Individual Retirement Accounts (IRAs)

Uniquely Invested in Your Future.

An IRA is a tax–advantaged1 account that is generally considered an essential element of a sound financial plan. Whether you’re opening a new account or rolling over your 401(k), you have three IRA options from which to choose: Traditional, Roth, or Coverdell ESA.

Once you’ve chosen an IRA, you can choose to place your money into a Patelco Money Market Account, an IRA Share Certificate, or both. If you’d like your IRA to include variable-return options, like stocks and mutual funds, let a CFS* Financial Advisor at Patelco help you figure out a good investment mix. Together we can help ensure you have the money you need when you retire.




Prepare for your retirement years and build up your retirement savings.

If you would like to open a Traditional IRA with Patelco, you have two savings options: a Money Market Account or an IRA Share Certificate. If you would like to be able to take advantage of variable return options, like stocks and mutual funds, contact a CFS* Financial Advisor at Patelco. Your advisor can help you to open the proper accounts and make the best investments for the future.

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Traditional IRA Frequently Asked Questions

How can a traditional IRA help me save for retirement?

  • Independence - can be opened and funded without any employer participation
  • Immediate tax benefits - tax-deferred contributions/earnings until retirement
  • Possible deductions - based on retirement plan participation and income
  • Accessibility - funds are always available, generally not true of employer plans
  • Flexibility - no minimum contribution in any year

Who can contribute, and how much?

You can contribute:

  • if you have not reached the year in which you turn 70 1/2
  • if you have earned income from employment equal to or greater than your IRA contribution
Contribution Limits
Year Amount
2005-2007 $4,000
2013 and beyond $5,500

Beginning in 2009, the maximum contribution amount will be indexed for cost-of-living adjustments (COLA) in $500 increments.


A qualified military reservist called to active duty for at least 180 days between 9/11/01 and before 12/31/07 may payback any 401(k) or IRA distributions that were taken as a distribution to his/her IRA. A qualified reservist distribution may be repaid to that individual's IRA within a two-year period beginning on the day after the end of the active duty period (or 8/17/2008, whichever is later). The applicable IRA contribution limits do not apply and there is no deduction for these contributions.

What is an IRA catch-up contribution?

Individuals who attain the age of 50 before the end of the taxable year may be eligible to contribute an additional amount to a Traditional and/or Roth IRA as a catch-up contribution as follows:


IRA Catch-Up Contributions
Year Amount
2002-2005 $500
2006 and beyond $1,000

What is a carryback contribution?

The deadline to contribute to a Traditional IRA for a particular tax year is generally April 15 of the following year. When this date occurs on a weekend or a legal holiday, the following business day becomes the deadline. Tax return extensions will not affect this deadline.


When an individual makes a contribution to his or her IRA between January 1 and April 15 for the previous tax year, this is frequently referred to as a "carryback contribution."

What is a SEP contribution?

A SEP (simplified employee pension) is a type of retirement plan that allows an employer to contribute to employees' Traditional IRAs. SEP contributions are subject to different contribution limits than Traditional IRA contributions. Once the employer makes a SEP plan contribution to an IRA, the contribution becomes an IRA asset and is subject to all the regular IRA rules and regulations. There are several other benefits of SEP plans:


  • Total SEP contributions cannot exceed $52,000 for 2014
  • Contributions made by the employer are always 100 percent vested
  • SEP plans may make contributions on behalf of eligible participants who are age 70 1/2 or older.
  • Because SEP plan contributions become the employee's IRA assets, these SEP IRA assets may generally be transferred in the same manner as IRA assets resulting from regular IRA contributions

Are all Traditional IRA contributions tax deductible?

One of the immediate benefits of contributing to a Traditional IRA is a tax deduction many receive on their income taxes. IRA contributors receive a 100% deduction on their annual contribution if:


  • they do not receive benefits under an employer’s retirement plan, or (if they do)
  • their modified adjusted gross income is no more than $89,000 if married and filing jointly or $55,000 for single filers (these amounts are for 2010).

For those who are participants in an employer plan, IRA deductibility is gradually phased out above these income levels.

Should I contribute if I can’t take a deduction?

