Savings Accounts

IRAs

 

Important changes to State of Michigan Income Withholding Legislation

Beginning January 1, 2012, the State of Michigan requires state income tax withholding on IRA distributions to IRA owners born in 1946 or later unless the IRA owner opts out of withholding.  As an IRA owner, you may be affected by these changes.

Per new legislations and as a custodian of your IRA, the University of Michigan Credit Union is required to withhold Michigan state income tax on certain IRA distributions.  Distributions from IRAs are subject to Michigan state income tax withholding at a rate of 4.35 percent of the gross distribution amount.  You may qualify for personal exemptions which would reduce the amount to be withheld.  Additionally, you may elect not to have state income tax withheld from your distributions or make estimated tax payments.  Please note that you may be subjected to penalties and/or interest if you elect to opt out of state withholding at the time of withdrawal.  Please consult your tax advisor to determine your options.

To opt out of state withholding or to be eligible for a withholding rate other than 4.35 percent, you must furnish the credit union with form MI W-4P. Click here for more information.

Saving For Retirement Has Never Been Easier!

An Individual Retirement Account (IRA) is a special savings plan which helps you save for your retirement. Over time, the money in your IRA will grow tax-deferred. And in the case of a Roth IRA, your withdrawals (including earnings) will be tax-free if the account has been open for five years and one of the following reasons applies:

• age 59 1/2
• disability
• first home purchase ($10,000 lifetime limit)
• death

IRS regulations require that you have earned income or that you file your tax return jointly with someone who has earned income in order to make contributions (deposits) to an IRA. There is no minimum age requirement.

Interest is paid and compounded quarterly on all IRA accounts. Please see our rate sheet for current rates, or call us at 734-662-8200 or 800-968-8628 for an IRA application packet. Or, inquire at any of our offices.

We offer the following investments:
Traditional and Roth IRAs (either $500 or $10,000 minimum to open)

•   6-Month IRA 
• 12-Month IRA 
• 18-Month IRA 
• 24-Month IRA
• 30-Month IRA
• 36-Month IRA  
• 42-Month IRA 
• 48-Month IRA
• 54-Month IRA 
• 60-Month IRA

Loss of 90 days interest if funds are withdrawn before maturity.
 

IRA Plus Account

• When you open an IRA Plus, choose either a Roth or a Traditional IRA.
• No minimum balance is required to open the account.
• No minimum balance is required to maintain the account.
• Features the structure of a savings account with IRA tax advantages.
• The interest rate is the same as the Savings Plus account (see Rates). Interest is paid quarterly.
• There are no 90 day or 180 day UMCU interest penalties for early withdrawals. But, Internal Revenue Service (IRS) penalties may still apply for early withdrawal.
• No need to renew this account. It stays open until you close it.
• Contributions are limited to $5,000 for 2011 and 2012 for taxpayers under age 50. For those 50 and older by the end of a year, your limit is $6,000 for 2011 and 2012.
• Contributions to the IRA are allowed at any time, however prior-year contributions must be made by the tax return deadline for that year.
• IRAs are also available as term savings accounts with opening minimum balances of either $500, $10,000 and higher rates for $50,000 and $100,000.

Open your IRA Plus account at any office and invest in your future, today.

Choosing the IRA that's Right for You

Curious about the major differences between a Traditional and a Roth IRA? The chart below will explain. For more information about  IRAs, see your credit union IRA specialist. Be sure to seek the advice of a competent tax professional if you need more specific tax information.

	Traditional IRA	Roth IRA
Income limits for contributions	No income limits.	2011 MAGI (modified adjusted gross income as reported on your tax return) must be under $107,000 for single filers, under $169,000 for joint filers, and under N/A for married persons filing separately.
Contribution limits	Total combined contributions to a Roth and/or Traditional IRA are limited to $5,000 for 2011-2012 for taxpayers under age 50. For those 50 and older by the end of a year, your limit is $6,000 for 2011-2012.	Total combined contributions to a Roth and/or Traditional IRA are limited to $5,000 for 2011-2012 for taxpayers under age 50. For those 50 and older by the end of a year, your limit is $6,000 for 2011-2012.
Age limit on contributions	The year you reach age 70 1/2.	No age limit.
Age for required distributions	The year you reach age 70 1/2.	No mandatory withdrawals.
Withdrawal penalties	There is a 10% penalty on withdrawals prior to age 59 1/2 except for withdrawals due to: Death Disability Pre-59 1/2 periodic payments Qualifying medical expenses Health insurance premiums while unemployed Withdrawals up to $10,000 toward the purchase of a first home Conversion to a Roth IRA Higher education expenses (for owner, spouse, children or grandchildren) The portion of a withdrawal that is the return of non-deductible contributions is not subject to tax or penalty.	There is a 10% penalty on withdrawals prior to age 59 1/2 except for withdrawals due to: Death  Disability Pre-59 1/2 periodic payments Qualifying medical expenses Health insurance premiums while unemployed Withdrawals up to $10,000 toward the purchase of a first home Higher education expenses (for owner, spouse, children or grandchildren) Withdrawals of regular contributions are not subject to tax or penalty.
Tax Advantages	Contributions may be fully or partially tax deductible if: Neither you nor your spouse participates in an employer retirement plan. You do not participate in an employer retirement plan but your spouse does, and your MAGI (modified adjusted gross income) is below $179,000 for 2011. You participate in an employer retirement plan and your MAGI is at or below $66,000 (for tax year 2011) for single filers or $110,000 for joint filers. Taxes on the earnings are deferred until the funds are withdrawn from the IRA.	Contributions are not tax deductible. Earnings are tax free if you have had an account for five years and one of the following applies: After age 59 1/2 Death Disability First-time home purchase (up to $10,000)

 

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