"Mike McLucas was very knowledgeable about my husband’s account and just the way he spoke to me made me feel like I had a friend helping me through this sad and confusing time."
- Sandi M. - (Spouse of deceased member Thomas M.)
What is a Traditional IRA?
A Traditional IRA is a special savings plan authorized by the federal government to help you accumulate funds for retirement. The advantage of a Traditional IRA is that contributions are generally tax deductible. Whether your contribution is deductible depends on certain factors, such as participation in an employer sponsored plan; filing status; and your modified adjusted gross income.
Who can contribute to a Traditional IRA?
If you receive compensation for personal services (wages, salary, commissions, tips, etc.), you may contribute to a Traditional IRA.
How much may I contribute?
The maximum contribution amount is the lesser of your compensation or $5,500 ($6,500 if you are age 50 or older). Contribution may not be made for or after the year in which you reach age 70½. You can make contributions to your Traditional IRA anytime up to and including the due date of your federal tax return for the previous year, namely, April 15.
Is my contribution deductible?
Whether your contribution is deductible depends on certain factors:
|If your filing status (2014) is …||And your modified adjusted gross income is …||The amount deductible is …|
|Single or head of household||$60,000 or less||A full deduction|
|More than $60,000 but less than $70,000||A partial deduction|
|$70,000 or more||No deduction|
|Married filing jointly or qualifying widow(er)||$96,000 or less||A full deduction|
|More than $96,000 but less than $116,000||A partial deduction|
|$116,000 or more||No deduction|
If you are unsure whether you are an active participant in such a plan, your W-2 form will indicate your participation status. If you need to know sooner, ask your employer. All of the interest earnings accumulated in your Traditional IRA remains tax-deferred until withdrawn.
When can funds be withdrawn?
Withdrawals are permitted any time after age 59½ without an IRS tax penalty, but must begin by April 1 following the year in which you reach age 70½. When you begin making withdrawals, you will be taxed only on the amount you withdraw each year on which taxes have not previously been paid. The remaining funds continue to accumulate tax-deferred. You will benefit at retirement, in all probability, by the fact that you will be in a lower tax bracket than at the time you make your contribution. Additional IRS penalty-free withdrawals of contributions and earnings prior to age 59½ include:
There is a UTUIA surrender charge of 5% for the first through third policy years, decreasing 1% per year through the seventh policy year. After seven years, 100% of the annuity value can be withdrawn without a UTUIA surrender charge. In addition, after the first policy year, 10% of the annuity value may be withdrawn once per policy year without a UTUIA surrender charge.
Am I required to take a distribution?
Yes. You must begin to withdrawal funds starting at age 70½. The first required distribution must begin by April 1 following the year in which you reach age 70½.
Note: All references in this brochure to tax deduction and taxation of benefits refer only to the federal income tax law. Check state law for the impact of IRA contributions on state income taxes. Contact your Field Supervisor or Karen Lasby for more information.