IRA can mean tax savings…now or later

Contributing to an IRA gives you an opportunity to save for retirement while taking advantage of tax benefits. There are two IRA account types available—Traditional and Roth.

What’s the difference between a Roth and a Traditional IRA?

Contributions to a Roth IRA are taxed now, but all qualified withdrawals, including earnings, are tax free.

Contributions to a Traditional IRA account may provide a tax deduction now, but all withdrawals, including earnings, will be taxed as regular income.

Consider a Roth if…

  • You have a long time until retirement.
  • You want to reduce tax liability in retirement.
  • You want greater flexibility in estate planning.
  • You believe your tax rate is lower now than it will be when you withdraw the money.

When and how to contribute?

Contribute throughout the year or all at once with a lump sum. Setting up automatic payments through your credit union or bank or payroll deduction through your district makes it easy to budget your contributions.

Contributions for a specific tax year can be made until your tax return deadline for that year. For example, you may apply IRA contributions made by April 15, 2018 to the 2017 tax year. Be aware you cannot apply automatic contributions to a prior tax year. You will need to write a check for any contributions made in 2018 that you wish to apply to 2017.

What’s the limit?

The maximum combined amount you may contribute to all of your Traditional and Roth IRAs in 2018 is $5,500 if you are under age 50 and $6,500 if you are age 50 or older. However, contributions may also never exceed your earned compensation for the year (if your earned compensation is less than the applicable limit, you may only contribute up to the amount of your compensation). You may also contribute on behalf of a spouse who doesn’t have earned income.

Who can contribute?

If you have earned income, you can contribute to a Roth IRA unless your income exceeds $135,000 (single) or $199,000 (married, filing jointly) in 2018. However, once you hit $120,000 (single) or $189,000 (married filing jointly) your Roth IRA contribution limit is reduced or “phased out” as your income rises—until you exceed $135,000 and $199,000 respectively.

Where to open an IRA?

Wisconsin public school employees, their spouse or domestic partner, children and their spouses, parents, parents-in-law—and in some cases, their grandchildren—may participate in the IRA program offered by WEA Member Benefits. We accept rollovers from a variety of retirement plans. We also offer Simplified Employee Pension (SEP) IRAs. Members who have spouses—or other eligible family members—who are self-employed are eligible to participate in our SEP program. 

Our WEAC IRA program is a great option because we do not charge commissions, and our low annual administrative fee is lower than the fees charged by many other providers.

Enrolling is easy!

The Trustee Custodian for the WEAC IRA accounts is Newport Trust Company. To be eligible for this program, you must meet the IRS eligibility requirements for contributing to an IRA. Wisconsin residency required.

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