Secure your future with a credit union IRA
CAFCU's Individual Retirement Accounts (IRAs) are designed to help you save for the future with our risk-free, federally insured share certificates. Get all your questions answered by choosing a topic below or contact us for additional support.
What is an individual retirement account (IRA) and why should I get one?
An IRA is an excellent choice for anyone looking to set aside money for retirement while diversifying their investment portfolio with a tax-advantaged account.
The IRA was created by the U.S. congress in 1974 via the Employee Retirement Income Security Act, or ERISA to give Americans not covered by an employer retirement plan a way to save money on their own for retirement while enjoying certain tax advantages.
Today, the two main types of IRAs – Traditional and Roth – are used by self-employed, employed, and unemployed people a like to grow their retirement nest egg.
No matter your age, background, or how far off retirement may seem, IRAs have many advantages that can help you save money for the future. This includes:
Tax advantages:* Contributions to a traditional IRA are often tax-deductible, meaning you can lower your taxable income for the year in which you make contributions. Additionally, the earnings on investments within the IRA grow tax-deferred until withdrawal, saving you significant money over time. With a Roth IRA, your qualified withdrawals after either (a) you reach the age of 59 ½ and/or (b) your account has been open for at least five years you can withdraw your contributions and any investment earnings without owing federal income tax.
Portability: Individual Retirement Accounts (IRAs) are designed to help maximize your savings for retirement. When you open an IRA, you’re in charge of this account rather than it being owned by an employer sponsored plan. That means it goes wherever you do and you can continue contributing. If you change jobs frequently or become self-employed, having an IRA ensures that your retirement savings remain intact and continue to grow. You can also easily roll over funds from previous employer-sponsored plans into your IRA without incurring any taxes or penalties
Supplemental savings: If you are interested in diversifying your investments, having an IRA in addition to your 401(k) can help you establish a new retirement savings bucket and choose a different type of investment for it.
Access to penalty-free withdrawals: While IRAs are designed for retirement, with a Roth IRA you can withdraw contributions (not earnings) any time without penalty in an emergency. In addition, both Roth and traditional IRAs offer penalty-free withdrawals for certain specific purchases, such as first-time home purchases or qualified education expenses.
IRAs are an excellent tool for retirement enjoyed by more than 4 in 10 American households. If you are interested in joining this group of savvy savers, contact us
to get started. Current CAFCU members can visit our online IRA Service Center for detailed guidance, online applications, and self-service forms by logging into digital banking
and clicking on Tools > IRA Service Center
.
How is a credit union IRA different from other IRAs?
While a bank-issued IRA can hold any type of investment (stocks, bonds, mutual funds, exchange-traded funds, real estate investment trusts, etc.), at a credit union like CAFCU, your IRA is invested in a
share certificate, offering more stability and predictability.
Interest earned within the share certificate IRA is typically tax-deferred until withdrawals are made. There are other rules and regulations about these special types of investment vehicles.
Is a CAFCU IRA a safe investment?
Should I choose a traditional or Roth IRA?
Not sure how to choose between a traditional or Roth IRA?
Though the IRA was introduced in 1974 by the U.S. congress via the Employee Retirement Income Security Act (ERISA), Roth individual retirement accounts (Roth IRAs) were created by the Taxpayer Relief Act of 1997 to introduce an account that would enable tax-free withdrawals in retirement.
Therefore, the investment tool you choose depends on current and future tax situations, investment goals, and personal preferences.
Here’s a quick guide to help you understand the basic differences.*
| TRADITIONAL | ROTH |
| Income and eligibility | There are no income limits for contributing, but tax deductibility might be limited based on income and participation in employer-sponsored retirement plans. | Contribution eligibility is subject to income limits. Higher-income earners might not be able to contribute directly to a Roth IRA. |
| Required minimum distributions | Required after age 73 | Never required |
| Withdrawal rules | You may begin taking distributions from a Traditional IRA upon reaching the age of 59½. Withdrawals before this age may incur an early withdrawal penalty. Mandatory distributions (required minimum distributions or RMDs) begin at age 73. | Contributions can be withdrawn at any time without penalty, but earnings withdrawals before age 59½ might incur taxes and penalties unless certain conditions are met. There are no RMDs during the original owner's lifetime. Principal investment may be withdrawn penalty free after 5 years of continuous Roth investment history. |
| Tax treatment | Contributions may be tax-deductible, reducing current taxable income. However, withdrawals in retirement are taxed as ordinary income. | Contributions are made with after-tax dollars, so withdrawals in retirement, including earnings, are tax-free if certain conditions are met. |
| Future tax considerations | Offers potential immediate tax benefits if you're in a higher tax bracket now than in retirement. However, withdrawals are taxed at ordinary income rates in retirement. | Can be advantageous for those expecting to be in a higher tax bracket in retirement or anticipating higher tax rates in the future. Tax-free withdrawals in retirement can provide flexibility and potentially increase spendable income. |
| Are contributions tax deductible? | Maybe | No |
| Necessary forms | IRA Traditional Simplifier | Roth IRA Simplifier
|
*Contributions to traditional and Roth IRAs may have different tax implications based on factors such as income level, participation in employer-sponsored retirement plans, and future tax rates. Please consult with a qualified tax professional regarding your specific tax situation and retirement planning needs.
