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Retirement Deposit Insurance Coverage Increases
You work hard and save money to ensure that one day you will have a comfortable retirement, so preparing financially and keeping your nest egg secure is crucial.
The good news is that you now have increased protection on you retirement savings accounts at banks and your credit union. Effective April 1, 2006 Congress raised the limit on federal deposit and share insurance coverage which protects against retirement savings loss if a bank or credit union fails. This higher insurance limit only applies to certain retirement accounts that you have at banks and savings associations insured by the Federal Deposit Insurance Corporation (FDIC) and at your credit union insured by the National Credit Union Administration (NCUA).
NCUA wants credit union members to be clear about what has and hasn’t changed. Here are some basics about the new and existing insurance coverage:
Effective April 1, 2006 Traditional and ROTH IRAs and KEOGH retirement accounts at Vacationland Federal Credit Union are now insured up to $250,000, an increase from the previous $100,000 coverage. Deposits such as Individual Retirement Accounts (IRAs) and Keogh accounts are insured up to $250,000. under the new rules. Traditional and Roth IRAs at one credit union are now insured in the aggregate to $250,000. Additionally, NCUA insures Keogh accounts separately in the aggregate to $250,000. With Excess Share Insurance these deposits are insured for an additional $250,000 (total $500,000) at VLFCU.
Retirement account insurance protection is separate and apart from insurance coverage on other credit union accounts. The increase to $250,000 for retirement account protection is important because many people saving for retirement have accumulated well in excess of $100,000.
IMPORTANT NOTE:
Basic insurance coverage for other share accounts is still $100,000. However, just as before, there are many ways to qualify for more than basic coverage at one institution.
If you have any questions about the new retirement deposit insurance coverage, Excess Share Insurance, or how your retirement and other share accounts are covered at VacationLand Federal Credit Union, please do not hesitate to call one of your Member Service Representatives.
On May 26, 2001, Congress approved the Economic Growth and Tax Relief Reconciliation Act of 2001. President Bush signed EGTRRA into law on June 7, 2001. Here are some of the changes that came about as a result of the new law:
IRA Contribution Limits for 2003 and Beyond
Traditional IRAs:
2003 under age 50 $3,000/age 50 to 70½ $3,500
2004 under age 50 $3,000/age 50 to 70½ $3,500
2005 under age 50 $4,000/age 50 to 70½ $4,500
2006 under age 50 $4,000/age 50 to 70½ $5,000
2007 under age 50 $4,000/age 50 to 70½ $5,000
2008 under age 50 $5,000/age 50 to 70½ $6,000
Roth IRAs:
2003 under age 50 $3,000/age 50 or over $3,500
2004 under age 50 $3,000/age 50 or over $3,500
2005 under age 50 $4,000/age 50 or over $4,500
2006 under age 50 $4,000/age 50 or over $5,000
2007 under age 50 $4,000/age 50 or over $5,000
2008 under age 50 $5,000/age 50 or over $6,000
Educational IRA's
2003 and after $2,000
Tax Credits for Eligible Individuals
Between the years of 2003 and 2006, lower-income individuals who qualify may be eligible for a tax credit for contributions to their Traditional or Roth IRA. Depending on the individual's annual income level and tax-filing status, they may receive a credit of up to 50% of the contribution amount (based on a contribution of up to $2,000.00), for a maximum tax credit of $1,000.00. The tax credit is in addition to the fact that the same contribution may also be deductible! If the tax credit is greater than the individual's tax amount due, a refund will not be issued for the difference. As always, an individual should seek the advice of a qualified tax professional to see how the tax law applies in their situation. This tax credit incentive provides a great opportunity to increase the retirement nest egg for those who qualify.
Educational IRA's
Education IRAs received a big boost with EGTRRA. The annual contribution limit has been increased to $2,000.00 (from the current $500.00) beginning January 1, 2002. Also, included in the Education IRA expansion is a change in the definition of “qualified education expenses” to include certain elementary and secondary school expenses. Prior to the new law change, only post-secondary education expenses were “qualified”.
Contact a Member Service Representative for more information.
419.625.9025 | 800.691.9299 | inquiry@vlfcu.org
