When am I required to start taking mandatory distributions from my IRA?

Once you turn 70 1/2, you are required to start taking your Required Minimum Distribution (RMD) from your Traditional IRA. In February of the year you will turn age 70 1/2, a letter will be sent to you notifying you that the RMD must be taken beginning that year. Mandatory Distribution can be taken from any Traditional IRAs (including Provident Credit Union's IRA Term Share Certificates) without IRS penalties and without Provident's early withdrawal penalty.

What are the penalties for early withdrawal of an IRA certificate?

The penalty is $125 or 180 day's of dividends* (whichever is greater) for accounts opened/renewed after July 2007, otherwise penalty is $75 or 90 day?s of dividends* (whichever is greater).

* Based on the respective certificate rate on the principal amount withdrawn.

What is an IRA Term Share Certificate?

An IRA Term Share Certificate is a savings product that you can invest your money in and withdraw with interest at maturity. All Provident certificates are insured up to $250,000 by the NCUA (National Credit Unions Association). For more information, go to Save & Invest > IRAs, ESAs, & HSAs.

When can I withdraw funds from my Coverdell Education Savings Account (aka Educational IRA) without IRS penalties?

Regular contributions can only be withdrawn tax-free and IRS penalty-free* from your Coverdell ESA when it is for qualified education expenses (earnings are subject to tax and penalty for most other withdrawals).

• Funds can be transferred tax-free and penalty-free from the account of one child to the account of another child within the same family.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

* Penalties may apply for early withdrawal from Provident IRA Certificate

When can I withdraw funds from my Roth IRA without IRS penalties?

Regular contributions can be withdrawn tax-free and IRS penalty-free* from your Roth IRA at any time.

After the account has been open five tax years, earnings can be withdrawn tax-free and penalty-free for any of these reasons:

• For first-time home purchase**
• You are age 59 1/2
• You have a disability

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

* Penalties may apply for early withdrawal from Provident IRA Certificate

** Lifetime limit for exemption on first time home purchase is $10,000

When can I withdraw funds from my Traditional IRA without IRS penalties?

You can make withdrawals IRS penalty-free* from your Traditional IRA for any of the following reasons:

• For qualifying medical expenses exceeding 7.5% of adjusted gross income
• For qualified higher-education expenses
• For first-time home purchase**
• You are age 59 1/2
• You have a disability
• The owner dies, and payment is made to beneficiaries
• You are unemployed for 12 weeks or longer, and the payment is for health insurance premiums

For reasons other than the above, you could be subject to a 10% early withdrawal penalty.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

* Penalties may apply for early withdrawal from Provident IRA Certificate

** Lifetime limit for exemption on first time home purchase is $10,000

What are the tax advantages of a Coverdell Education Savings Account (aka Educational IRA)?

The tax advantages of a Coverdell ESA are that:

• Earnings grow, tax-free.
• Withdrawals for qualified education expenses are tax-free.
• Special-needs beneficiaries can withdraw funds tax-free to pay for qualified education expenses at any age.
• Qualified education expenses may include tuition, fees, books, computer equipment and technology required for elementary, secondary and post-secondary education.
• A beneficiary may receive tax-free distributions from an Education IRA in the same year he or she claims the Lifetime Learning or HOPE Scholarship tax credits.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

What are the tax advantages of a Roth IRA?

The tax advantages of a Roth IRA are that:

• Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59 1/2, disability, death, or a first time home purchase).*
• You are not required to start withdrawals at age 70 1/2.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

* Lifetime limit for exemption on first time home purchase is $10,000

What are the tax advantages of a Traditional IRA?

The tax advantages of a Traditional IRA are that:

• Earnings grow tax-deferred until withdrawn.
• Contributions may be tax-deductible.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

Are my contributions to a Coverdell Education Savings Account (aka Educational IRA) deductible?

No, Coverdell ESAs are not deductible. Only Traditional IRAs offer tax deductibility.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

Are my contributions to a Roth IRA deductible?

No, Roth IRAs are not deductible. Only Traditional IRAs offer tax deductibility.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

Are my contributions to a Traditional IRA deductible?

Your contributions are fully deductible if you do not exceed the contribution limits and you meet one of the following criteria:

If you are single:

• You are not active in employer retirement plans (regardless of income)
• You are active in employer retirement plans with an AGI* of $56,000 or less for 2009-2010

If you are married:

• Neither spouse is active in an employer retirement plan (regardless of income)
• You are active in employer retirement plans, and your joint tax returns shows an AGI of $89,000 or less for 2009-2010
• You are not active in employer retirement plans, but your spouse is, as long as AGI is $167,000 or less for 2009-2010.

Individuals with incomes exceeding the above limits may be able to deduct an amount that is less than the amount that can be contributed.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

* AGI = Adjusted Gross Income from the federal tax form

How much can I contribute to a Coverdell Education Savings Account (aka Educational IRA)?

Your total combined contributions to all Coverdell Education Savings Plans (ESA) for the same child can be up to:

• $2,000 per child, per year

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

How much can I contribute to a Roth IRA?

Your total combined contributions to Roth and Traditional IRAs can be up to:

• $5,000/year through 2010

If you are age 50 or older you can exceed the regular annual contribution limit by:

• $1,000/year for 2006-2010

Contributions cannot exceed 100% of your earned compensation.

Contributions to Roth IRA reduce contributions that can be made to Traditional IRAs.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

How much can I contribute to a Traditional IRA?

Your total combined contributions to Roth and Traditional IRAs can be up to:

• $5,000/year through 2010

If you are age 50 or older you can exceed the regular annual contribution limit by:

• $1,000/year for 2006-2010

Contributions cannot exceed 100% of your earned compensation.

Contributions to Traditional IRA reduce contributions that can be made to Roth IRAs.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

Am I allowed to contribute to a Coverdell Education Savings Account (aka Educational IRA)?

To qualify for contributing to a Coverdell ESA, you must have income from compensation (or be filing jointly with a spouse who earns compensation) with the following AGI:*

• Up to $95,000 for single filers
• Up to $150,000 for joint filers

Some people with higher AGI may be able to make smaller contributions.

Contributions not allowed after the beneficiary reaches age 18.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

* AGI = Adjusted Gross Income from the federal tax form

Am I allowed to contribute to a Roth IRA?

To qualify for contributing to a traditional IRA, you must have income from compensation (or be filing jointly with a spouse who earns compensation) with the following AGI:*

• Up to $105,000 for single filers
• Up to $167,000 for joint filers

Some people with higher AGIs may be able to make smaller contributions.

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

* AGI = Adjusted Gross Income from the federal tax form

Am I allowed to contribute to a Traditional IRA?

To contribute to a traditional IRA, the only qualifications on who can contribute are that you must be under age 70 1/2, and have income from compensation (or if filing jointly, have a spouse who earns compensation)

For more on Provident IRAs, go to Save & Invest > IRAs, ESAs, & HSAs

Investment Glossary Year-End Tax Planning Tips