How to Guide: Establishing and Funding IRAs (Webinar Handouts)

Learning Objectives

After completing this session, you will be able to

define the purpose and tax advantages of Traditional and Roth IRAs,

identify the IRA contribution eligibility requirements,

discuss the process for establishing an IRA application,

discuss the IRA contribution limit and deadline, and

discuss the process for documenting a contribution.

Introduction to IRAs

©2012 Ascensus, Inc. Page 1


I
• Individual
account
• Cannot be
owned by a
nonperson
entity



I R
• Individual Studies show
account most members
• Cannot be will need to rely
owned by a on personal
nonperson savings for 80
entity percent of their
post-retirement
income



I R A
• Individual Studies show • One application
account most members = One IRA
• Cannot be will need to rely • Account can
owned by a on personal contain several
nonperson savings for 80 investments
entity percent of their
post-retirement
income



Benefits to Account Holders

Traditional IRA Roth IRA





Tax-deferred earnings






Regular contributions may
be tax-deductible






Regular contributions may Earnings may be withdrawn
be tax-deductible income tax-free


Contribution Eligibility



Anyone may establish an IRA. Eligibility requirements may limit how much
an individual may contribute to an IRA.



Anyone may establish an IRA. Eligibility requirements may limit how much
an individual may contribute to an IRA.

Roth Traditional
IRAs IRAs Earned income includes
amounts derived from or
received for personal services
rendered (e.g. IRS Form W-2,
Wage and Tax Statement,
Earned Schedule C, Profit or Loss
From Business if self-
Income employed, or Schedule F, Profit
or Loss From Farming.



Wages
Tips Rental Income
Taxable alimony
Bonuses
Unemployment compensation
Dividends
Combat pay Separation & early retirement
Child support
Professional fees
Interest

Commissions AFDC & TANF*

Disability pay Salaries
Royalties* Social Security


Earned Income Not Earned Income

Wages Interest
Salaries Royalties*
Tips Dividends
Bonuses Rental Income
Taxable alimony Unemployment compensation
Commissions Disability pay
Professional fees Child support
Combat pay Separation & early retirement
AFDC & TANF*
Social Security



Traditional IRA

• Earned Income
• Age – An account holder must
not attain age 70½ or older
any time during the year for
which the contribution is made.

Note: Once the account holder
reaches age 70½, they must
begin removing assets from the
IRA. This is called a required
minimum distribution (RMD).



Roth IRA

• Earned Income
• Income Limit – An account
holder’s modified adjusted gross
income (MAGI) must not exceed
the IRS limits.


Apply Your Knowledge: Contribution Eligibility

1. Meredith is single, 35, and works as a doctor. She receives earned income of
$80,000 per year. Can Meredith make a contribution to a Traditional IRA?
(Yes or No) [Yes]



2. Derek is married, 38, and is a mechanic. He and his wife file a joint federal
income tax return. Their combined earned income is $84,000 per year and
they have a combined MAGI of $90,000 per year. Can Derek contribute to a
Roth IRA? (Yes or No) [Yes]



3. George is single, 75, and is a maintenance worker. He has earned income of
$35,000 per year. Can George contribute to a Traditional IRA? (Yes or No) [No]


Establishing an IRA

©2012 Ascensus, Inc.

Establishing an IRA

The first step in establishing an
IRA with the prospective account
holder is to provide information
without giving tax advice.
• Explain the rules, but do not
apply the rules to the individual’s
situation.
• Identify the type of IRA the
individual wishes to establish,
describe investment options
available at the credit union, etc.


Establishing an IRA

The first step in establishing an
IRA with the prospective account
holder is to provide information
without giving tax advice.
• Explain the rules, but do not
apply the rules to the individual’s
situation.
• Identify the type of IRA the
individual wishes to establish,
describe investment options
available at the credit union, etc.
Second, to establish the IRA, the
credit union must provide the
following documents:


Establishing an IRA

Optional Document
• Application (required by some financial organizations)

Required Documents
• Plan Agreement
• Disclosure Statement
• Financial Disclosure

Regulatory Document
• Truth-in-Savings Disclosure


Establishing an IRA

To accurately administer the
IRA, the application requests
the account holder’s
• Legal name, taxpayer
identification number,
address and date of birth.


Required Documents

Pages 8 - 9

Required Documents

The plan agreement serves as
the “contract” between the credit
union and the individual for
whom the IRA is created.

Pages 8 - 9

Required Documents

When establishing an IRA, the credit
union must provide an up-to-date
disclosure statement, which explains
the IRA rules in nontechnical
language.

Pages 8 - 9

Required Documents

The credit union must provide
financial projections as part of the
disclosure statement.
• helps account holders visualize
their IRA investment growth, and
• allows account holder to compare
investments

Pages 8 - 9

Apply Your Knowledge: Establishing an IRA

1. When completing the application the account holder is required to name
beneficiaries (Yes or No). [No]



2. The account holder must sign the application to establish the IRA (Yes or No). [Yes]



3. What are the five documents that are required to be given to the account holder
upon the opening of an IRA? [Copy of Signed Application, Plan Agreement,
Disclosure Statement, Financial Disclosure and TIS]



4. How often must the financial disclosure be given to the account holder? [Once]


IRA Contributions

©2012 Ascensus, Inc. Pages 10 - 11

IRA Contributions

Contribution Limit
Traditional and Roth IRA Aggregate
Annual Regular Contribution Limits
Additional “Catch-Up” Contribution
Annual Regular
Tax Year for Account Holders Age 50 and
Contribution Limit
Older
2012 $5,000 $1,000 ($6,000 total)

Example: Contribution Limit
Kevin, age 54, has a Traditional and a Roth IRA at ABC Credit Union.
Assuming he is eligible to contribute to both IRAs, he could contribute
$3,000 to his Traditional IRA and $3,000 to his Roth IRA for tax year
2012.


