If you are a wage earner or self-employed, you are eligible to start an IRA (Individual Retirement Account). IRAs are special savings accounts that carry tax benefits.
Contributions are limited to earned income only and the maximum contribution amount changes from year to year. Contributions may not be made for or after the year in which you reach 70 1/2. Withdrawals are permitted anytime, but may be subject to a penalty if you have not reached the age of 59 1/2. When you begin making withdrawals, you will be taxed only on the amount withdrawn. The remaining funds continue to earn tax deferred interest.
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. If you satisfy the qualified distribution requirements, you can withdraw the earnings tax free, which is the ultimate advantage of having a Roth IRA.
Coverdell Education Savings Account (ESA)
Coverdell ESAs help people save for a child’s education expenses, such as tuition, fees, books, supplies, equipment, and, in some cases, room and board.
Contact Maine Highlands FCU for more details regarding all IRA products.