IRA Solutions


This page is for informational purposes only, and Alliance Credit Union is not providing any tax or investment advise, members should consult his or her own tax advisor for the potential tax related consequences of opening an IRA account.

An individual retirement arrangement (IRA) is a personal savings plan that offers a member tax advantages to set aside money for their retirement or plans for certain education expenses. Two advantages of an IRA are:

  • Members may be able to deduct their contribution in whole or in part, depending on the type of IRA and a member’s circumstances.

  • Generally, amounts in the IRA, including earnings and gains are not taxed until distributed, or in some cases, are not taxed at all if distributed according to the rules.

Alliance Credit Union currently offers two different traditional IRA accounts. Check back for additional IRA solutions coming soon.

  • Traditional IRA Savings

  • Traditional IRA CD

What is a Traditional IRA?

A Traditional IRA was the original IRA. The Traditional IRA is the term for a regular IRA available to those under age 70 ½ who have earned income (i.e., job compensation). Under current rules, Traditional IRA contributions of $3,000 ($3,500 for taxpayers who are 50+ years old) are fully deductible for individuals with adjusted gross income of $95,000 or less (married couples with AGI under $150,000). Taxpayers can contribute to their Traditional IRA through age 70.

Deductible IRA contributions and the earnings they accrue are not subject to federal or state income tax until the funds are withdrawn or distributed from the IRA account. Distributions after age 59 ½ are fully taxed as ordinary income. Distributions prior to age 59 ½ are also subject to a 10% penalty for early withdrawal, unless the withdrawal is because of:

  • Death or disability of the IRA holder

  • Rolled over to another IRA with a valid IRA rollover

  • Converted to a Roth IRA with a valid conversion

  • Taken to pay for qualifying medical expenses or health insurance for unemployed individuals

  • Taken to pay first- time home purchase expenses or the higher education of member, spouse, child or grandchild

  • Part of a series of substantially equal periodic payments

  • Due to an IRS levy

After age 70 ½, traditional IRA owners must take annual contributions (minimum required distribution-MRD) based upon actuarial life expectancies. These distributions are fully taxable as ordinary income. Failure to take a required minimum distribution results in severe penalties.