Individual Retirement Accounts (IRAs)

What are IRAs?

IRAs are a powerful tool to help build your retirement savings. IRAs offer either tax-deferred or tax-free earnings growth until they aredistributed, and some contributions may be tax-deductible as well. Over time, these special tax features can result in significantly larger savings than what you could achieve with ordinary savings accounts.

Traditional IRAs

Traditional IRAs offer the possibility of tax deferment, with earnings remaining tax-sheltered until withdrawn. Your contributions may be fully or partially tax-deductible, depending on your income level.

Roth IRAs

Roth IRAs provide for IRS penalty-free and tax-free withdrawals on all qualified distributions and certain earnings. Contributions are not tax-deductible, but withdrawals after age 59½ are tax-free if the funds have been in the account for at least five years.

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Coverdell Education Savings Accounts

This account is designed to help parents and others save for a child’s education expenses—kindergarten through higher education. Contributions are non-deductible, earnings are tax-deferred, and distributions are tax-free when withdrawn for qualified education purposes.

Deposit Insurance for IRAs Increased to $250,000

For the first time in more than 25 years, Congress raised the limit on the federal deposit insurance coverage that protects your retirement savings. The new law provides up to $250,000 of protection for the combined total of the Traditional and ROTH IRAs (individual Retirement Accounts) self-directed Keoghs and certain other retirement accounts an individual may have on deposit at federally insured institutions including DFCU. The new limit is a substantial increase from the previous level of $100,000, and provides additional security to members that currently have more than $100,000 in their DFCU IRA account as well as an opportunity for members that currently have $100,000 in a DFCU IRA account, and would like to place additional funds at the credit union’s attractive rates.

Good News for DFCU Savers

The increase in deposit insurance coverage for retirement accounts is good news for members that have saved substantial sums for their retirement and want to deposit more than $100,000 at DFCU - for safety, convenience or other reasons - knowing that up to $250,000 is fully insured as of April 1, 2006.