1. Individual Retirement Accounts
Back to Basics
Individual Retirement Accounts
IRA’s
January 2009

2. Agenda Basic IRA Information Traditional IRA Roth IRA Coverdell ESA
Compensation
Contribution Limits
Catch up Rule
Spousal Contributions
Rollovers & Direct Transfers
Traditional IRA
Roth IRA
Coverdell ESA
Forms (IRA Direct)
Resources & Questions
This training session is designed to teach you the basics of IRA’s.
Compensation
Contribution limits
The catch-up rule
Spousal contributions
Rollovers and Direct transfers
Differences between a Traditional and Roth IRA’s
Coverdell ESA’s
Forms and utilizing IRA Direct
Resources and Questions

3. Write Down One Question that you would like to have answered during today’s session
Have each staff member take a minute to write down one question they would like to have answered during the session. Encourage the staff to ask questions throughout the presentation and stay engaged to the topic of discussion.

4. Compensation
Must have
earned
compensation
Wages, salaries, fees, tips, bonuses, commissions, taxable alimony, and separate maintenance payments.
Not included are:
Interest, dividends, rental income, retirement income (Social Security), disability, child support payments, and unemployment compensation.
Compensation can only be considered “earned income” from:
Wages
Salaries
Fees
Tips
Bonuses
Commissions
Taxable alimony
Separate maintenance payments
Compensation does NOT include:
Interest
Dividends
Rental income
Retirement income (SS)
Disability
Child support payments and unemployment compensation

5. Contribution Limits
The contribution limits for 2008 and 2009, including catch up limits.

6. Catch Up Rule For individuals who are 50 and older by the end of the
year for which the contribution applies can make additional contributions.
Catch up limits
2008 = $1,000
2009 = $1,000
The Catch up rule is for individuals who are 50 and older by the end of the year for which the contribution applies. These individuals qualify to make additional contributions if they wish to do so.

7. Spousal Contributions
Contributions can be made if a spouse makes little to no income.
Requirements:
Each owner must have separate IRA’s.
Able to contribute to both up to the maximum annual contribution limits.
File joint income tax return.
Spousal Contributions can be made if a spouse makes little to no income.
Requirements:
Each owner must have separate IRA’s
File joint income tax returns
If you have any other questions regarding Spousal Contributions, please seek help from a CUNA representative, Cora , Michelle G. or Karrie

8. Rollovers & Direct Transfers
Withdrawn assets from an IRA and then re-deposits them within 60 days into the same or another IRA.
60 Day Rule
Once a Year
Direct Transfers:
A direct transfer is a transaction in which the owner moves assets directly from one IRA to another.
No 60 Day Rule
Unlimited

9. IRA to IRA = Direct Transfer Check Must be Made Payable as shown below
QRP (Qualified Retirement Plan) to IRA = Direct Rollover Check Must be Made Payable as shown below
IRA to IRA = Direct Transfer Check Must be Made Payable as shown below
January 1st, 2009
Pay to the Order of
$8,592.37 C
Wells Fargo (name of the institution)
FBO: John Smith (member’s name)/IRA Account
Eight thousand five hundred ninety two dollars and 37 cents
TSCU Representative
Please pay close attention as to how checks are made payable, this is crucial when accepting items for deposit or making items payable if the IRA funds are being withdrawn. Checks that are intended to be deposited to an IRA account must be coded and deposited appropriately.

10. IRA to Member = Rollover Checks that are made payable directly to the member are considered a Rollover and the 60-day rule would apply.
January 1st, 2009
$8,592.37 C
John Smith (member’s name)
Eight thousand five hundred ninety two dollars and 37 cents
TSCU Representative
Pay to the Order of
Pay to the Order of
Checks that are made payable to the member, even if there is an IRA type reference notated on the check and the member mails or hand carries the item into the credit union, it must be coded appropriately. The 60-day rule would apply to this item. The member has 60 days to deposit the funds back to a retirement account from the original date of the withdrawal in order to avoid taxes and penalties.