Yes! There are significant benefits to making an IRA contribution even if it is not currently tax deductible.

A nondeductible contribution:


  • grows tax-deferred, with earnings sheltered from taxation until withdrawn
  • whether deductible or nondeductible, is a step closer to a secure retirement
  • you should file a form 8606 to track non-deductible contributions

Quite simply, no taxable, non-IRA investment of the same type will generate nearly the same earnings over a lifetime of saving as nondeductible IRA contributions will. (The Roth IRA may also be similarly beneficial.)

Will I get a tax credit for my contribution?

Certain individuals may receive a non-refundable tax credit (not to exceed $1,000) for contributions made to Traditional and Roth IRAs. If you are eligible, the tax credit is equal to the applicable percentage on up to $2,000 of a "qualified retirement savings contribution" which includes annual Traditional and Roth IRA contributions. To be eligible for the tax credit, you must:


  • have attained age 18 before the end of the taxable year
  • not be a dependent or a full-time student
  • have adjusted gross income (AGI) within limits

The following chart highlights the income levels for eligibility for the tax credit and the applicable percentage used to calculate the tax credit:

Contributions
Joint Return Head of Houshold All other Cases Aplicapable Percenage
Over Not over Over Not over Over Not over
$0 $32,000 $0 $24,000 $0 $16,000 50
$32,000 $34,500 $24,000 $25,875 $16,000 $17,250 20
$34,500 $53,000 $25,875 $39,750 $17,250 $26,500 10
$53,000   $39,750   $26,500   0

Please consult with a tax professional.

Can Traditional IRA assets be moved?

Under certain circumstances, IRA holders may wish to move their IRA from one financial organization to another. IRA assets may be:


  • withdrawn (distributed) and redeposited elsewhere (known as a rollover) within 60 days
  • moved to another organization (known as a trustee-to-trustee transfer)

Can other assets be combined in a Traditional IRA?

Contributions made by an employer through a retirement plan known as a simplified employee pension (SEP) are actually contributed to a Traditional IRA, and they can be combined with regular IRA contributions. Effective in 2002, after-tax assets from a "qualified retirement plan" and assets held in governmental 457 plans are eligible for rollover to a Traditional IRA. To protect the option of someday moving them to another employer plan, such assets are often best kept in a separate IRA that contains no other contributions.

When can I use my Traditional IRA assets?

Unlike most employer retirement plans in which access to funds is limited to such events as change of employment, plan termination, reaching retirement age, death, or disability, access to your IRA funds is guaranteed, always. However, until age 59 1/2 there is a 10 percent early distribution penalty and you may be taxed on the amount withdrawn unless you qualify for an exemption due to one of the following reasons:


  • disability
  • qualifying medical expenses
  • qualifying education expenses
  • unemployment (under certain conditions)
  • qualifying first home purchase
  • death
  • receipt of your IRA assets in equal payments over your life expectancy
  • distribution on account of an IRS Levy
  • qualified HSA funding distribution
  • A qualified military reservist called to active duty for at least 180 days and applies to individuals ordered or called to active duty after 9/11/01 and before 12/31/07.

Am I ever required to take funds from my Traditional IRA?

Beginning in the year that a Traditional IRA holder turns age 70 1/2, distributions from an IRA must begin. These distributions are generally based on the person's IRA balance divided by his or her life expectancy, either singly or jointly with their IRA beneficiary. Since the purpose of IRAs is to provide for retirement - not to be a tax shelter - IRA holders failing to take their required distributions are subject to a substantial penalty.


For more information...

For more information on the benefits of an IRA, ask a CFS* Financial Advisor at Patelco for details today. The Advisors may also suggest that you seek advice from a tax-specific advisor.

Make an appointment


Your contributions and earnings grow tax-free.

If you would like to open a Roth IRA with Patelco, you have two savings options: a Money Market Account or an IRA Share Certificate. If you would like to be able to take advantage of variable return options, like stocks and mutual funds, contact a CFS* Financial Advisor at Patelco. Your advisor can help you to open the proper accounts and make the best investments for the future.

