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How does a Roth IRA work?

This savings plan gives you the ability to invest your after-tax dollars today, let the investment grow tax-deferred, and take qualifying withdrawals tax-free. Unlike the traditional IRA, there is no 73 age limit on making contributions. You simply need to have earned income equal to the amount you contribute up to a maximum of $7,000.00 ($14,000.00 combined for spouses) per year. (There are income thresholds which may reduce the amount you can contribute.)

FedChoice IRAs are insured up to $500,000!*

Tax credits may be available

If you are an eligible individual and fall within certain income limitations, you may be eligible for a tax credit of up to 50 percent of your retirement savings contributions that do not exceed $1,000 (up to $2,000 if filing jointly). An eligible individual is defined as someone who is:

  • 18 years of age at the close of the taxable year
  • Not a dependent of another taxpayer
  • Not a full-time student

In addition, your Adjusted Gross Income must not exceed:

  • $228,000 if your filing status is married filing jointly
  • $153,000 if your filing status is head of household (with qualifying person), or
  • $10,000 if your filing status is single, married filing separately, or qualifying widow(er) with dependent child

When can the Roth IRA assets be used?

Two conditions must be satisfied to make tax-free and penalty-free withdrawals from the Roth IRA:

  • A Roth IRA must have been opened a minimum of five years
  • The withdrawal must be made after the occurrence of one of the following events:
    • Age 59 1/2
    • Death
    • Disability
    • First home purchase

Distributions which meet the above criteria are referred to as "qualified distributions." While you may take distributions from your Roth IRA at any time, distributions which are not qualified distributions will be subject to taxes (and in some cases early distribution penalties) to the extent they exceed your aggregate contributions to Roth IRAs.

Roth IRAs available from FedChoice

Fixed Term IRA Certificate

  • $500.00 minimum deposit
  • Available for 18 months
  • Available for 60 months

How much can I contribute?

Learn more about the annual limits for contribution on the IRS website!

Already a member?

Opening your new Savings Account is easy. Just visit the nearest Financial Service Center or call us at 301.699.6151 • 800.969.6151.

Find a convenient Financial Service Center location

*Deposits are insured up to $500,000. Your savings are insured up to $500,000. The first $250,000 per member is insured by the National Credit Union Association (NCUA), a U.S. Government Agency, with an additional $250,000 of coverage provided by Excess Share Insurance Corporation (ESI), a private corporation.