An individual retirement account (IRA) is a form of individual savings plan that provides tax advantages for retirement savings.  Now is a good time to talk about IRAs because deposits can be made for 2019 until April 15, 2020.  The annual IRA limit is $6,000 in 2019 and 2020.  If you’re 50 or older, the limit is $7,000 for 2019 and 2020. A Traditional IRA or SEP IRA can be established as an IRA savings account or an IRA share certificate.  Contributions can be made to age 70.5.  Distributions must begin at age 72.  Contributions may reduce taxable income.  Earnings grow tax deferred.  Distributions are taxable.  Many people simplify Traditional IRA activity as “money is deposited before tax.”  All transactions and earnings within the IRA have no tax impact in the current year, but remember that withdrawals are taxed as income.  The SEP IRA (Simplified Employee Pension) allows an employer or self-employed individual to make retirement plan contributions into a traditional IRA established in the employee’s name, instead of a pension fund in the company’s name. SEP IRA accounts are treated like traditional IRAs for tax purposes and allow the same investment options, but may have extended contribution deadlines. Another type of IRA is a Roth IRA or Health Savings Account (HSA).  With a Roth IRA, contributions are made with after-tax assets, all transactions within the IRA have no tax impact, and withdrawals are usually tax-free. Like Traditional IRAs, Roth IRAs can be established as an IRA savings account or an IRA share certificate.  Deposits for the previous year can also be made until April 15 of the following year.  Roth IRAs have no age limit for contributions or distributions.  Earnings grow tax free and qualified distributions are tax free.  Contributions can be made only if there is earned income and must be done prior to the year you turn 72. HSAs can be used to pay for deductibles, copayments, coinsurance, and some other expenses. You may contribute to an HSA only if you have a High Deductible Health Plan. For 2020, if you have an HDHP, you can contribute up to $3,100 for individual coverage and up to $7,100 for family coverage.  HSA funds roll over year to year if you don’t spend them. An HSA may earn interest or other earnings, which are not taxable.   A Coverdell Education Savings Account (ESA) can also be established as an IRA savings account or an IRA share certificate.  An ESA is targeted to education expenses and not retirement.  Beneficiaries must be under the age of 18.  Max contribution for Coverdell is $2,000 annually.  Distributions are both tax free and penalty free.  Unused benefits can be rolled over to another family member under age 30.    Certain exceptions may apply.  If you have a question about IRAs, please call PECU at 800-772-1955.