER, those contributions may or may not be deductible.
Roth IRA: Yes, provided you do not exceed the income limits, (see Eligibility Rules section above).

Can I convert my traditional IRA to a Roth IRA?
Yes, however keep in mind that the pre-tax dollars that are converted are then considered taxable income. New Rules for Conversions: For any conversions in 2010, any amounts that are required to be included in income are included in income in equal amounts in 2011 and 2012. If you elect otherwise, you can choose to include the entire amount in income in 2010. We highly recommend that you consult a tax professional or investment adviser when considering a conversion.

Can I have both, a Traditional and a Roth IRA?
Yes. You can have, and contribute to both. However, the sum of all IRA contributions for a year cannot exceed the contribution limit for that year.

What is a Direct Rollover, and how do they work?
A Direct Rollover is the process of moving money from an employer provided retirement plan to an IRA or other qualified plan without the owner taking possession of it. Usually, when someone terminates employment or retires, they will use a direct rollover to move their money from a 401(k), 403(b), 457(b), or TERI plan into their own IRA. The direct rollover allows you to have more control over the account while maintaining its tax deferred status. If this is of interest to you, we encourage you to speak with one of our Investment Advisors to ensure the process goes smoothly.

Why should I have an IRA at my credit union?
There’s a lot more to having an IRA than just getting tax advantages. Some of the benefits of a credit union IRA include:

- Competitive rates
- Low or no annual maintenance fees
- Insured Deposits
- Payroll Deduction to simplify contributions
- Low minimum deposit requirements
- Personalized answers to your questions
- One-stop shopping for all your financial services

This write-up is intended to provide general information concerning the rules surrounding IRAs. We do not hold ourselves out as legal or tax advisors. For information concerning your specific - situation; we would advise that you contact an investment advisor at one of our branches, or visit the IRS’ website,, or contact your own investment, legal, or tax adviser.

For more information about investment services, please contact one of the investment professionals that Carolina Collegiate recommends:

Neil Stalker: Edward Jones, Cayce 803.791-7745

Marvin Sox: Carolina Wealth Management, Lexington 803.359.3800

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Carolina Collegiate Federal Credit Union
Phone: 803.227.5555 • Toll Free: 800.476.5861 • Fax: 803.227.5566
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