IRA Contributions

Contribution Limit vs. Individual Contribution Limit

If the IRA owner’s earned income is lower than the annual
contribution limit, the IRA owner may be eligible to contribute up to
100 percent of their earned income.

Example: Individual Limit

Julie, age 19, is a single college student who earned $2,500 working
in the university bookstore for tax year 2012. Even though the IRS
contribution limit is $5,000, her individual limit will be $2,500.


IRA Contributions


IRA Contributions

Spousal Contribution Limit

A married account holder who does not
earn any or earns minimal earned
income and files a joint federal income
tax return for a year can treat the
couple’s joint earned income as their
own for purposes of determining the
maximum contribution limit.


IRA Contributions


A married account holder who does not Husband’s Earned Income
earn any or earns minimal earned + Wife’s Earned Income
income and files a joint federal income = Total Earned Income
tax return for a year can treat the
couple’s joint earned income as their
own for purposes of determining the
maximum contribution limit. Husband’s
Wife’s IRA
IRA
Contribution
Contribution


IRA Contributions

Example: Spousal Contribution Limit
Kim and Matt, both 35, are married. Matt is Husband’s Earned Income
in graduate school and has no earned + Wife’s Earned Income
income, and Kim is a dentist. As long as = Total Earned Income
Kim and Matt file a joint federal tax return,
Matt can use Kim’s earned income to
contribute to his Traditional IRA. If Kim
earns at least $10,000 in 2012, then they Husband’s
Wife’s IRA
can both contribute $5,000 to their own IRA
Contribution
Contribution
IRAs for 2012.


Apply Your Knowledge: Contribution Limit

1. Edward was born on December 30,
1964. What is his aggregate
contribution limit for 2012? [$5,000]



2. Elise was born on April 19, 1962. What
is her aggregate contribution limit for
2012? [$6,000]


Contribution Deadline

©2012 Ascensus, Inc. Page 12 - 13


A current-year regular contribution can be made beginning on January
1 of that year.
The deadline to make regular contributions for a year is the deadline
for filing that year’s federal income tax return, generally April 15.



2012 2013
January 1 December 31

1 of that year.



2012 2013
January 1 December 31 April 15

1 of that year.



Current Year

2012 2013

1 of that year.



Current Year Prior Year

2012 2013

1 of that year.



Prior-Year Regular Contributions

April 15
Under federal guidelines, the instruction to attribute a contribution to
the prior year must be in writing and is irrevocable.
• If there is no written instruction, assume the regular contribution is
for the current year.
• A prior-year regular contribution cannot be changed to a current-
year regular contribution.


Apply Your Knowledge: Contribution Deadline

1. What is the last date on which
Henry can make a contribution
for tax year 2012? [April 15, 2013]



2. If Henry makes his 2012
contribution on February 12,
2013, what methods can he use
to provide the written direction
for a prior-year contribution?
[Any written instruction method
accepted by the credit union]


Q&A and Contact Information

Paul Kern CIS, CIP, CISP
paul.kern@ascensus.com
608-229-1794
http://www.nafcu.org/ascensus

Establishing and Funding IRAs

Thank you for attending!

Learning Objectives
At the completion of this session you will be able to
define the purpose and tax advantages of Traditional and Roth IRAs,
identify the IRA contribution eligibility requirements,
discuss the process for establishing an IRA,
discuss the IRA contribution limit and deadline, and
discuss the process for documenting a contribution.

Icon Activity

Refer to Job Aids section of the material.

Indicates a group exercise.

Personal Objective(s)

I am attending this session so that upon completion I will be able to

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________


Definition of an IRA

I__________________
The IRA is an individual account, which means that it can only be owned by one account
holder.
A nonperson entity (e.g., a trust) cannot own an IRA, but a nonperson entity may be
named as an IRA beneficiary.

R_________________ Post-Retirement Income
Studies show most members will need to Other
Resources
rely on personal savings for up to 80 20%
percent of their post-retirement income. Personal
Savings
Source: www.ssa.gov (Including
IRAs)
80%
A_________________
One application = One IRA

An IRA may contain several investments.


What are the benefits to the account holder?

Earnings are always tax-deferred.
Account holder does not receive an IRS Form 1099-INT, Interest Income for
earnings on an IRA.

Traditional IRA contributions may be tax deductible.

Roth IRA earnings may potentially be withdrawn income tax-free.

Establishing and Funding IRAs 1 © 2012 Ascensus, Inc.
www.ascensus.com


Anyone may establish an IRA. Eligibility requirements may limit how much an individual
may contribute to an IRA. Account holders are responsible for determining if they are
eligible to make regular contributions.

The account holder must have earned income during the year for which the regular
contribution is made.
Earned income includes amounts derived from or received for personal services
rendered (e.g. IRS Form W-2, Wage and Tax Statement, Schedule C, Profit or Loss
From Business if self-employed, or Schedule F, Profit or Loss From Farming.

Sources of Income


Wages Interest
Salaries Royalties*
Tips Dividends
Bonuses Rental Income
Taxable alimony Unemployment compensation

Commissions Disability pay
Professional fees Child support

Combat pay Separation & Early retirement
AFDC & TANF**
Social Security

*Whether royalties are considered earned income is dependent on several factors.

**Aid to Families with Dependent Children and Temporary Assistance for Needy Families

www.ascensus.com

Traditional IRA Eligibility

Anyone who meets both the following requirements is eligible
70½ Year: The 70½ year is
to make contributions to a Traditional IRA. the year in which a person
reaches 70½ years of age.
Earned Income For people born between
January 1 and June 30, the
Age – An account holder must not attain age 70½
70½ year will be the year
or older any time during the year for which the th
of their 70 birthday. For
contribution is made. those born between July 1
and December 31, the 70½
Once the account holder reaches age 70½, they must begin year will be the year of
st
removing assets from the IRA. This is called a required their 71 birthday.
minimum distribution (RMD).

