IRA
TIP OF THE DAYTIP OF THE DAY
#1#1
Both Traditional and Roth IRAsrequire earned income—butRoth IRAs have income limits.
Roth IRA owners must meetMAGI requirements. MAGI = Modified AdjustedGross Income
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#2#2
Not all income is consideredearned income Earned income must generally betaxable income = work related IRA owners must have earnedincome to make a contribution
The IRS does not consider thefollowing earned income:social security
interestrental income
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#3#3
Traditional and Roth IRAs shareone contribution limit
Contributions to both Traditionaland Roth IRAs are totaled
together.That total should not exceedtheir allowed contribution limit.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#4#4
There are two types of agebased contribution limits forRoth & Traditional IRA owners.Always check the IRA ownersage when dealing with IRAs.
Normal = For IRA ownersyounger than age 50.Catch-Up = For IRA owners50 years of age and older.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#5#5
MAGI - Modified Adjusted Gross
IncomeThe IRS has a formula that calculates
this figureIRA owners determine if they meet
MAGI limits
Why it is important for Roth IRA
owners:it determines if a full, partial orif no contribution can me madeHigher income earners may not bequalifed for Roth contributions
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#6#6
RMD = Required Minimum
DistributionAffects only Traditional IRAs and
not Roth IRAs
An RMD must be taken when aTraditional IRA owner reaches age
73.The RMD is calcualted based on theIRAs FMV (fair market value) for
the prior year.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#7#7
RBD
Required Beginning DateThe date when an IRA ownermust take their first RMD followingthe year they turned 73
st
This date is April 1
Traditional IRA owner turns 73:The first RMD may be postponed to thefollowing year (optional).If postponed, 2 RMDs will be taken in
the same year.All future RMDs must be taken by
December 31st.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#8#8
Roth IRA DistributionsDistributions may be taken taxand penalty free!
Roth IRA Owners may qualify if 2requirements are met:5 year waiting period satisfied:The clock starts when the 1contribution to a Roth IRA was
st
made.
AND
One of the following: Age 59 ½, Death,Disability, First Time Homebuyer
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#9#9
Traditional IRA DistributionsDistributions are usually taxableincome for the IRA owner.
Early Withdrawals:When funds are removed before age 59½ and not moved into another allowed
retirement account.IRA owner subject to 10% earlywithdrawal penaltyMay also be subject to income tax
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#10#10
Traditional IRA DistributionsDistributions are usually taxableincome for the IRA owner.
Normal Withdrawals:When funds are removed when IRA ownerreaches age 59 ½ and funds not movedinto another allowed retirement account.
No 10% early withdrawal penalty.Distribution is still taxable
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#11#11
Withholding for IRAsA percentage withdrawn and sentto the IRS to cover potential income
taxes
What does it help with?Avoids a larger tax bill later
FAQs
Withholding is optional, not requiredWe only withhold percentages, not dollar
amountsMinimum withholding rate: 10%Maximum withholding rate: 100%
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#12#12
What is a Transfer?When IRA funds move directly fromone institution to another, without themember receiving the fundsFunds are generally moving from a likeIRA to another like IRA (Ex: Traditional
to Traditional)
FAQs
The member never takes possession ofthe funds (even as a check)No 60-day rule (rollovers)No annual limit (contributions)
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#13#13
What is a Rollover?When retirement funds move from oneaccount to another Ex: 401K or TSPfunds move to Traditional IRA at PHFCU
Indirect Rollover If the owner receives the funds to complete the
rollover:Must be completed in 60 days to avoid possible
penalties & taxes Limited to 1 per 12 month periodDirect Rollover (Safest Method)Owner never touches fundsRetirement funds move from one financial institution
to another directly.No 60-day rule & no 1 per 12 month rule
PHFCU employees provide IRA rules NOT tax advice. Politely refer members to a competent tax professionalif they need further guidance.
Training Department
IRA
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Transcript
IRA
TIP OF THE DAYTIP OF THE DAY
#1#1
Both Traditional and Roth IRAsrequire earned income—butRoth IRAs have income limits.