11. Quick Reference Guide to Understanding how to code IRA funds
If check is payable to:
Treat as a:
Owner Only
Rollover
Credit Union Only
Direct Transfer
Credit Union AND Owner
Credit Union OR Owner

12. Traditional IRA
Tax deductible contributions (depending on income level)
Withdraws begin at 59 ½ and are mandatory by age 70 ½.
Taxes are paid on earnings when withdrawn from the IRA.
Available to everyone, no income restrictions (must have earned income)
All funds withdrawn before 59 ½ are subject to a 10% penalty.
Traditional IRA:
Tax deductible contributions (depending on income level)
Withdraws begin at 59 ½ and are mandatory by age 70 ½.
Taxes are paid on earnings when withdrawn from the IRA.
Available to everyone, no income restrictions (must have earned income).
All funds withdrawn before 59 ½ are subject to a 10% penalty.

13. ROTH IRA
The Roth IRA was born on January 1st, 1998 as a result of the Taxpayer Relief Act of 1997.
Contributions are not tax deductible.
No mandatory distribution age.
All earnings and principal are 100% tax free if rules and regulations are followed.
Available only to single-filers making up to $95k or married couples making a combined maximum of $150k annually.
Principal contributions can be withdrawn at any time without penalty (subject to the 5 year rule).
Roth IRA:
The Roth IRA was born on January 1st, 1998 as a result of the Taxpayer Relief Act of 1997.
Contributions are not tax deductible.
No mandatory distribution age
All earnings and principal are 100% tax free if rules and regulations are followed.
Available only to single-filers making up to $95k or married couple making a combined maximum of $150k annually.
Principal contributions can be withdrawn at any time without penalty (subject to the 5 year rule).

14. From January 1st thru Tax Day (April 15th) of each year, member’s are required to sign a contribution form to contribute to the prior year.
From January 1st thru tax day (April 15th) of each year, member’s are required to sign a contribution form to contribute to the prior year. If the member does not sign a form, the contribution will go towards the current year. Member’s will need to be contacted to ensure their contributions are being applied to the year that they intended. This can have a significant impact to the member when they file their taxes, especially if it is a Traditional IRA contributions that may lower their taxable income.

15. 8 Ways to Avoid Penalties
Permanent disability of an IRA owner.
Death of an IRA owner
Withdrawals used to pay non-reimbursed medical expenses.
Withdrawals used to pay for 1st time home purchase.
Higher education costs.
Funds used to pay back taxes to the IRS after a levy has been placed against the IRA.
Withdrawals used to pay medical insurance premiums.
Made on or after the day the IRA owner turns 59 ½.

16. Coverdell ESA Created as a part of the Taxpayer Relief Act of 1997.
A special type of savings with the sole purpose of helping to pay for higher education expenses of the child named on the account (designated beneficiary).
Parents & Guardians are allowed to make non-deductible contributions for a child (under the age of 18) or special needs beneficiary.
Contributions are not tax deductible.
Amounts deposited grow tax-free until distributed.

17. Coverdell ESA - Contributions
The annual contribution limit is $2,000 for each beneficiary.
Distributions may be tax-free if they are not more then the beneficiary’s adjusted qualified education expenses for the year.
Amounts must be distributed when the designated beneficiary reaches age 30.
Transfers to members of the beneficiary’s family are permitted.

18. Traditional IRA Contribution Form
For MSR’s assisting members with IRA transactions, please utilize IRA Direct, so that forms are pre-filled and completed in the system. Tellers please utilize the blank forms for contributions and withdrawals, which can be located in Silver Cloud or linked to this presentation.

19. Roth IRA Contribution Form

20. Resources CUNA Mutual By Web at www.cunamutual.com
By phone at # (For IRA and IRA Direct questions)
or #
IRA Projection Table
IRA post 70 ½ Periodic Payment Estimator
Silver Cloud
Traditional IRA Contribution Form
Roth IRA Contribution Form

21. Questions