Roth IRA Eligibility Modified Adjusted Gross
Income (MAGI): MAGI is
Anyone who meets both the following requirements is eligible an individual’s adjusted
to make contributions to a Roth IRA. gross income without
taking into account
Traditional IRA deductions,
Earned Income
student loan interest
Income limit – An account holder’s modified deductions, tuition and
adjusted gross income (MAGI) must not exceed the fees deductions, certain
foreign income and foreign
IRS limits.
housing exclusions and
deductions, certain Series
MAGI Limits for Regular Roth IRA Contributions EE bond interest
exclusions, adoption
expense exclusions, and
Apply Your Knowledge: Contribution Eligibility domestic production
activities deductions.
1. Meredith is single, 35, and works as a doctor. She receives
earned income of $80,000 per year. Can Meredith make a
contribution to a Traditional IRA? (Yes or No)

2. Derek is married, 38, and is a mechanic. He and his wife file a joint federal income
tax return. Their combined earned income is $84,000 per year and they have a
combined MAGI of $90,000 per year. Can Derek contribute to a Roth IRA? (Yes or
No)

3. George is single, 75, and is a maintenance worker. He has earned income of $35,000
per year. Can George contribute to a Traditional IRA? (Yes or No)

www.ascensus.com

Establishing an IRA

The first step in establishing an IRA with the prospective account holder is to provide
information without giving tax advice.
Explain the rules, but do not apply the rules to the individual’s situation.
Identify the type of IRA the individual wishes to establish, describe the IRA
investment options available at the credit union, etc.
Second, to establish an IRA, the credit union must provide the following four
documents.
Plan agreement, disclosure statement, financial disclosure and Truth-In-Savings.
Note: Most credit unions require a member to complete an application when establishing an IRA.

Completing the IRA Application

Ascensus Traditional IRA Application (Form 2300-T)

Note: In today’s training we are going to use the Traditional IRA application. The concepts for completing
the Roth application are similar.

To accurately administer the IRA, the application requests the account holder’s
legal name, taxpayer identification number, address and date of birth.

www.ascensus.com

Beneficiary Designation

When establishing the IRA, the account holder may wish to designate beneficiaries.
Account holders are not required to name beneficiaries while completing the
application, but most will want to.

While completing the application in IRAdirect, there are three levels of available
beneficiaries.

Primary Beneficiary – receives first consideration for receiving the IRA assets after
the account holder’s death.

Secondary (or Contingent) Beneficiary – receives the IRA assets after the account
holder’s death if no named primary beneficiary qualifies to receive the assets.

Tertiary Beneficiary – receives the IRA assets after the account holder’s death if no
named secondary beneficiary qualifies to receive the assets.

Note: If the account holder would like to change their beneficiary designation or name one at a later time
they may do so throughout the lifetime of the account.

www.ascensus.com

Spousal Consent

Some states have community property or marital property laws that govern the
property rights of married individuals. If the account holder names a primary beneficiary
other than (or in addition to) their spouse, the spouse should sign the Spousal Consent
portion of the IRA application.
The account holder is not required to ask the spouse to sign, waiving their rights. It is
also not required that the spouse sign if asked.

Community/Marital Property States as of January 2012:

*Alaska Arizona **California Idaho
**Louisiana Nevada New Mexico Texas
Washington Wisconsin
* Alaska requires both spouses to “opt in” to community property law.
** While California and Louisiana have community property laws, they do not affect IRA death benefits if
there are designated beneficiaries.

Signatures and Date

It is very important that both the account holder and the credit union representative
sign the application. Without the account holder’s signature, there is no IRA.

www.ascensus.com

Plan Agreement

Ascensus Traditional IRA Agreement

The plan agreement serves as the “contract” between the credit union and the
individual for whom the IRA is created.
The purpose of the plan agreement is to disclose both the credit union and the account
holder’s responsibilities. The account holder must receive a copy of the plan agreement
upon opening the account.

Disclosure Statement

Ascensus Traditional IRA Disclosure Statement

When establishing an IRA, the credit union must provide an up-to-date disclosure
statement, which explains the IRA rules in nontechnical language.
The disclosure statement is written in a question and answer format.
It also contains a revocation provision that allows the account holder to revoke the
IRA within seven calendar days of receiving the statement.

Financial Disclosure

Ascensus Financial Disclosure

The credit union must provide financial projections as part of the disclosure statement.
This document must be provided to the account holder at account opening and is not to
be required to be amended even if the investment or rate changes. It is not required to
be in the account holder’s file if other documents state that the account holder
acknowledges receipt of a financial disclosure.


beneficiaries (Yes or No).

2. The account holder must sign the application to establish the IRA (Yes or No).

3. What five documents must the account holder receive upon the opening of an IRA?

4. How often must the credit union give the financial disclosure to the account holder?

www.ascensus.com

IRA Contributions

Contribution Limit

The maximum amount individuals may contribute to their IRAs is referred to as the
“annual regular contribution limit.”
The annual regular contribution limit is determined by the IRS each year and may be
adjusted for COLAs.
Account holders who attain age 50 by December 31 of the year are eligible to
contribute an additional amount called a “catch-up contribution.” The catch-up
contribution can be made any time during the year in which the account holder
attains age 50 and for each subsequent year.

Traditional and Roth IRA Aggregate Annual
Regular Contribution Limits

Additional “Catch-Up” Contribution
Annual Regular
Tax Year for Account Holders Age 50 and
Contribution Limit
Older

2012 $5,000* $1,000 ($6,000 total)

* The $5,000 contribution limit may be adjusted for inflation in future years in $500 increments.

Source: www.irs.gov (Publication 590)

Example: Contribution Limit

Kevin, age 54, has a Traditional and a Roth IRA at ABC Credit Union. Assuming he is
eligible to contribute to both IRAs, he could contribute $3,000 to his Traditional
IRA and $3,000 to his Roth IRA for tax year 2012.

www.ascensus.com

Individual Contribution Limit

If the account holder’s earned income is lower than the annual contribution limit, the
account holder may be eligible to contribute up to 100 percent of their earned income.