Roth IRA owners must meetMAGI requirements. MAGI = Modified AdjustedGross Income
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#2#2
Not all income is consideredearned income Earned income must generally betaxable income = work related IRA owners must have earnedincome to make a contribution
The IRS does not consider thefollowing earned income:social security
interestrental income
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#3#3
Traditional and Roth IRAs shareone contribution limit
Contributions to both Traditionaland Roth IRAs are totaled
together.That total should not exceedtheir allowed contribution limit.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#4#4
There are two types of agebased contribution limits forRoth & Traditional IRA owners.Always check the IRA ownersage when dealing with IRAs.
Normal = For IRA ownersyounger than age 50.Catch-Up = For IRA owners50 years of age and older.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#5#5
MAGI - Modified Adjusted Gross
IncomeThe IRS has a formula that calculates
this figureIRA owners determine if they meet
MAGI limits
Why it is important for Roth IRA
owners:it determines if a full, partial orif no contribution can me madeHigher income earners may not bequalifed for Roth contributions
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#6#6
RMD = Required Minimum
DistributionAffects only Traditional IRAs and
not Roth IRAs
An RMD must be taken when aTraditional IRA owner reaches age
73.The RMD is calcualted based on theIRAs FMV (fair market value) for
the prior year.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#7#7
RBD
Required Beginning DateThe date when an IRA ownermust take their first RMD followingthe year they turned 73
st
This date is April 1
Traditional IRA owner turns 73:The first RMD may be postponed to thefollowing year (optional).If postponed, 2 RMDs will be taken in
the same year.All future RMDs must be taken by
December 31st.
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#8#8
Roth IRA DistributionsDistributions may be taken taxand penalty free!
Roth IRA Owners may qualify if 2requirements are met:5 year waiting period satisfied:The clock starts when the 1contribution to a Roth IRA was
st
made.
AND
One of the following: Age 59 ½, Death,Disability, First Time Homebuyer
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#9#9
Traditional IRA DistributionsDistributions are usually taxableincome for the IRA owner.
Early Withdrawals:When funds are removed before age 59½ and not moved into another allowed
retirement account.IRA owner subject to 10% earlywithdrawal penaltyMay also be subject to income tax
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#10#10
Traditional IRA DistributionsDistributions are usually taxableincome for the IRA owner.
Normal Withdrawals:When funds are removed when IRA ownerreaches age 59 ½ and funds not movedinto another allowed retirement account.
No 10% early withdrawal penalty.Distribution is still taxable
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#11#11
Withholding for IRAsA percentage withdrawn and sentto the IRS to cover potential income
taxes
What does it help with?Avoids a larger tax bill later
FAQs
Withholding is optional, not requiredWe only withhold percentages, not dollar
amountsMinimum withholding rate: 10%Maximum withholding rate: 100%
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#12#12
What is a Transfer?When IRA funds move directly fromone institution to another, without themember receiving the fundsFunds are generally moving from a likeIRA to another like IRA (Ex: Traditional
to Traditional)
FAQs
The member never takes possession ofthe funds (even as a check)No 60-day rule (rollovers)No annual limit (contributions)
PHFCU employees provide IRA rules
NOT tax advice. Politely refer members to acompetent tax professional if theyneed further guidance.
Training Department
IRA IRA
TIP OF THE DAYTIP OF THE DAY
#13#13
What is a Rollover?When retirement funds move from oneaccount to another Ex: 401K or TSPfunds move to Traditional IRA at PHFCU
Indirect Rollover If the owner receives the funds to complete the
rollover:Must be completed in 60 days to avoid possible
penalties & taxes Limited to 1 per 12 month periodDirect Rollover (Safest Method)Owner never touches fundsRetirement funds move from one financial institution
to another directly.No 60-day rule & no 1 per 12 month rule
PHFCU employees provide IRA rules NOT tax advice. Politely refer members to a competent tax professionalif they need further guidance.
Training Department