Individual Retirement Accounts - East County Schools Federal Credit Union
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Individual Retirement Accounts (IRAs)

IRAs are a great tool to save for major events in your life, such as retirement, college expenses, or a new home. East County Schools has both share and certificates, Roth and Traditional. Stop by a branch to open an account.

IRA Share Accounts

  • Similar to a share savings account in that there is a $5.00 deposit requirement and additions to the principal can be made at any time, up to the maximum contribution allowed per year by law.
  • You can contribute up to $6,500 per year plus an additional $1,000 catch up if you are 50 or older for 2023 and $7,000 per year plus an additional $1,000 catch up if you are 50 or older for 2024. Contributions made January 1 - April 15 can be for the current or previous year.
  • Dividends are calculated daily and paid monthly.
  • No East County Schools FCU penalties for early withdrawal. The Internal Revenue Service does impose penalties for withdrawals prior to age 59½.
In 2023, the age when people must withdraw from tax-deferred retirement accounts has changed from 72 to 73.
Starting in 2024, those with Roth IRAs won’t need to make withdrawals at any specific age.

IRA Share Certificates of Deposits (CDs)

  • 3-month to 60-month certificates are available.
  • Minimum purchase amounts of $1,000 or any amount above this minimum.
  • "Maturity sensitive," generally paying higher Dividend Rates for those with longer maturities.
  • Certificates automatically renew at maturity unless you indicate otherwise.
  • East County Schools FCU imposes penalties for early withdrawals.
    • Terms of up to one year – 30 days of dividends or $25.00, whichever is less
    • Terms of greater than one year – 90 days of dividends

All Individual Retirement Accounts are insured to $250,000 by the NCUA (National Credit Union Administration) separately from any other share accounts you may have with East County Schools Federal Credit Union.


Compare Individual Retirement Accounts

DescriptionTraditional IRARoth IRA
Adjusted Gross Income Eligibility RestrictionsAlmost everyone with earned income may participateIndividuals earning $125,000 or less
Married couples earning $208,000 or less in 2022
Maximum Annual Contribution$6,000
(if under age 50)
(if over age 50)
(if under age 50)
(if over age 50)
Non-wage Earning Spousal Contribution$6,000
(if under age 50)
(if over age 50)
(if under age 50)
(if over age 50)
Tax Deductibility of ContributionsUp to 100% depending on Annual Gross Income and participation in an employer-sponsored retirement plan.Cannot deduct
Tax treatment of dividend earningsGrow tax-deferred until withdrawnGrow tax-free
Taxes Upon WithdrawalWithdrawals of contributions and dividend earnings are taxed as ordinary income at the then current tax bracketNone
Withdrawal RestrictionsCurrently, most withdrawals before age 59½ result in IRS penalties. Some exceptions are made for catastrophic medical expenses or disability. The new law allows for early penalty-free withdrawal for first-time home purchases and/or college expenses.IRS penalty-free withdrawal after age 59½, so long as the money has been in the account for five years. Penalty-free and tax-free withdrawals prior to age 59½ if the funds are used for disability or first-time home purchase. The five-year-in-the-account rule applies.
Age at which withdrawals must begin72 (70 ½ if you reached 70 ½ before January 1, 2022)

(Does not imply that $6,000 or $7,000 can be contributed to both IRA types. A maximum of $6,000 or $7,000 can be contributed to one or the other -or- split between both.)

Traditional IRAs

  • Maximum annual contribution is $6,000 if under age 50 or $7,000 if over age 50, or 100% of your earned income, whichever is less, for 2020 & 2021. Income limits also apply.
  • IRS penalty-free withdrawals are allowed prior to age 59½ when the funds are used for first-time home purchases (up to a lifetime limit of $10,000) and/or higher education expenses.

Roth IRAs

  • The Roth IRA, like the Traditional IRA, has a maximum annual contribution limit of $6,000 if under age 50 or $7,000 if over age 50 from earned income, for 2019 & 2020. Income limits also apply.
  • Contributions to a Roth IRA are not tax-deductible.
  • Your eligibility to contribute to a Roth IRA is not dependent on whether you are covered by a retirement plan at work.
  • Dividends grow tax-free.
  • Withdrawals of both contributions and earned dividends are tax-free after age 59½, as long as the money has been in the account for five years.
  • Tax-free distributions from the Roth IRA are permitted prior to age 59½ for disability and/or first-time home purchases (up to a lifetime limit of $10,000), as long as the money has been in the account for five years.
  • Unlike Traditional IRAs, the Roth IRA allows you to make contributions after the age of 70½.
  • The Roth IRA does not require mandatory minimum distributions once you reach age 70½.
  • Converting Traditional IRAs to a Roth IRA:
    1. You can convert your Traditional IRAs to a Roth IRA, using special rules developed by the IRS.
    2. The transferred amount is subject to income tax, but is exempt from IRS early withdrawal penalties.

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