Thrivent Federal Credit Union offers both Traditional and Roth IRAs – each with its own benefits. Choose the one that gives you the best advantage in saving toward your goals.
Traditional IRA Advantages2
Contributions – As long as you've earned income, you may contribute up until the tax year in which you reach age 70½. You may also contribute for a nonwage-earning spouse. In 2015, you can contribute up to $5,500 per year; if you are age 50 or over by the end of the year, you can contribute an additional $1,000.
Tax Benefits – You may be able to fully deduct your contributions on your tax returns (limits may apply if you or your spouse participates in an employer-sponsored plan). Any earnings are tax-deferred, and you pay the taxes at the time of withdrawal.
Distributions – Though all withdrawals will be subject to ordinary income tax, you may withdraw money at any time. However, if you withdraw money before you reach age 59½, you may also incur an IRS 10% early distribution penalty unless an exception applies.1 Some exceptions include:
First home purchase. ($10,000 lifetime limit)
Higher education expenses.
Series of payments based on life expectancy (Substantially Equal Periodic Payments).
Eligible unreimbursed medical costs.
Total and permanent disability.
Payment of account assets upon your death.
Medical insurance premiums while unemployed.
With Traditional IRAs, you must begin taking withdrawals in the year in which you turn age 70½.
Roth IRA Advantages2
Contributions – Anyone who meets the guidelines for modified adjusted gross income may contribute to a Roth at any age.3 There is no tax deduction for your contributions.
Tax Benefits – Any earnings are tax-deferred and distributions may be tax-free, assuming they meet the criteria below.
Distributions – Distributions of your contributions are always tax-free and can occur at any time. Distributions of earnings would not be tax-free until your Roth IRA is at least five years old and you meet one of the following qualifying reasons:1