Note: Once again, this is an aggregate total for all of an account holder’s Traditional and Roth IRAs.

Example: Individual Limit

1. Julie, age 19, is a single college student who earned $2,500 working in the university
bookstore for tax year 2012. Even though the IRS contribution limit is $5,000, her
individual limit will be $2,500.


A married account holder who does not earn any (or earns minimal) earned income and
files a joint federal income tax return for a year can treat the couple’s joint earned
income as their own for purposes of determining the annual contribution limit.

To make a spousal contribution, the following requirements must be met.

The couple must file a joint federal income tax return.
There must be enough in earned income to support contributions for either spouse.
Each spouse who wants to make a contribution must have his (or her) own IRA. For a
Traditional IRA, the account holder must be younger than age 70½. For a Roth IRA,
the account holder must meet the MAGI limitations.

Example: Spousal Contribution Limit

Kim and Matt, both 35, are married. Matt is in graduate school and has no earned
income, and Kim is a dentist. As long as Kim and Matt file a joint federal tax return,
Matt can use Kim’s earned income to contribute to his Traditional IRA. If Kim earns at
least $10,000 in 2012, then they can both contribute $5,000 to their own IRAs for
2012.

www.ascensus.com

1. Edward was born on December 30, 1964. What is his aggregate contribution limit for
2012?

2. Elise was born on April 19, 1962. What is her aggregate contribution limit for 2012?


Ascensus Traditional IRA Contribution Direction

A current-year regular contribution can be made beginning on January 1 of that year.
The deadline to make regular contributions for a year is the deadline for filing that
year’s federal income tax return, generally April 15.

The IRA contribution deadline is not extended for account holders who receive an
extension for filing their federal income tax returns.
If April 15 falls on a Saturday, Sunday, or legal holiday, the deadline is extended to
the next business day.
A regular contribution made by mail is deemed timely if the envelope is postmarked
by the account holder’s federal tax return deadline and is accompanied by written
direction.

www.ascensus.com

Prior-Year Contributions

Ascensus Traditional IRA Contribution Direction

Under federal guidelines, the instruction to attribute a contribution to the prior year
must be in writing and is irrevocable. The account holder may use any written means to
make a prior-year contribution.

To comply with these guidelines, credit unions should adhere to the following
guidelines.
If there is no written instruction, assume the regular contribution is for the current
year.
A prior-year regular contribution cannot be changed to a current-year regular
contribution.
Direct deposit contributions are made for the current-year unless the credit union
receives written instruction before the contribution is made to treat it as a prior-
year contribution.


1. What is the last date on which Henry can make a contribution for tax year 2012?

2. If Henry makes his 2012 contribution on February 12, 2013, what methods can he
use to provide the written direction for a prior-year contribution?

www.ascensus.com

In Review

The purpose of an IRA is to help the account holder save for retirement while gaining
certain tax advantages.

1. The eligibility requirements for Traditional IRA contributions
Earned Income – The account holder must receive earned income during the
year for which the contribution is being made or file a joint federal income tax
return with a spouse who receives earned income.
Age – The account holder must be under age 70½, and must not reach age 70½
during the year for which the contribution is being made.
2. The eligibility requirements for Roth IRA contributions
Earned Income – The Roth account holder must receive earned income during
the year for which the contribution is being made or file a joint federal income
tax return with a spouse who receives earning income.
Income Limit – The Roth account holder must have earned income under the
MAGI limit for the year for which the contribution is being made.
3. An eligible individual who reaches age 50 by the end of the calendar year may make
a “catch-up” contribution for that year.

4. An eligible individual may make contributions up to the lesser of 100 percent of
earned income or the annual contribution limit for the tax year.

5. A married person who files a joint federal income tax return may claim a spouse’s
earned income as their own under the spousal contribution rules.

6. The deadline to contribute to an IRA is the account holder’s federal tax return
deadline (usually April 15).

www.ascensus.com

Answers to Group Exercises

1. Meredith is single, 35, and works as a doctor. She receives earned income of
$80,000 per year. Can Meredith make a contribution to a Traditional IRA? (Yes)

2. Derek is married, 38, and is a mechanic. He and his wife file a joint federal income
tax return. Their combined earned income is $84,000 per year and they have a
combined MAGI of $90,000 per year. Can Derek contribute to a Roth IRA? (Yes)

3. George is single, 75, and is a maintenance worker. He has earned income of $35,000
per year. Can George contribute to a Traditional IRA? (No)

Establishing an IRA
beneficiaries. (No)

2. The account holder must sign the application to establish the IRA. (Yes)

3. What five documents must the account holder receive upon the opening of an IRA?
(IRA application, IRA agreement, IRA disclosure statement, financial disclosure,
and Truth-In-Savings).

4. How often must the credit union give the financial disclosure to the account holder?
(Once).

Contribution Limit
1. Edward was born on December 30, 1964. What is his aggregate contribution limit for
2012? ($5,000)

2. Elise was born on April 19, 1962. What is her aggregate contribution limit for 2012?
($6,000)

1. What is the last date on which Henry can make a contribution for tax year 2012?
(April 15, 2013)

2. If Henry makes his 2012 contribution on February 12, 2013, what methods can he
use to provide the written direction for a prior-year contribution? (Every written
direction method accepted by the credit union)

www.ascensus.com

Sources of Income


Wages Commissions Interest Child support
Salaries Professional fees Royalties* Separation & Early
retirement
Tips Jury pay Dividends
AFDC & TANF**
Bonuses Directors fees Rental Income
Social Security
Taxable alimony Combat pay Unemployment
compensation

Disability pay

*Whether royalties are considered earned income is dependent on several factors.

