Individual Retirement Accounts
Frequently Asked Questions

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Contributions and distributions

Am I eligible to contribute to an IRA?

For a Traditional IRA any individual under the age of 70 1/2 is eligible to contribute to an IRA as long as they are earning qualified compensation or receiving alimony. For a Roth IRA any individual may contribute who is earning qualified compensation or receiving alimony that does not exceed specific income limitations.

Can I convert my Traditional IRA to a Roth IRA?

The IRS uses the phrase "IRA conversion contribution" to refer to any transaction in which all or part of the assets in a traditional IRA are moved to a Roth IRA. If you are married and filing separate federal income tax returns then you cannot make an IRA conversion contribution during that year. If this is not your situation, then you can make an IRA conversion contribution during any year in which your modified adjusted gross income (MAGI) is $100,000 or less. If you file a joint income tax return with your spouse, then this limit is joint MAGI of not more than $100,000. Also, an IRA conversion contribution becomes taxable income for the tax year in which the contribution was made. You should consult your tax advisor for more information.

Can I transfer an IRA at another institution to Alaska USA?

Yes, you can transfer an IRA at another institution to Alaska USA. This is called a direct transfer. With a direct transfer funds are moved from financial institution to financial institution without the owner of the IRA having access to the funds. This type of transfer can be accomplished as often as desired.

Can I transfer my employer retirement plan to an IRA?

If the funds are coming from a qualified retirement plan (QRP) you are able to transfer them to a Traditional IRA by completing a Direct Rollover. Once you have verified through your employer that your current plan is a QRP, you may either establish a new Traditional IRA with the credit union or use your existing Traditional IRA and direct your employer to transfer your funds for you.

Can withdrawals be made over the phone?

Yes, IRA withdrawals can be performed by telephone via the Member Service Center.  Since IRA withdrawals are reportable to the IRS, you will be required to sign the withdrawal/distribution form and select a withholding option.

How do I calculate my Required Minimum Distribution (RMD)?

Your Required Minimum Distribution (RMD) is calculated by using the ending balance of your IRA on December 31 of the prior tax year and dividing that number by your life expectancy the year the withdrawal will be made. If you are married and your spouse is the sole beneficiary of an IRA during an entire year and your spouse is more than ten years younger than you are on your birthdays during the year, then the RMD for the year is based on the joint like expectancy of you and your spouse. You may contact a credit union representative for more information.

How much can I contribute?

For the 2014 tax year, the maximum annual contribution is $5,500 ($6,500 for those 50 and older).

Please note that your contribution amount cannot exceed the amount of your earned income. There is no maximum contribution limit on an Investment Account.

Is federal tax withholding required and how much do I have to specify?

No, withholding is not required.  You may select your withholding options on the distribution form when requesting a withdrawal.  If withholding is selected, the minimum amount is 10%.  You may also wish to consult your tax advisor to determine the withholding amount that may apply to you.

Is my contribution tax deductible?

Only Traditional IRA contributions are tax deductible if certain conditions exist. If you and your spouse are not covered by an employer sponsored retirement plan, you will receive a full deduction regardless of your income. If you participate in an employer sponsored retirement plan, your income and filing status will determine the amount of your contribution that is deductible from taxes.

What are the income limits for contributing to an IRA?

There are no income limitations for contribution to a Traditional IRA. The income limitations for contributing to a Roth IRA are as follows:

Tax Year 2007 Full Contribution if your MAGI* is less than Partial Contribution if your MAGI* is between
Single Filer $99,000 $99,000 - $114,000
Married Filing Jointly $156,000 $156,000 - $166,000
* MAGI - Modified Adjusted Gross Income

 

Tax Year 2008 Full Contribution if your MAGI* is less than Partial Contribution if your MAGI* is between
Single Filer $101,000 $101,000 - $116,000
Married Filing Jointly $159,000 $159,000 - $169,000
* MAGI - Modified Adjusted Gross Income

What are the tax penalties for early withdrawals?

Most early withdrawals are subject to a 10% tax penalty. You should contact your tax advisor for more information.

What is a Required Minimum Distribution (RMD)?

A Required Minimum Distribution (RMD) is the amount required by the IRS to be distributed to the IRA owner from a Traditional IRA beginning the year the IRA owner turns 70 1/2.

What tax form is used to report contributions?

The tax form used to report contributions is the IRS form 5498. This form is mailed at the end of May and will reflect deposits made to IRA accounts for the previous tax-year.

What tax form is used to report distributions?

The tax form used to report distributions is IRS form 1099-R. This form is sent to any IRA holder who made an aggregate withdrawal of $10 of more from their IRA regardless of whether or not withholding was done. This form is mailed in the same envelope with your year end account statement.

What type of funds can be contributed to an IRA?

Wages, tips, commissions, net business income, and alimony qualify as earned income for contributions to IRAs.

When are tax forms sent out?

IRS form 5498 is mailed at the end of May and will reflect deposits made to IRA accounts for the previous tax-year. IRS form 1099-R is mailed in the same envelope with your year-end account statement.

When can withdrawals be made from an IRA?

Withdrawals may be made from an IRA at any time. However, if an IRA withdrawal is not part of a normal or qualifying distribution, IRS penalties may be imposed. You should contact your tax advisor for more information.

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