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It is our sincere desire to have each and every one of our members become masters of their financial destiny: To do what you want when you want to and to have the funds available to do it with! To have this desire become your reality, you have to educate yourself and understand how the choices you make today will affect your ability to do what you wish tomorrow.

Savings & Investments
Individual Retirement Accounts

Traditional IRA
Save for tomorrow’s retirement starting today – you may even realize tax savings too! Less than 50% of America’s households will have enough retirement savings to live comfortably after they retire. You cannot rely on Social Security only to support you.

Start helping yourself today by starting an IRA with AM Federal Credit Union. Open with a minimum of $300 to start earning a good rate of return right away. Have some of your paycheck deposited automatically every time you get paid and see your money tree grow! Call an employee of the credit union and let them explain the magic of investing in an IRA or e-mail us to set up an account today!

Your contributions to the traditional IRA may or may not be tax deductible depending on your employment circumstances. If you or your spouse are not covered by an employer retirement plan, you may take a tax deduction for your contribution no matter how much money you make. If you or your spouse is an active participant in a retirement plan, the amount of contribution you may use for a tax deduction will vary. As always, AM Federal Credit Union suggests you consult with a qualified tax advisor for more information.

Roth IRA
The Roth IRA is a tax-advantaged investment vehicle which was born from the Taxpayer Relief Act of 1997. It’s named after William Roth, Jr., the Delaware senator who chaired the Finance Committee and shepherded the bill through Congress. While it doesn’t provide a deduction on contributions (as in a Traditional IRA), all earnings are tax free when you or a beneficiary withdraw them (provided that certain requirements are met).

Roth IRAs have some other benefits over Traditional IRAs:

1.) You can take out contributions (the money you put into an account) at any time from a Roth IRA without penalty and without tax liability. You probably wouldn’t want to, but it’s good to know you could in an emergency. (However, the earnings can only be withdrawn after five years and only if you die, become disabled, buy your first home (after $10,000), reach the age of 59 1/2, become disabled, pay medical expenses above 7.5% of your Adjusted Gross Income, higher education expenses, or health insurance premiums if you’re unemployed. Otherwise a penalty applies similar to that for a traditional IRA.).

2.) You aren’t required to begin making withdrawals when you turn 70 _ (which is especially helpful if you’re intending to leave money to your heirs).

3.) When you die, your heirs would receive your ROTH IRA proceeds entirely free from federal income taxes, whereas in a Traditional IRA, your heirs would be liable for taxes on the entire amount.

So which is better, a Roth IRA or a Traditional IRA? The answer depends on your specific circumstances and a lot of assumptions about the future. Many experts say that the farther away you from retirement, the more a ROTH IRA makes sense for you. If you expect to be in a lower tax bracket when you retire, a Traditional IRA may make more sense for you.

Coverdell Education Savings Account (formerly Education IRA)
With the rising cost of college education, an Education Savings Account is a great way to save for a child's future education costs. You don't have to be the parent to contribute - grandparents, aunts, uncles, friends, etc are eligible as well.

Benefits of an Education Savings Account:
1.) Contribute $2,000 per year for each child under 18

2.) Tax-free and penalty-free earnings as long as the assets are used to pay education expenses and are withdrawn before the child turns 30. Assets may be used to cover the following: Qualified primary, secondary and higher education expenses.

3.) You are eligible to contribute to an Education Savings Account if your Modified Adjusted Gross Income (MAGI) is $190,000 or less for married taxpayers or $110,000 or less for single taxpayers. (Partial contributions allowed between $95,000 - $100,000 if single and between $190,000 - $220,000 for married filing jointly)

4.) Systemic Investment Plan - Simplify your retirement planning by automatically contributing to an IRA through a System Investment Plan - Invest at least $50 a month in the IRA of your choice.