* *Aid to Families with Dependent Children and Temporary Assistance for Needy Families

2012 MAGI Limits for Regular Roth IRA Contributions*

MAGI for MAGI for Ineligible for Roth
Filing Status
Full Contribution Partial Contribution Contribution

Single Up to $110,000 $110,000 up to $125,000 Over $125,000

Married, filing jointly Up to $173,000 $173,000 up to $183,000 Over $183,000
Married, filing separately** N/A $0 up to $10,000 Over $10,000

** If the Roth account holder did not live with their spouse at any time during the year,
they are considered a single filer for the purpose of determining Roth IRA eligibility.

* MAGI limits may be adjusted annually by the IRS; changes are posted to the IRA Resource Center.

www.ascensus.com

TRADITIONAL IRA TRUST APPLICATION PACKET
(FORM 2300-T)
Please Print or Type

___ ___ ___ ___ ___
CUID (Credit union will complete.) IRA Owner’s Name (First, Initial, Last)

IRA Owner’s Social Security Number
Identifying Info
___ ___ ___ - ___ ___ - ___ ___ ___ ___
Street Address

IRA Owner’s Birth Date (MM/DD/YYYY) - (required for processing) Mailing Address if Different From Street Address

Account Number City, State, Zip

I instruct the credit union to invest this IRA in the following investment: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
___________________________________________
M This is a Simplified Employee Pension (SEP) IRA.
DESIGNATION OF BENEFICIARY (Revocable; see next page for complete instructions)
PRIMARY Beneficiary(ies) — % Column MUST total 100%
% Name Mailing Address Relationship Birth Date SS #

SECONDARY Beneficiary(ies) — % Column MUST total 100%

Beneficiary Designation
TERTIARY Beneficiary(ies) — % Column MUST total 100%

Spousal Consent
ACCEPTANCE OF Trustee
This section should be reviewed if either the trust or residence of the IRA owner
is located in a community or marital property state and the IRA owner is married. (for credit union use only)
Due to the important tax consequences of giving up one’s community property The credit union hereby establishes a traditional IRA
interest, individuals signing this section should consult with a competent tax for the above IRA owner under the terms of the “Credit
or legal advisor. Union Traditional IRA Trust Agreement.”
Current Marital Status

Spousal Consent
M I Am Not Married – I understand that if I become married in the future,
I must complete a new Traditional IRA Beneficiary Designation/Change
form (Form 2303T).
Signatures
Credit Union Name

M Am Married – I understand that if I choose to designate a primary
I
beneficiary other than my spouse, my spouse must sign below. Credit Union Mailing Address (include street address)

Consent of Spouse
I am the spouse of the above-named IRA owner. I acknowledge that I have City, State, Zip
received a fair and reasonable disclosure of my spouse’s property and financial
obligations. Due to the important tax consequences of giving up my interest in X
this IRA, I have been advised to see a tax professional. Authorized Credit Union Signature Date (MM/DD/YYYY)
I hereby give the IRA owner any interest I have in the funds or property deposited M Check here if this is an amendment to an existing IRA.
in this IRA and consent to the beneficiary designation(s) indicated above. I
assume full responsibility for any adverse consequences that may result. No IRA OWNER’S SIGNATURE
tax or legal advice was given to me by the Trustee.
I acknowledge receipt of the “Credit Union Traditional IRA
Disclosure Statement,” which includes a financial projection
X table. I also accept the terms and conditions of the “Credit Union
Signature of Spouse Date (MM/DD/YYYY) Traditional IRA Trust Agreement.”

X X
Signature of Witness Date (MM/DD/YYYY) IRA Owner’s Signature Date (MM/DD/YYYY)

Stock #80008
2300-T
2010 Ascensus, Inc., Middleton, WI
© (Rev. 1/2010)

TRADITIONAL IRA BENEFICIARY
DESIGNATION/CHANGE (FORM 2303T)
Please Print or Type
____ ____ ____ ____ ____ Credit Union Name
CUID (Credit union will complete.)

____ _____ _____ - _____ _____ - _____ _____ _____ _____ - _____ _____
Social Security Number IRA Suffix IRA Owner’s Name (First, Initial, Last)

Account Number
I am the beneficiary. (Check this box if you are not the original owner of this account, but instead received it as a beneficiary after the
original owner’s death and are now designating your own beneficiaries.)

___________________________________________________________ _____ _____ _____ - _____ _____ - _____ _____ _____ _____ - _____ _____
Original IRA Owner’s Name Original IRA Owner’s Social Security Number IRA Suffix

DESIGNATION OF BENEFICIARY (Revocable; see next page for complete instructions)
PRIMARY Beneficiary(ies) — % Column MUST total 100%

SECONDARY Beneficiary(ies) — % Column MUST total 100%

Sample
TERTIARY Beneficiary(ies) — % Column MUST total 100%
% Name

Beneficiary Designation/Change Form for each IRA.)
Mailing Address

Spousal Consent
Relationship Birth Date

(This beneficiary designation overrides all previous designations for this IRA. If you have more than one IRA, you must fill out a separate
SS #

This section should be reviewed if either the trust or residence of the IRA owner or inherited IRA owner is located in a community or marital
property state and the IRA owner or inherited IRA owner is married. Due to the important tax consequences of giving up one’s community
property interest, individuals signing this section should consult with a competent tax or legal advisor.
Current Marital Status
M I
Am Not Married – I understand that if I become married in the future, I must complete a new Traditional IRA Beneficiary Designation/
Change form (Form 2303T).
M I
Am Married – I understand that if I choose to designate a primary beneficiary other than my spouse, my spouse must sign below.
Consent of Spouse
I am the spouse of the above-named IRA owner or inherited IRA owner. I acknowledge that I have received a fair and reasonable disclosure
of my spouse’s property and financial obligations. Due to the important tax consequences of giving up my interest in this IRA, I have been
advised to see a tax professional.
I hereby give the IRA owner or inherited IRA owner any interest I have in the funds or property deposited in this IRA and consent to the
beneficiary designation(s) indicated above. I assume full responsibility for any adverse consequences that may result. No tax or legal advice
was given to me by the Trustee or Custodian.

