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Retirement

Building Your Retirement

At some point, we all stop working and retire. While this may feel far away, it’s not too early to start planning your financial future. Unfortunately, most Americans aren’t as prepared as they should be for retirement. If you’re thinking about starting to save, then an Individual Retirement Account, or IRA, may be right for you.^*

What is an IRA?

An IRA is an investment account with tax benefits aimed at helping you save for retirement. Depending on the IRA plan type and the investments within that plan, income from interest, dividends and capital gains compound each year without being taxed while funds remain within an IRA plan. We offer certificates of deposit, savings accounts and money market accounts for our IRA plans.

I’d like to open an IRA. What are my options?

There are several different types of IRAs. Each one comes with their own set of rules and restrictions. The two most common types are Roth IRA and Traditional IRA.

The main difference between a Roth IRA and a Traditional IRA is in the way they are taxed. With a Roth IRA, you pay taxes when you first put money into the account and do not have to pay taxes when you withdraw the money in retirement. The money invested in Traditional IRAs is not taxed when first invested but is subject to tax when funds are withdrawn.

Nearing Retirement

You’ve worked hard to earn what you have. We want to help you make the most of it. If your next chapter in life is enjoying retirement, then we’ve got some resources to help. An Individual Retirement Account, or IRA, is subject to special tax advantages, helping you build savings more effectively.^* Once you set up an IRA, you can invest the funds into CDs, money market funds, mutual funds or individual stocks and bonds. The two most common types of IRAs are Roth or Traditional.

Exploring Your IRA Options

	Roth IRA	Traditional IRA
Can I contribute?	You are eligible to contribute if you earn compensation (or file a joint tax return with a spouse who earns compensation) and your modified adjusted gross income (MAGI) is less than or within the defined limits. More information about MAGI limits is available on the IRS website.	You are eligible to contribute if you are under age 70 years and 6 months and earn compensation (or file a joint return with a spouse who earns compensation).
Can I take an income tax deduction for my contribution?	No. Roth IRA contributions are not tax-deductible.	It depends on your marital and tax-filing status, your MAGI, and whether you or your spouse actively participates in an employer-sponsored retirement plan. If neither you nor your spouse is an active participant, then you are eligible to deduct your full contribution.
What are the benefits?	You may qualify for a saver’s tax credit of up to $1,000 when you make a contribution. Because all Roth IRA contributions must be included in your taxable income, and therefore are not tax-deductible, you can withdraw your contributions at any time, tax- and penalty-free. Any earnings generated within the IRA are tax-deferred (you do not pay tax on the earnings until you withdraw them.) If you satisfy the qualified distribution requirements, you can withdraw the earnings tax-free, which is the ultimate advantage of having a Roth IRA. You are never required to take money out of your Roth IRA, no matter what your age. Restrictions may apply.	You may qualify for a saver’s tax credit of up to $1,000 when you make a contribution. Any earnings generated within the IRA are tax-deferred (you do not pay tax on the earnings until you withdraw them). If your Traditional IRA contributions are tax-deductible and therefore tax-deferred, you do not pay taxes on them until you withdraw the money. Any after-tax amounts (nondeductible contributions) within your IRA can be withdrawn tax- and penalty-free.
Will I ever be required to withdraw the money?	No. Roth IRA owners are never required to take distributions. After your death, however, your beneficiaries may be subject to required distributions.	Yes. Traditional IRA owners are required to take annual minimum distributions beginning for the year they turn age 70 years and 6 months. Your beneficiaries also will be subject to required distributions.

	Roth IRA
Can I contribute?	You are eligible to contribute if you earn compensation (or file a joint tax return with a spouse who earns compensation) and your modified adjusted gross income (MAGI) is less than or within the defined limits. More information about MAGI limits is available on theIRS website.
Can I take an income tax deduction for my contribution?	No. Roth IRA contributions are not tax-deductible.
What are the benefits?	You may qualify for a saver’s tax credit of up to $1,000 when you make a contribution. Because all Roth IRA contributions must be included in your taxable income, and therefore are not tax-deductible, you can withdraw your contributions at any time, tax- and penalty-free. Any earnings generated within the IRA are tax-deferred (you do not pay tax on the earnings until you withdraw them.) If you satisfy the qualified distribution requirements, you can withdraw the earnings tax-free, which is the ultimate advantage of having a Roth IRA. You are never required to take money out of your Roth IRA, no matter what your age. Restrictions may apply.
Will I ever be required to withdraw the money?	No. Roth IRA owners are never required to take distributions. After your death, however, your beneficiaries may be subject to required distributions.

	Traditional IRA
Can I contribute?	You are eligible to contribute if you are under age 70 years and 6 months and earn compensation (or file a joint return with a spouse who earns compensation).
Can I take an income tax deduction for my contribution?	It depends on your marital and tax-filing status, your MAGI, and whether you or your spouse actively participates in an employer-sponsored retirement plan. If neither you nor your spouse is an active participant, then you are eligible to deduct your full contribution.
What are the benefits?	You may qualify for a saver’s tax credit of up to $1,000 when you make a contribution. Any earnings generated within the IRA are tax-deferred (you do not pay tax on the earnings until you withdraw them). If your Traditional IRA contributions are tax-deductible and therefore tax-deferred, you do not pay taxes on them until you withdraw the money. Any after-tax amounts (nondeductible contributions) within your IRA can be withdrawn tax- and penalty-free.
Will I ever be required to withdraw the money?	Yes. Traditional IRA owners are required to take annual minimum distributions beginning for the year they turn age 70 years and 6 months. Your beneficiaries also will be subject to required distributions.

Living in Retirement

Your hard work has allowed you to enjoy the retirement chapter of your life. Now more than ever, it’s important to make the most of your money so you can continue to enjoy what you’ve earned. We’ve got some ideas to help.^* Plus, at WaFd Bank, we offer no-fee IRA rollovers and transfers.

Rolling over your IRA for a better retirement

Rolling over retirement plan assets to another retirement plan or an IRA will not only preserve your tax benefits, but may possibly provide you with additional benefits.

When You Can Roll It Out

Employee-sponsored retirement plans have “triggering events” that dictate when you may withdraw the money from your account, such as attainment of retirement age, termination of employment, disability, or death.

Next, you must ensure that the amount you are taking is eligible to be rolled over. Most distributions from retirement plans are eligible to be rolled over to IRAs or other eligible retirement plans, but some are not.

Talk to your employer about your options on either of the above.

What can I roll over to a Traditional IRA?

Qualified Retirement Plans such as 401(k) Plans
Federal Thrift Savings Plans
403(b) Plans
Governmental 457(b) plans
Simple IRA Plans

What can I roll over to a Roth IRA?

Qualified Retirement Plans such as 401(k) Plans
Federal Thrift Savings Plans
403(b) Plans
Governmental 457(b) plans
Designated
Roth Plan Accounts^**

^* Please consult with a tax professional to determine which options meet your financial goals.

^**Pretax assets rolled over from a retirement plan to a Roth IRA must be included in taxable income in the year of distribution.

Contact Us

For more information about our account services, or to talk to our Client Care Directors:

Call 1-800-324-9375

Email info@wafd.com

Contact your neighborhood branch.