Why Choose an Individual Retirement Account (IRA)
As part of our mission, Pension Fund offers Individual Retirement Accounts (IRAs), which are after-tax retirement savings programs.
With IRAs, you can save money your way. Whether you’re already participating in employer-provided retirement plans and want additional investment options or you’re self-employed and want to actively save for retirement (or aren’t currently participating in any retirement programs and want to start), IRAs allow you to decide when and how much you save.
- Because these are individual retirement programs, you don’t have to enroll through an employer. If you ever change jobs, your money stays with you.
- You can make contributions on your own schedule, or roll over funds from another account.
- With both types of IRAs, you may designate bene ciaries to ensure your money lives on.
IRAs offer flexibility based on your income and how you wish to receive funds in retirement. If your income is above the limits for contributing to a Roth IRA, you can always contribute to a Traditional IRA. With a Roth IRA, you receive your funds tax-free, and with a Traditional IRA, your earnings grow tax-deferred until retirement. (For more information see our IRA comparison chart on pg. 8.)
Pension Fund’s IRAs offer a competitive, guaranteed return, with the potential for additional interest earnings (Good Experience Credits). Our IRAs offer a guaranteed base interest rate of 3 to 6%, so they’re a safe and secure option for your investments. Additionally, our IRAs are eligible for additional interest earnings through Good Experience Credits.
Turbocharge your savings by putting taxes on hold:
Because the Traditional IRA uses after-tax dollars, your earnings aren’t taxed until distribution. This means a 25-year-old who opens an IRA and puts in $5,500/year at an annual return rate of 6% will have a savings total of $902,262 at age 65. If his savings were taxed at an annual rate of 25% over those 40 years instead, he’d end up with $615,157 at age 65.
Which IRA is best for you?
When choosing between the Roth and Traditional IRA, consider your income now and in retirement. The Roth IRA has income limits, so if your current income exceeds those limits, you may want to consider investing with the Traditional IRA. If you expect to be in a lower income tax bracket when you retire, you may want to contribute to a Traditional IRA. If you expect to be in the same or higher tax bracket, you may want to contribute to a Roth IRA.
The Roth IRA is best for someone who:
- Is still relatively new in their career (tax rates are lower when income is lower)
- Would like to withdraw retirement funds tax-free
- Wishes to access funds earlier than retirement if necessary
The Traditional IRA is best for someone who:
- Would like to save without income limits (i.e., high income earners)
- Is looking for additional tax deductions on income a Plans to retire in a lower income bracket
Brochure excerpt from Pension Fund of the Christian Church’s IRA Brochure