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Should you open an IRA? The answer might surprise you

by Joshua D. Scroggin
March 21, 2018
This middle-aged couple is enjoying a glass of wine in their kitchen.
What you'll find when opening or moving your IRA to CoastHills are the best rates the Credit Union can offer and terms that help you maximize your retirement earnings.

If your job offers a 401(k) plan for retirement, chances are you already know how beneficial taking part can be, especially if your employer offers matching contributions.

But whether you’re self-employed, working for a small business or your workplace just doesn’t offer a 401(k) as part of its benefits, you’ve got to start looking into alternative retirement savings plans.

Even for some who do participate in a 401(k), an Individual Retirement Account (IRA) could be just what you need, and tax season is the perfect time to find out more.

That’s because for whatever type of IRA account you choose — Roth or Traditional — there are unique tax benefits for you to take advantage of.

Already have an IRA? You might want to move it to CoastHills

Here’s why: At CoastHills Credit Union, our IRA rates match certificate rates. Shop around and you’ll find that credit unions typically have some of the best yields around on certificate accounts. They’re similar to what the banks call CDs.

Now, compare our latest promotional rate to that of the major banks, and you’ll see how much more your membership at CoastHills can make you in retirement.

And once the promotional term on your IRA certificate ends, you can maximize your earnings by finding the most attractive rates and locking in a term that works best for you, while still enjoying all of the tax benefits.

To open a new CoastHills IRA Certificate, speak with a Member Services Officer at your favorite branch.

Still not convinced? Read on to see what’s right for you.

We have your best interest in mind. Click here to learn more.

Roth vs. Traditional

One of the great things about IRAs is that you pay no taxes on any of the growth of your contributed funds as long as the funds remain in your account.

The major differences between a Roth and Traditional IRA are when the funds will get taxed and how you can make withdrawals.

If you’re looking for a break on taxes while you’re earning income, Traditional IRA contributions are tax deductible for the year that you make the deposits. You can contribute up to $5,500 per year. If you’re over 50, that amount increases to $6,500.

So, if you still haven’t filed your taxes this year and are looking for a way to lower your taxable income while setting yourself up with future savings at the same time, a Traditional IRA might be for you.

Just remember that Traditional IRA withdrawals in retirement, which become mandatory at age 70½, are taxed at whatever the income tax rates are at that time.

With Roth IRAs, you do not get a tax break on contributions, but as you long as you do not begin taking withdrawals before age 59½ and until after five years of making the first deposit, those distributions will be tax free.

You also aren’t required to take Roth IRA withdrawals at any point in your lifetime, which makes them more ideal for passing on to heirs.

Still not sure if you can participate?

Just because you have a 401(k) plan through work, it does not mean you can’t open an IRA. In fact, your 401(k) alone may not be enough to fully fund your retirement. If so, having a supplemental retirement account might make sense. But there are income limits that prevent you from receiving all the tax benefits if you do already have a 401(k).

It all depends on your adjusted gross income (AGI).

Your AGI is your taxable income minus personal exemptions and itemized deductions. What are the eligible exemptions and deductions? Well, tax laws change year to year, so you should consult a tax professional to be sure, but they can include things like student loan interest, college tuition, alimony payments — and IRA contributions.

For 2017, if you are single with an AGI of less than $62,000, you can take a full deduction of the amount of your IRA contribution limit, even if you participate in your employer’s 401(k). For married couples where both spouses are covered by 401(k) plans, the AGI limit for full deductions is $101,000. For married couples where only one spouse is covered by a 401(k), the AGI limit for full deduction is $189,000.  

Check out the IRS website for more detail

Whoa! This is starting to sound complicated

If all this tax lingo is making your head spin, have no fear. CoastHills has its own Wealth Management department with a dedicated staff combining decades of experience offering financial planning, investment, education and tax strategies to members (specific tax advice not provided).

If you’ve read this far, chances are CoastHills Wealth Management can help you identify your needs and offer solutions that can help you reach your financial goals. Call us at (805) 733-7899 and speak to one of our Financial Advisors today.

Live life by design, not by default. Click to learn more.


CoastHills Credit Union and CoastHills Wealth Management are not registered broker-dealers and are not affiliated with LPL Financial.

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC.

The investment products sold through LPL Financial are not insured CoastHills Credit Union deposits and are not NCUA insured. These products are not obligations of CoastHills Credit Union and are not endorsed, recommended or guaranteed by CoastHills Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

The LPL Financial representatives associated with this site mat only discuss and/or transact securities business with residents of the following states: AR, AZ, CA, CO, FL, GA, HI, IA, ID, IL, KS, KY, LA, MD, MI, MN, MO, MS, MT, NC, NE, NH, NM, NV, NY, OH, OK, OR, PA, SC, TX, UT, VA, WA, WI.

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