Apply Now

Special Roth Conversion:
New laws make it easier than ever for anyone to convert their tax-deferred accounts (Traditional, Simple, and SEP IRAs) to a tax-free Roth IRA. Want to know if the Roth IRA Conversion is right for you? Learn More >

Roth IRA Frequently Asked Questions

What makes the Roth IRA so unique?

  • First, the money you contribute to a Roth IRA has already been taxed. So the principal amount is never subject to taxes or penalties in the future, as long as you stay within the contribution guidelines.
  • Second, this retirement plan allows the money you contribute to grow tax-deferred. If you do not withdraw any of the earnings until you have had the Roth IRA for at least five years and have a qualifying event, those tax-deferred earnings become tax-free. Consult a tax advisor for details.

Who is eligible?

Unlike the Traditional IRA, there is no 70 1/2 age limit on making contributions. You simply need to have earned income equal to the amount you contribute up to a maximum amount set each year.

How much can I contribute?

Single tax filers may contribute up to the maximum allowable per year if their modified adjusted gross income (MAGI) is less than $105,000. If a single tax filer's MAGI is between $105,000 and $120,000, they may contribute a reduced amount adjusted for their income. Married couples filing jointly may each contribute up to the maximum allowable if their MAGI is less than $159,000. Contributions for joint filers are reduced for MAGI's between $167,000 and $176,000.


Roth IRA contributions may not be made by single tax filer's with MAGI of more than $120,000, or couples with MAGI of more than $176,000. Annual contribution limits increase as follows:

Contributions
Year Amount
2005-2007 $4,000
2013 and beyond $5,500

What is an IRA catch-up contribution?

Individuals who attain the age of 50 before the end of the taxable year may be eligible to contribute an additional amount to a Traditional and/or Roth IRA as a catch-up contribution as follows:

IRA Catch-Up Contributions
Year Amount
2002-2005 $500
2006 and beyond $1,000

What is a carryback contribution?

The deadline to contribute to a Roth IRA for a particular tax year is generally April 15 of the following year. When this date occurs on a weekend or a legal holiday, the following business day becomes the deadline. Tax return extensions will not affect this deadline.


When an individual makes a contribution to his or her Roth between January 1 and April 15 for the previous tax year, this is frequently referred to as a "carryback contribution."

When can I use my Roth IRA assets?

If you satisfy two conditions, you may make tax-free and penalty-free withdrawals from your Roth IRA. First, your Roth IRA must have been open for a minimum of five years. Second, the withdrawal must be made because of the occurrence of one of the following events:


  • age 59 1/2
  • death
  • disability
  • first home purchase

Distributions that meet the above requirements are referred to as "qualified distributions." While you may take distributions from your Roth IRA at any time, distributions which are not qualified distributions may be subject to taxes (and in some cases early distribution penalties) to the extent they exceed your aggregate contributions to Roth IRAs.

Can I move money from my Traditional IRA to my Roth IRA?

Yes. An individual may convert assets from a Traditional IRA to a Roth IRA. The individual must pay tax on any previously untaxed dollars converted from the Traditional IRA to the Roth IRA, but the 10 percent early distribution penalty does not apply to the conversion amount. Individuals should seek advice from a competent tax advisor to determine whether converting pretax retirement assets is beneficial.

Am I ever required to take funds from my Roth IRA?

Unlike the Traditional IRA, there are no required minimum distributions at age 70 1/2. Your earnings can continue to grow until you need them. There are special requirements when these plans pass to your beneficiaries.


For more information...

For more information on the benefits of a Roth IRA, ask a CFS* Financial Advisor at Patelco for details today. The Advisors may also suggest that you seek advice from a tax-specific advisor.

Make an appointment


A tax-exempt way to save for your child's education.

If you would like to open a Coverdell Education Savings Account (ESA) with Patelco, you have two savings options: a Money Market Account or an IRA Share Certificate. If you would like to be able to take advantage of variable return options, like stocks and mutual funds, contact a CFS Financial Advisor at Patelco. Your advisor can help you to open the proper accounts and make the best investments in your future.

Apply Now

Coverdell ESA Frequently Asked Questions

What is a Coverdell Education Savings Account?

