Choosing between a Roth and Traditional IRA comes down to your current tax situation and what you expect retirement to look like for you. Here’s a simple way to think about it:

A Roth IRA may be a good fit if you:

• Expect to be in a higher tax bracket in retirement
• Prefer tax-free qualified withdrawals down the road
• Are early in your career or currently earning a lower income
• Want the flexibility to withdraw your contributions (not earnings) at any time, generally without taxes or penalties

A Traditional IRA may be a good fit if you:

• Want to potentially deduct your contributions from your taxes today
• Expect to be in a lower tax bracket when you retire
• Want to reduce your taxable income now
• Are comfortable paying taxes on withdrawals during retirement

Keep in mind that eligibility for tax deductions and Roth IRA contributions depends on your income, tax filing status, and whether you or your spouse have a workplace retirement plan. WFFCU recommends you speak with a tax or financial professional to help guide you with your retirement decisions.

When referring to IRA contributions, a few examples of “earned income” include:

• Wages, salaries, and tips
• Commissions, bonuses, and professional fees
• Net earnings from self-employment
• Taxable combat pay for military members

A few examples of what may NOT qualify as “earned income”:

• Interest and dividend payments
• Capital gains and rental income
• Pensions, annuities, or deferred compensation
• Social Security, unemployment, or disability benefits

If married and filing a joint tax return, an IRA owner who does not have adequate earned income, but whose spouse does, may make IRA contributions based on their spouse’s income.

Moving IRA funds can be a smart way to consolidate your retirement savings or move funds to a new financial institution. Before you get started, here are a few things to keep in mind:

• IRA transfer vs. rollover: An IRA to IRA transfer moves IRA funds between financial institutions. An IRA to IRA rollover are IRA assets you receive from a distribution that must be deposited into another IRA within 60 calendar days. Other restrictions may apply.
• Investment choices: Take a close look at the investment options and fees at the new provider before making a move.
• Costs and expenses: Review any account maintenance fees, fund expenses, or transfer fees that may apply.
• Tax implications: An IRA to IRA transfer is not reportable to the IRS. There is no limit on the number of IRA transfers you may make per year. An IRA to IRA rollover is reportable to the IRS and you are only permitted to make one in a 12 month period.
• Required Minimum Distributions (RMDs): If RMDs apply to your account, they generally can’t be transferred or rolled over. What are RMDs?

If you’re moving funds from an employer-sponsored plan, make sure you understand the rules before initiating the transfer. Our team is always ready to walk you through your options.

Yes, you can roll over an old 401(k) into a new retirement account. This allows you to move the funds from your previous employer’s retirement plan into an IRA. Rolling over your old 401(k) can help consolidate your retirement savings and potentially give you more investment options.

Direct vs. Indirect rollover:

A direct rollover is when retirement funds are moved from a qualified employer-sponsored retirement plan such as a 401(k) directly into an IRA.

An indirect rollover occurs when retirement funds are disbursed from the employer-sponsored retirement plan, payable to the plan participant. The funds must be rolled over into an IRA within 60 calendar days. Other restrictions may apply.

No investment is completely risk-free, but there are tried-and-true strategies to help you work toward a secure retirement:

• Contribute consistently, even when markets fluctuate
• Diversify across different asset classes to help manage risk
• Increase contributions as your income grows
• Review and rebalance your portfolio regularly
• Keep an emergency fund in place so your retirement savings can stay invested for the long term
• Match your investment choices to your time horizon鈥攖hose closer to retirement may want a more conservative approach
• Keep an eye on investment costs and fees, as they can add up over time

Your strategy should reflect your personal financial goals, risk tolerance, and timeline.

A Certificate IRA combines the tax advantages of an IRA with the predictability of a fixed interest rate. It’s a great option if you value stability and want to know exactly what your savings will earn.

Here’s how it works:

• You deposit retirement funds into an IRA certificate for a fixed term, such as 1, 3, or 5 years
• The account earns a fixed interest rate for the duration of that term
• At maturity, you can renew the certificate, transfer the funds to another IRA investment, or withdraw funds if you’re eligible
• Early withdrawals may result in financial institution penalties, and IRA withdrawals before age 59陆 may be subject to taxes and potential IRS penalties unless an exception applies

Certificate IRAs are a popular choice for members who prioritize preserving their principal and earning predictable returns鈥攚ithout worrying about market ups and downs.

An IRA (Individual Retirement Account) is a type of retirement savings account that offers tax advantages for individuals planning for their retirement.

On the other hand, a regular share certificate is a type of savings account offered by credit unions that allows you to earn dividends on your money over a fixed period of time. Unlike an IRA, there are no special tax benefits associated with regular share certificates. Because of this, you may withdraw savings at the end of your share certificate term without penalty from the financial institution or the IRS. Withdrawing from an IRA may result in penalties from the IRS if it is before age 59 ^1/2.

The key difference comes down to your time horizon and how much risk you’re comfortable with.

Short-term retirement savings (typically within 5 years of retirement):

• Focuses on protecting what you’ve built rather than chasing growth
• Often includes more conservative options like cash equivalents, certificates, or short-term fixed-income investments
• Designed to limit your exposure to market volatility

Long-term retirement savings (typically 10 or more years before retirement):

• Emphasizes growth over time
• May include a higher allocation to stocks and diversified investment funds
• Has more runway to recover from short-term market dips

Many retirement savers gradually shift toward more conservative investments as retirement approaches鈥攚hile still keeping enough growth potential to help their savings last. Not sure where you stand? We’d love to help you find the right balance.

A catch-up contribution is an additional amount of money that individuals age 50 or older can contribute to their retirement accounts. This is in addition to the maximum annual contribution limit set by the Internal Revenue Service (IRS). The purpose of this provision is to help older workers who may not have been able to save as much for retirement earlier in their career to make up for lost time.