How can I open an IRA with CAFCU?
To open an IRA, stop by your nearest branch or call our Member Center at 1-800-359-1939 Monday - Friday from 7 a.m. to 7 p.m. CST.
If you are a current CAFCU member, you can also apply online by logging in to digital banking from desktop browser and going to Tools > IRA Service Center to get started.
Please note that contributions must be made in cash. Stocks, bonds, mutual funds, etc. are not allowable contributions.
How will my money be invested with a CAFCU IRA?
CAFCU IRAS are invested in share certificates with terms from 6 to 36 months and a tiered rate structure.
To view current rates, click below.
What are your current IRA rates?
You can view current IRA share certificate rates on our
Rates page or by scrolling down on this page.
I'm not a CAFCU member. Can I open an IRA with you?
You can if you join us! Learn how to join our credit union family and access our membership application online at cafcu.org/join.
Once you've submitted your online application and your application is approved, you should receive an answer by email within 24 business hours.
You can then open your traditional or Roth IRA account by:
What are my options for funding my CAFCU IRA?
There are several ways to fund your traditional or Roth IRA with CAFCU:
- Wire yourself the money from another financial institution. Incoming wire transfers to CAFCU are free!
- Write a check and deposit it through CAFCU's mobile banking app (be aware of limits).
- Deposit cash or a check at a local branch.
- Deposit cash or a check at a shared branch location.
- Arrange a transfer of funds from a connected bank in our mobile app (note that it takes 2-4 days to set up an external transfer. Click here to learn more about external transfers.
- Send yourself funds using Zelle®.
- Use funds from a recent direct deposit! (Don't have direct deposit set up yet? Use this form to get started).
What is the minimum balance requirement to open an IRA with CAFCU?
You can open an IRA with CAFCU with a $1,000 minimum investment.
There is no minimum for an IRA share certificate with a 6-month term!
How are dividends calculated?
CAFCU IRA share certificate dividends are calculated daily and paid monthly.
Can I add other types of investments to my CAFCU IRA?
Not at this time. The only risk-free, federally insured investment option we offer with our IRA is a
share certificate. You can choose the term.
Can I roll over a 401(k) or IRA to a CAFCU IRA?
Yes! Our team can help you roll over your 401(k)s and other retirement assets into a CAFCU retirement account with a job change or retirement.
Contact us to get started.
What are annual IRA contribution limits?
The federal government sets the maximum amount investors may contribute to their IRAs each year (see table below). This amount can be divided among both traditional and Roth IRAs.
Maximum Allowable Contributions
| Contribution Year | Under 50 years | Over 50 years |
| 2021 | $6,000 | $7,000 |
| 2022 | $6,000 | $7,000 |
| 2023 | $6,500 | $7,500 |
What should I do if I inherited an IRA?
If you inherited retirement savings from an employer-sponsored retirement plan or from a traditional or Roth IRA, we can help. Visit our
inherited individual retirement account page for more information.
When will I receive my IRA statement?
CAFCU's IRA statements are provided quarterly or monthly based on account activity.
Can I change the term of my IRA share certificate?
You can change your share certificate term within the 10-day window of your certificate's maturity. You can also change the term before it expires if needed, but will incur a dividend penalty for breaking the term (there is a 60-day dividend penalty with 6-month and 1-year terms and 150-day dividend penalty with 24 and 36-month terms).
During my share certificate term, rates changed. How will this affect my certificate's rate tier?
IRA share certificates have a tiered rate structure, allowing them to earn a higher rate on a higher balance. If during your share certificate term your balance reaches a new rate tier (i.e. $10,000), your share certificate rate will adjust to the new tier when your certificate term matures.
How can I set up regular contributions to my IRA from my paycheck?
You can use payroll allocation to put saving on autopilot by setting up regular deductions from your paycheck into your CAFCU IRA. To do this, you will be required to complete a one-time contribution form. Contact us for details.
At this time, you cannot use automatic transfers to contribute to an IRA.
Where can I get help?
Here are all the ways you can
contact us for help with an individual retirement account.
IRA calculators and resources
| $1,000 minimum |
APY** |
Dividend Rate |
| 6-month |
3.25% |
3.20% |
| 12-month |
3.51% |
3.45% |
| 24-month |
3.76% |
3.70% |
| 36-month |
4.02% |
3.95% |
| $10,000 minimum |
APY** |
Dividend Rate |
| 6-month |
3.30% |
3.25% |
| 12-month |
3.56% |
3.50% |
| 24-month |
3.82% |
3.75% |
| 36-month |
4.07% |
4.00% |
For more information or questions connect with us:
*Consult with your tax advisor.
** APY = Annual Percentage Yield.
+Penalties will apply for early withdrawal of funds.