For the past several years, a Coverdell Education Savings Account (formerly the Education IRA) has provided an investment tool for the purpose of paying a child's education-related expenses.

What is the contribution limit?

The annual per-designated-beneficiary contribution limit is $2,000.

What is a qualified education expense?

A qualified elementary, secondary or higher education expense is one that is required for the enrollment or attendance by your child at an eligible educational institution.

These expenses include:

  • tuition
  • fees
  • books
  • supplies
  • equipment
  • academic tutoring
  • special needs services
  • room and board expenses
  • uniforms
  • transportation
  • educational computer technology or equipment
  • Internet access

Who can contribute to a Coverdell Education Savings Account?

The answer to that question is “almost anyone.”

There are two key limitations:

  • Each child can receive a total of the maximum allowed per year in contributions from all sources. It does not make a difference if this is done in a single account or multiple accounts designed to benefit the same child.
  • In 2010, individuals may be limited in the amount of their contributions if their modified adjusted gross income (MAGI) exceeds $95,000 for single filers or $190,000 for married tax filers. Above these income levels, the ability to contribute is phased out. If income exceeds $110,000 for single tax filers, or $220,000 for married tax filers, no contribution is allowed. Effective January 1, 2002, married individuals (filing a joint return) may make the maximum $2,000 contribution per designated beneficiary when their joint MAGI is $190,000 or less. The $2,000 limit is reduced and gradually phased out for joint filers when their combined MAGI is between $190,000 and $220,000. When their combined MAGI is $220,000 or more, married individuals filing joint returns may not fund a Coverdell Education Savings Account.

There is no requirement that the contributor must be a member of the family. Furthermore, EGTRRA clarifies that corporations and other entities (including tax-exempt organizations) are permitted to make contributions to Coverdell Education Savings Accounts, regardless of the income of the corporation or entity during the year of the contribution.

With this broad range of potential contributors, it is possible that more than one person may want to contribute for the same child. A coordinated effort should be encouraged to avoid excess contributions.

Can I roll over funds from another Education Savings Account?

You can roll over funds from one Coverdell Education Savings Account to a new or existing only. The funds, however, must benefit the same child or an eligible member of the child's family. A rollover contribution does not affect the annual contribution limit. Rollovers must be completed within 60 days of the initial distribution and are limited to one per 12-month period.

Am I allowed to change the beneficiary?

The responsible individual may change the designated beneficiary (child). An example of why someone may wish to change the beneficiary is the current beneficiary has completed their education and there are funds remaining. The only stipulation is that the new beneficiary must be an eligible member of the family.

Who is a member of the family?

There are several possible family members that may be renamed as Coverdell Education Savings Account beneficiaries:

  • children, grandchildren, and stepchildren
  • brothers, sisters, stepbrothers, and stepsisters
  • nephews and nieces
  • parents, stepparents, and grandparents
  • uncles and aunts
  • spouses of all the family members listed above

It is important to remember that even with this extended range of family members, contributions can be made only for those under the age of 18, or individuals with special needs beyond age 18.

How does the age waiver for a special needs beneficiary work?

As a result of EGTRRA, effective January 1, 2002, designated beneficiaries with special needs:

  • will be eligible to receive annual contributions after attaining age 18
  • will not have his or her Education Savings Account balance distributed within 30 days after attaining age 30
  • will be eligible to receive rollover contributions from qualified family members after attaining age 30
  • will be eligible to be named as a designated beneficiary to a qualified family member's Education Savings Account after attaining age 30

What is a carryback contribution?

The deadline to contribute to a Coverdell education savings account (ESA) for a particular tax year is generally April 15 of the following year. When this date occurs on a weekend or a legal holiday, the following business day becomes the deadline. Tax return extensions will not affect this deadline.

When an individual makes a contribution to an ESA between January 1 and April 15 for the previous tax year, this is frequently referred to as a "carryback contribution."


For more information...

For more information on the benefits of an Coverdell ESA, ask a CFS* Financial Advisor at Patelco for details today. The Advisors may also suggest that you seek advice from a tax-specific advisor.

Make an appointment


For specific tax advice, please consult a qualified tax professional.