X
_____________________________________________________ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____________________
______________________________
Signature of Spouse Date (MM/DD/YYYY)
X
_____________________________________________________ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____________________
______________________________
Signature of Witness Date (MM/DD/YYYY)
IRA OWNER’S SIGNATURE
(This beneficiary designation is not effective unless signed.)

X
_____________________________________________________ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____________________
______________________________
Original IRA Owner’s/Inherited IRA Owner’s Signature Date (MM/DD/YYYY)
Stock #80013
2303T
© 2010 Ascensus, Inc., Middleton, WI (Rev. 1/2010)

CREDIT UNION TRADITIONAL IRA TRUST AGREEMENT (rev. 1/2010)
Form 5305 under Section 408(a) of the 4. REQUIRED MINIMUM DISTRIBUTIONS (b) If the grantor dies before the required
Internal Revenue Code FORM (rev. March beginning date, the remaining interest
2002). 4.1 Distributions Must Comply With will be distributed in accordance with
Tax Laws. Notwithstanding any provision (i) below or, if elected or there is no
The grantor named on the application of this agreement to the contrary, the designated beneficiary, in accordance
is establishing a traditional individual distribution of the grantor’s interest in the with (ii) below:
retirement account under section 408(a) trust account shall be made in accordance
to provide for his or her retirement and for with the following requirements and shall (i) The remaining interest will be
the support of his or her beneficiaries after otherwise comply with section 408(a)(6) and distributed in accordance with
death. the regulations thereunder, the provisions of paragraphs (a)(i) and (a)(ii)
which are herein incorporated by reference. above (but not over the period in
The trustee named on the application has paragraph (a)(iii), even if longer),
given the grantor the disclosure statement 4.2 Post 70½ Distributions. The starting by the end of the calendar
required by Regulations section 1.408-6. grantor’s entire interest in the trust account year following the year of the
must be, or begin to be, distributed not grantor’s death. If, however, the
The grantor has assigned the trust later than the grantor’s required beginning
account the sum indicated on the designated beneficiary is the
date, April 1 following the calendar year in grantor’s surviving spouse, then
application. which the grantor reaches age 70½. By that this distribution is not required
The grantor and the trustee make the date, the grantor may elect, in a manner to begin before the end of the
following agreement: acceptable to the trustee, to have the calendar year in which the grantor
balance in the trust account distributed in: would have reached age 70½.
1. CONTRIBUTION LIMIT (a) A single sum; or But, in such case, if the grantor’s
surviving spouse dies before
Except in the case of a rollover (b) Payments over a period not longer than distributions are required to begin,
contribution described in section 402(c), the life of the grantor or the joint lives of then the remaining interest will be
403(a)(4), 403(b)(8), 408(d)(3), or 457(e) the grantor and his or her designated distributed in accordance with (a)
(16), an employer contribution to a simplified beneficiary. (ii) above (but not over the period
employee pension plan as described in paragraph (a)(iii), even if longer),
4.3 Death Benefits. If the grantor dies

Sample
in section 408(k) or a recharacterized over such spouse’s designated
contribution described in section 408A(d) before his or her entire interest is distributed
beneficiary’s life expectancy, or in
(6), the trustee will accept only cash to him or her, the remaining interest will be
accordance with (ii) below if there
contributions up to $3,000 per year for tax distributed as follows:
is no such designated beneficiary.
years 2002 through 2004. That contribution (a) If the grantor dies on or after the
limit is increased to $4,000 for tax years (ii) The remaining interest will be
required beginning date and:
2005 through 2007 and $5,000 for 2008 and distributed by the end of the
thereafter. For individuals who have reached (i) the designated beneficiary is calendar year containing the fifth
the age of 50 before the close of the tax the grantor’s surviving spouse, anniversary of the grantor’s death.
year, the contribution limit is increased to the remaining interest will be
4.4 No Contributions to Inherited IRA.
$3,500 per year for tax years 2002 through distributed over the surviving
If the grantor dies before his or her entire
2004, $4,500 for 2005, $5,000 for 2006 and spouse’s life expectancy, as
interest has been distributed and if the
2007, and $6,000 for 2008 and thereafter. determined each year until such
designated beneficiary is not the grantor’s
For tax years after 2008, the above limits spouse’s death, or over the period
surviving spouse, no additional contributions
will be increased to reflect a cost-of-living in paragraph (a)(iii) below if longer.
may be accepted in the account.
adjustment, if any. Any interest remaining after the
spouse’s death will be distributed 4.5 Computation of the RMD. The
2. NONFORFEITABLE over such spouse’s remaining life minimum amount that must be distributed
expectancy as determined in the each year, beginning with the year
The grantor’s interest in the balance in the year of the spouse’s death and containing the grantor’s required beginning
trust account is nonforfeitable. reduced by 1 for each subsequent date, is known as the “required minimum
year, or, if distributions are being distribution” (RMD) and is determined as
3. INVESTMENT LIMITATIONS made over the period in paragraph follows:
(a)(iii) below, over such period.
3.1 No Life Insurance or Asset (a) Post 70½ RMD. The required minimum
Commingling. No part of the trust account (ii) the designated beneficiary is not distribution under paragraph 4.2(b)
funds may be invested in life insurance the grantor’s surviving spouse, for any year, beginning with the year
contracts, nor may the assets of the trust the remaining interest will be the grantor reaches age 70½, is
account be commingled with other property distributed over the beneficiary’s the grantor’s account value at the
except in a common trust fund or a common remaining life expectancy as close of business on December 31
investment fund (within the meaning of determined in the year following of the preceding year divided by the
section 408(a)(5)). the death of the grantor and distribution period in the uniform
reduced by 1 for each subsequent lifetime table in Regulations section
3.2 Restriction on Collectibles. No part year, or over the period in 1.401(a)(9)-9. However, if the grantor’s
of the trust account funds may be invested paragraph (a)(iii) below if longer. designated beneficiary is his or her
in collectibles (within the meaning of section surviving spouse, the required minimum
408(m)) except as otherwise permitted (iii) there is no designated beneficiary,
distribution for a year shall not be more
by section 408(m)(3), which provides the remaining interest will be
than the grantor’s account value at the
an exception for certain gold, silver, and distributed over the remaining
close of business on December 31
platinum coins, coins issued under the laws life expectancy of the grantor
of the preceding year divided by the
of any state, and certain bullion. as determined in the year of the
number in the joint and last survivor
grantor’s death and reduced by 1
table in Regulations section 1.401(a)
for each subsequent year.
Stock #80008
2300-T
© 2010 Ascensus, Inc., Middleton, WI
Page 1 of 10 (Rev. 1/2010)

