Back to Basics

1. Back to Basics Individual Retirement Accounts IRA’s January 2009

2. Agenda • Basic IRA Information • Compensation • Contribution Limits • Catch up Rule • Spousal Contributions • Rollovers & Direct Transfers • Traditional IRA • Roth IRA • Coverdell ESA • Forms (IRA Direct) • Resources & Questions

3. Write Down One Question that you would like to have answered during today’s session

4. Compensation Must have earned compensation • Wages, salaries, fees, tips, bonuses, commissions, taxable alimony, and separate maintenance payments. • Not included are: • Interest, dividends, rental income, retirement income (Social Security), disability, child support payments, and unemployment compensation.

5. Contribution Limits2008-2009

6. Catch Up Rule • For individuals who are 50 and older by the end of the year for which the contribution applies can make additional contributions. • Catch up limits • 2008 = $1,000 • 2009 = $1,000

7. If you have any other questions regarding Spousal Contributions, please seek help from a CUNA representative, Cora , Michelle G. or Karrie Spousal Contributions • Contributions can be made if a spouse makes little to no income. • Requirements: • Each owner must have separate IRA’s. • Able to contribute to both up to the maximum annual contribution limits. • File joint income tax return.

8. Rollovers & Direct Transfers Rollovers: • Withdrawn assets from an IRA and then re-deposits them within 60 days into the same or another IRA. • 60 Day Rule • Once a Year Direct Transfers: • A direct transfer is a transaction in which the owner moves assets directly from one IRA to another. • No 60 Day Rule • Unlimited

9. C100123456789 January 1st, 2009 Pay to the Order of $8,592.37 Wells Fargo (name of the institution) FBO: John Smith (member’s name)/IRA Account Eight thousand five hundred ninety two dollars and 37 cents TSCU Representative 10100123456 322173149 100123456789 QRP (Qualified Retirement Plan) to IRA = Direct RolloverCheck Must be Made Payable as shown below IRA to IRA = Direct TransferCheck Must be Made Payable as shown below

10. C100123456789 January 1st, 2009 Pay to the Order of $8,592.37 John Smith (member’s name) Eight thousand five hundred ninety two dollars and 37 cents TSCU Representative 10100123456 322173149 100123456789 IRA to Member = RolloverChecks that are made payable directly to the member are considered a Rollover and the 60-day rule would apply. Pay to the Order of

11. Quick Reference Guide to Understanding how to code IRA funds

12. Traditional IRA • Tax deductible contributions (depending on income level) • Withdraws begin at 59 ½ and are mandatory by age 70 ½. • Taxes are paid on earnings when withdrawn from the IRA. • Available to everyone, no income restrictions (must have earned income) • All funds withdrawn before 59 ½ are subject to a 10% penalty.

13. ROTH IRA • The Roth IRA was born on January 1st, 1998 as a result of the Taxpayer Relief Act of 1997. • Contributions are not tax deductible. • No mandatory distribution age. • All earnings and principal are 100% tax free if rules and regulations are followed. • Available only to single-filers making up to $95k or married couples making a combined maximum of $150k annually. • Principal contributions can be withdrawn at any time without penalty (subject to the 5 year rule).

14. From January 1st thru Tax Day (April 15th) of each year, member’s are required to sign a contribution form to contribute to the prior year.

15. 8 Ways to Avoid Penalties • Permanent disability of an IRA owner. • Death of an IRA owner • Withdrawals used to pay non-reimbursed medical expenses. • Withdrawals used to pay for 1st time home purchase. • Higher education costs. • Funds used to pay back taxes to the IRS after a levy has been placed against the IRA. • Withdrawals used to pay medical insurance premiums. • Made on or after the day the IRA owner turns 59 ½.

16. Coverdell ESA • Created as a part of the Taxpayer Relief Act of 1997. • A special type of savings with the sole purpose of helping to pay for higher education expenses of the child named on the account (designated beneficiary). • Parents & Guardians are allowed to make non-deductible contributions for a child (under the age of 18) or special needs beneficiary. • Contributions are not tax deductible. • Amounts deposited grow tax-free until distributed.

17. Coverdell ESA - Contributions • The annual contribution limit is $2,000 for each beneficiary. • Distributions may be tax-free if they are not more then the beneficiary’s adjusted qualified education expenses for the year. • Amounts must be distributed when the designated beneficiary reaches age 30. • Transfers to members of the beneficiary’s family are permitted.

18. Traditional IRA Contribution Form

19. Roth IRA Contribution Form

20. Resources • CUNA Mutual • By Web at www.cunamutual.com • By phone at #1-800-356-9140 (For IRA and IRA Direct questions) • www.irs.gov or #1-800-829-1040 • IRA Projection Table • IRA post 70 ½ Periodic Payment Estimator • Silver Cloud • Traditional IRA Contribution Form • Roth IRA Contribution Form

21. Questions