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IRA FAQs

What is an IRA?
IRA stands for an Individual Retirement Account. It is a type of retirement plan that qualifies for special tax treatment. The credit union, as custodian of an IRA, invests the money as directed by the member.

Extra Credit Union offers three types of IRA accounts:
  • Traditional
  • Roth
  • Coverdell/Education
Eligibility/Contribution

Do you have earned compensation/income?
The IRA owner must receive earned compensation/income during the year the regular contribution is made. Members may still open an IRA if they do not have earned income at the time of the account opening if they plan on working during that year or are setting up a direct transfer or rollover from another financial institution. It is not the responsibility of the credit union to track and monitor this for our IRA owners.

What is your age?
Members inquiring about opening a traditional IRA must be under age 70 ½. Once IRA owners reach age 70 ½ they are no longer able to make contributions into a Traditional IRA. Roth IRA owners have no age limit.

Do you know your income limit?
In order to contribute into a Roth IRA you must not exceed the IRS modified adjusted gross income (MAGI) limits. There are also MAGI limits set on traditional IRAs that could possibly lower the amount of their contributions that can be tax deductable.

What is a Traditional IRA?
A Traditional IRA is a type of IRA that has the potential for tax-deductible contributions but does not have the potential for tax-free earnings.

Who can contribute?
  • Anyone under age 70 ½ who has income from compensation (or who is filing jointly with a spouse who earns compensation)
  • Anyone who has received a distribution from a qualified retirement plan and decides to move the proceeds of the plan to an IRA
How much can they contribute?

Contribution Type

 2008
 2009
Traditional or Roth IRA
Contribution Limit
 $5,000
 $5,000
Traditional or Roth IRA
Catch Up Contribution
$1,000
 $1,000
  • Currently, a member under the age of 50 can contribute a maximum of $5,000 per year
  • Over age 50 a member can contribute up to $6,000 per year to ‘catch up’ savings for retirement
  • Contributions CANNOT exceed compensation
  • Reduces contributions that can be made to Roth IRA
What is a Roth IRA?
A Roth IRA is a type of IRA that has the potential for tax-free earnings but does not have the potential for tax-deductible contributions.

Who can contribute?
  • Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) that has a MAGI below the defined limits
  • Reduced contributions are allowed for higher income **See tax advisor
How much can they contribute?

Contribution Type

 2008
 2009
Traditional or Roth IRA
Contribution Limit
 $5,000
 $5,000
Traditional or Roth IRA
Catch Up Contribution
$1,000
 $1,000
  • Currently, a member under the age of 50 can contribute a maximum of $5,000 per year
  • A member over the age of 50 can contribute up to $6,000 per year
  • Contributions CANNOT exceed their compensation
  • Reduces contributions that can be made to Traditional IRAs
What is a Coverdell IRA?
A Coverdell IRA is a type of IRA that allows you to save money for your child’s educational expenses. Contributions are not tax deductible.

Who can contribute?
  • Anyone who earns compensation and has a MAGI less than the defined limits
  • Beneficiary/child must be under 18 years old
How much can they contribute?
The maximum contribution is $2,000 per child annually.