CREDIT UNION TRADITIONAL IRA DISCLOSURE STATEMENT (rev. 1/2010)
This publication discusses traditional taxable income you receive during the year 4. HOW MUCH OF MY TRADITIONAL
individual retirement accounts (IRAs) in for performing services or that you receive IRA CONTRIBUTION CAN I
general, and your credit union-sponsored as taxable alimony or separate maintenance DEDUCT?
traditional IRA in particular. This publication payments. Amounts excluded from taxable
only discusses the federal tax rules, and you income are generally not treated as This answer discusses the amount that you
should consult your tax advisor concerning compensation. The only exception is that all can deduct for making regular contributions
the tax laws of your state. Your credit union combat pay earned by military personnel is to a traditional IRA. The amount that you can
is referred to as “we” in this document. treated as compensation, even though most contribute is discussed in answer 2.
combat pay is not taxable. Compensation Factors Affecting Deduction. The
There are two types of IRAs. This does not include income from property,
document primarily discusses the original amount you can deduct depends on whether
such as interest, dividends, rent, or capital you and your spouse (if you are married) are
IRAs that were created in 1974, which are gains. You compute your net income from
called “traditional IRAs.” The second type active participants in a retirement plan, and
performing services by adding: your modified adjusted gross income (MAGI)
was created by Congress in 1997, and
these are called “Roth IRAs.” Roth IRAs • The wages, salary, tips, bonuses, for federal income tax purposes.
are discussed in this document only to professional fees, consulting fees, and An active participant in a retirement plan
the extent they relate to traditional IRAs. other amounts you receive for providing is someone who is an active participant in
Many rules are the same for both traditional personal services as an employee (you an IRC 401 pension, profit-sharing, or stock-
and Roth IRAs, and the discussion of can use the amounts shown in the bonus plan; a Keogh plan; a SEP plan; a
these rules will refer simply to “IRAs.” For “wages, tips, other compensation” box of SIMPLE plan; a government retirement plan
more information about Roth IRAs, ask the IRS Forms W-2 that you receive); plus (other than Social Security); an IRC 403(b)
for the Credit Union Roth IRA Disclosure annuity or mutual fund plan; or an employee
Statement. • The net income from a business you
own and operate as a sole proprietor or savings plan operated under IRC 501(c)(18).
1. CAN I REVOKE MY IRA AFTER I your share of partnership income, but The following retirement plans are ignored in
HAVE SIGNED THE APPLICATION? only if you actively provide services in making this determination: (1) Service as a
connection with the business. member of a reserve or national guard unit
Right to Revoke. You can revoke an of less than 91 days of active duty during the
IRA within seven days after you receive (b) Annual Contribution Limit. Your year (other than active duty for training), or

Sample
this disclosure statement (except that you regular traditional IRA contributions for a (2) Service as a volunteer firefighter, if the
cannot revoke your IRA if you received this year cannot exceed the annual contribution accrued benefits as of the beginning of the
disclosure statement seven or more days limit (which is the amount stated in the year are not more than an annual benefit of
before you set up your IRA). We are required following table). The annual contribution limit $1,800 (single life annuity commencing at
to report to the IRS the contributions to and is higher in the year you reach age 50 and in age 65).
distributions from a revoked IRA. each subsequent year. For example, if you
reach age 50 by December 31, 2007, then Your MAGI is your adjusted gross
How to Revoke. You can revoke an IRA this limit is $5,000 for 2007. income before taking any deduction for
by calling us, writing to us, or stopping by IRA contributions, and without taking into
our office. Calls should be placed during Contributions For Under Age 50 Age 50+ account certain foreign income, foreign
normal business hours. Mailed notices are 2006–2007 $4,000 $5,000 housing exclusions, and series EE bond
timely if postmarked within the seven-day 2008 $5,000 $6,000 interest. Use your joint MAGI if you file a
period. If you revoke your IRA, the entire joint income tax return.
amount of any contributions you have made In 2009 and later years, the $5,000
will be returned to you. contribution limit for individuals under age If You Are NOT an Active Participant.
50 will be subject to an inflation adjustment. You can deduct all of your regular traditional
2. HOW MUCH CAN I CONTRIBUTE The annual contribution limit for individuals IRA contributions regardless of your income
TO A TRADITIONAL IRA? age 50 or older will be $1,000 more than if you are single or if your spouse is also not
the adjusted amount for individuals under an active participant in a retirement plan. But
There are two limits on the regular age 50. if your spouse is an active participant in a
contributions you can make to a traditional retirement plan, then the maximum amount
IRA for a year. Your regular traditional IRA 3. WHEN CAN I MAKE you can deduct is phased out between
contributions are limited to the lower of CONTRIBUTIONS? $150,000 and $160,000 of MAGI for 2006,
these limits. All regular contributions for the and between $156,000 and $166,000
same year to all of your traditional IRAs You can make regular IRA contributions
up until the time prescribed by law for filing of MAGI for 2007. Use the MAGI on the
must be combined for purposes of meeting tax return you file, whether it is a joint or
the contribution limits. A regular traditional the tax return for the year, not including
filing extensions. If you report income on separate return.
IRA contribution is any contribution that
does not qualify as a direct transfer, rollover, a calendar tax year basis, the deadline for If You ARE an Active Participant. The
direct rollover, recharacterization, SEP or making a regular IRA contribution for a year deduction for an active participant who is
SIMPLE contribution. is April 15 of the following year. If April 15 is single is phased out between $50,000 and
a weekend or a legal holiday at the address $60,000 of MAGI for 2006, and between
(a) Compensation Limit. In general, to which you mail your federal tax return, $52,000 and $62,000 of MAGI for 2007.
your total regular IRA contributions then the deadline is the next business day. The deduction for an active participant who
for a year (both to Roth and traditional You can make a regular IRA contribution files a joint return is phased out between
IRAs) cannot exceed the amount of your before this deadline even if you have already $75,000 and $85,000 of joint MAGI for
compensation earned during that year. If filed your tax return for the year (this may 2006, and between $83,000 and $103,000
you file a joint federal income tax return and require you to file an amended return). There of joint MAGI for 2007. The deduction for
earn less compensation than your spouse, is no special time during this period for a married active participant who files a
you can treat as compensation the joint making a regular IRA contribution. You can separate return is phased out between
compensation of you and your spouse, less make regular IRA contributions periodically zero and $10,000 of joint MAGI. Most of
the IRA contributions made by your spouse. during the year, or in a single contribution for these phase-out ranges will be adjusted for
Your compensation for a year is the total the year. inflation in subsequent years.
Stock #80008
2300-T
Page 4 of 10 (Rev. 1/2010)

