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An Individual Retirement Account (IRA) is an excellent tool for retirement savings. Unlike most investments, depending on the type of IRA you choose, contributions may be tax deductible and will grow either tax-deferred or tax-free. The annual contribution limit for the tax year 2006 is $3,000 for individuals or $6,000 split between spouses.

Bethlehem 1st FCU offers these types of Individual Retirement Accounts:

  • Traditional IRAs

  • Roth IRAs

  • Education Savings Account* (formerly known as an Education IRA)

  • Federally Insured Up To $250,000

The accounts are FREE – we don’t charge any fees to open or maintain your IRA. More importantly, we offer competitive, generous dividends.

Traditional IRAs
The annual contribution limit increased to $4,000 in 2005 and will jump to $5,000 in 2008. After 2008, the contribution limit will be adjusted annually for inflation in $500 increments. The annual limit applies to any combination of IRA plans other than the ESA.

Contributions are fully tax deductible if you are not an active participant in an employer retirement plan. Otherwise, phaseout rules apply. Investments grow on a tax-deferred basis. Earnings are taxed only upon withdrawal.

BTFCU offers Traditional IRAs as Share (Savings) Accounts and as Certificates (CDs). The difference: An IRA share is a savings account to which you can contribute small amounts at any time (subject to IRS regulations as to the total amount you can contribute and keep sheltered from taxes in any given tax year). Certificates (or CDs) have a higher yield but they must be purchased in increments of $500 or more. Certificates expire 12, 24 or 36 months after purchase and must be rolled over into new certificates. Unless you decide to put the money into another instrument, the certificate will automatically roll over into a similar certificate at the new rate. Share accounts are ongoing and do not require rollover. 

Roth IRA
As long as you have earned income, you can establish and contribute to a Roth IRA even after age 70 1/2. While contributions are not tax deductible, contributions and earnings can be withdrawn tax-free, and unlike traditional IRAs, you are not required to begin taking required minimum distributions after reaching age 70 1/2. By converting your traditional IRA to a Roth IRA, you can enjoy tax-free withdrawals. However, the amount you convert is subject to income tax now.

Education Savings Account
Education IRAs have a new name: Coverdell Education Savings Plan. ESA’s allow you to put away up to $2,000 per beneficiary for higher education expenses, earning interest tax-free. (For taxable years prior to 2002, the annual contribution was only $500 per beneficiary.)

While there is no tax deduction for amounts contributed to an ESA, earnings grow tax-free. Your ESA can be used to pay qualified elementary school and secondary school expenses as well as those for higher education.

Catch-up Contributions

Individuals who have reached age 50 by the end of the year will be able to make additional catch-up contributions of $1,000 per year to their traditional or Roth IRA.


Federally Insured

Bethlehem 1st Federal Credit Union is governed by the National Credit Union Administration (NCUA), a U.S. Government Agency. It is the credit union equivalent of commercial banks’ Federal Deposit Insurance Corporation (FDIC). The NCUA, through its insurance fund (NCUSIF) protects your IRAs up to $250,000 against loss due to the failure of a federally-insured credit union for any reason.

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