Saving for retirement is one of the most important investments you can make.
Individual Retirement Accounts (IRAs) were designed specifically to help working people set aside funds for retirement. They offer significant tax benefits and in some cases, a deduction for contributing to your IRA.
Build Your Retirement Savings More Rapidly With a GEBA IRA
IRAs offer unique features that can significantly benefit retirement savers.
For tax year 2016, individuals with earned income can contribute up to $5,500 per year ($6,500 if over age 50) into an IRA. Withdrawals can begin as early as age 59½.
Which type is best for you depends on your situation:
A Traditional IRA allows tax-deductible contributions for qualifying taxpayers if your modified adjusted gross income is within the limits shown in Table 1. Earnings are tax-deferred and withdrawals after age 59½ are taxed as ordinary income. Required minimum distributions must begin by April 1 after the following year in which you turn age 70½. Anyone with earned income can establish a Traditional IRA prior to the tax year in which he or she reaches age 70½. You may have a Traditional IRA even if you participate in a qualified pension, profit-sharing, or other retirement plan (TSP).
In a Roth IRA, contributions are not deductible, but withdrawals after age 59½ are free of federalincometax, if the funds have been invested for five years or more. Eligibility for a Roth IRA is determined by the income limits shown in Table 2. There are no required distributions for a Roth IRA. You may have a Roth IRA even if you participate in a qualified pension, profit-sharing, or other retirement plan (TSP).
When Would a Roth IRA be the Right Choice?
- If you are not eligible make a tax-deductible IRA contribution
- If you expect to be in the same or higher tax bracket at retirement
- If you are looking for a way to pass on assets to heirs tax-free
- If your income allows you to make a contribution
The table below compares features of the two types of Individual Retirement Account Plans:
|| Roth IRA
| Contribution Allowed
for Tax Year 2016
| $5,500 ($6,500 if age 50+)
|| $5,500 ($6,500 if age 50+) if
Annual Gross Income is less
than shown in Table 2 above
| Tax Benefit
- Tax-deferred earnings growth
- Contribution may be deductible,
depending on income and
Pension Plan (see Table 1 above)
- Taxes due at withdrawal, which
may be at lower tax rate
- Withdrawals can begin at age
- Taxed on earnings only if non-
- Taxes on earnings and
contributions if deductible IRA
- Required Minimum Distributions
must begin at age 701/2
- Withdrawals can begin at
age 59 1/2 if held 5 years
- Tax-free distributions
- No Required Minimum
- Withdrawal allowed up to
$10,000 for first-time
home buying experience
GEBA’s experienced Insurance and Financial Consultants can provide recommendations regarding the type of IRA plan that is the best fit for your situation.
GEBA’s Licensed Consultants Will Help You Select the Right IRA Plan and Investment Options
In addition to offering both Roth and Traditional IRA plans, GEBA offers several investment options for your IRA, including:
GEBA’s licensed Insurance and Financial Consultants will be happy to meet with you to discuss your goals, risk tolerance, and financial circumstances, and provide advice on appropriate plans and investment options to consider. You can count on them for unbiased advice because GEBA is owned by its members – you! They also understand the FERS and CSRS benefits programs and will integrate your federal benefits into their recommendations.
For full details on income limits, eligibility and plan features for these tax-advantaged accounts, please request the GEBA/GEMBA Summary Plan Description and/or the prospectus for the specific investment option being considered. Group Annuities and Individual Retirement Accounts offered through Government Employees’ Mutual Benefit Association, Inc. (GEMBA).