ABC CREDIT UNION
***FINANCIAL PROJECTIONS***
This page contains projections of the future value of your IRA based on these assumptions:

1. The investment terms and fees described below remain the same throughout the projection period.
2. You withdraw the entire IRA at the end of the accumulation period.
3. The single contribution column assumes that $1,000 was contributed at the beginning of the year (the 1st year).
4. The annual contribution column assumes that $1,000 was contributed at the beginning of each year starting this year (the 1st year).

The three columns below list the projected values at the end of each year. To find the value at the end of a particular year, locate the years in the accumulated period
chart. Then go left to get the single contribution value, right to get the annual contribution value. Use the chart at the right to find the accumulation period until the end
of the year you reach age 60, 65, or 70. These are only projections, not guaranteed amounts. The future value of your IRA will depend on many factors.

Years Until You Reach
ACCUMULATED PERIOD CHART AGE
NOW 60 65 70
SINGLE ANNUAL SINGLE ANNUAL
CONTRI- CONTRI- CONTRI- CONTRI- 69 1
68 2
BUTION BUTION BUTION BUTION 67 3
VALUE VALUE VALUE VALUE 66 4
65 5
YEARS YEARS 64 1 6
1,010 1 1,010 1,308 27 31,129 63 2 7
62 3 8
1,020 2 2,030 1,321 28 32,450 61 4 9
60 5 10
1,030 3 3,060 1,335 29 33,785
59 1 6 11
1,041 4 4,101 1,348 30 35,133 58 2 7 12
57 3 8 13
1,051 5 5,152 1,361 31 36,494 56 4 9 14
1,062 6 6,214 1,375 32 37,869 55 5 10 15
54 6 11 16
1,072 7 7,286 1,389 33 39,258 53 7 12 17
52 8 13 18
1,083 8 8,369 1,403 34 40,660 51 9 14 19
1,094 9 9,462 1,417 35 42,077 50 10 15 20
49 11 16 21
1,105 10 10,567 1,431 36 43,508 48 12 17 22
47 13 18 23
1,116 11 11,683 1,445 37 44,953 46 14 19 24
1,127 12 12,809 1,460 38 46,412 45 15 20 25
44 16 21 26
1,138 13 13,947 1,474 39 47,886 43 17 22 27
42 18 23 28
1,149 14 15,097 1,489 40 49,375 41 19 24 29
1,161 15 16,258 1,504 41 50,879 40 20 25 30
39 21 26 31
1,173 16 17,430 1,519 42 52,398 38 22 27 32
37 23 28 33
1,184 17 18,615 1,534 43 53,932 24 34
36 29
1,196 18 19,811 1,549 44 55,481 35 25 30 35
34 26 31 36
1,208 19 21,019 1,565 45 57,046 33 27 32 37
32 28 33 38
1,220 20 22,239 1,580 46 58,626
31 29 34 39
1,232 21 23,472 1,596 47 60,223 30 30 35 40
29 31 36 41
1,245 22 24,716 1,612 48 61,835 28 32 37 42
1,257 23 25,973 1,628 49 63,463 27 33 38 43
26 34 39 44
1,270 24 27,243 1,645 50 65,108 25 35 40 45
24 36 41 46
1,282 25 28,526 1,661 51 66,769 23 37 42 47
1,295 26 29,821 1,678 52 68,447 22 38 43 48
21 39 44 49
20 40 45 50
19 41 46 51
18 42 47 52
NOMINAL EARNINGS RATE 1.0000 WITHDRAWAL PENALTY (DAYS) 0
CALCULATION METHOD Compound ENROLLMENT FEE .00
COMPOUNDING FREQUENCY Quarterly ANNUAL FEE .00
EFFECTIVE ANNUAL YIELD 1.0038 WDL/TERM FEE .00
TERM IN Days DAYS IN YEAR 365
NUMBER OF DAYS 365


How to Guide: Establishing and Funding IRAs (Webinar Handouts)

How to Guide: Establishing and Funding IRAs (Webinar Handouts)

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