A Traditional IRA from Capitol Federal allows you to save for retirement while potentially reducing your tax bill. Choose any CD term of 4 years or less for your investment.
Why Choose a Traditional IRA?
- Tax-Deductible Contributions. Consult your tax advisor to see if you qualify.
- Tax-Deferred Growth. Earnings are not taxed until you withdraw them in retirement.
- No Withdrawals Until Age 73. Your funds can continue to grow tax-deferred.
Are you eligible?
In order to contribute to a Traditional IRA, the contributor (or spouse if married and filing a joint return) must:
- Have earned income equal or greater than the contribution amount.
- Only contribute the maximum allowed to both a Traditional IRA or Roth IRA. If contributions are made to both a Traditional and Roth IRA, the maximum contribution to the Traditional is reduced by the amount contributed to the Roth IRA.
Your Modified Adjusted Gross Income (MAGI) and your participation in an employer-sponsored retirement (QRP) will affect your deductibility. Please refer to the income deduction limits below:
2023 Traditional IRA Deduction MAGI Ranges
| Participant | 2023 |
|---|---|
| Single active participant: | Less than $73,000 – full deduction $73,000 - $83,000 – partial deduction More than $83,000 – no deduction |
| Married active participant filing joint income tax return: | Less than $116,000 – full deduction $116,000 - $136,000 – partial deduction More than $136,000 – no deduction |
| Married active participant filing separate income tax return: | Less than $10,000 – partial deduction More than $10,000 – no deduction |
| Married, joint (not active participant but spouse is): | Less than $218,000 – full deduction $218,000 - $228,000 – partial deduction More than $228,000 – no deduction |
2024 Traditional IRA Deduction MAGI Ranges
| Participant | 2024 |
|---|---|
| Single active participant: | Less than $77,000 – full deduction $77,000 - $87,000 – partial deduction More than $87,000 – no deduction |
| Married active participant filing joint income tax return: | Less than $123,000 – full deduction $123,000 - $143,000 – partial deduction More than $143,000 – no deduction |
| Married active participant filing separate income tax return: | Less than $10,000 – partial deduction More than $10,000 – no deduction |
| Married, joint (not active participant but spouse is): | Less than $230,000 – full deduction $230,000 - $240,000 – partial deduction More than $240,000 – no deduction |
Contribution amounts and catch-up contribution amounts will increase annually as follows:
| Tax Year | Contribution Limit | Catch-Up Limit if Age 50 or Older | Total Contribution if Age 50 or Older |
|---|---|---|---|
| 2023 | $6,500 | $1,000 | $7,500 |
| 2024 | $7,000 | $1,000 | $8,000 |
Premature withdrawals from Certificates of Deposit shall be subject to a penalty. For certificates with an original or renewal term of one year or less, or for the 14-month CD, the penalty shall be equal to 90 days interest at the contract rate, non-compounded. For certificates with an original or renewal term greater than one year, with the exception of the 14-month CD, the penalty shall be equal to 180 days interest at the contract rate, non-compounded. The penalty shall be assessed on the amount withdrawn unless such withdrawal should cause the balance to fall below the required minimum balance, in which case the penalty would be charged on the entire balance and the account would be closed.
Interest which has been credited to the account since the later date of account opening, renewal or interest rate endorsement may be withdrawn at any time without penalty. Withdrawals not later than 10 days after maturity or following the death or adjudication of incompetence of an Account Holder shall not be subject to penalty.
For Traditional Individual Retirement Accounts only (this excludes Roth IRAs) held under Capitol Federal's IRA Trust Agreement (except for Passbook or daily accounts), penalties shall be assessed on withdrawals (other than at maturity, including the ten day post-maturity grace period) until the individual attains 59½ years of age, at which time the IRA Account Holder may withdraw without penalty, subject to laws and regulations concerning distributions from an IRA account, which may result in tax or other penalty assessments by the Internal Revenue Service.
Roth IRA
A Roth IRA is ideal if you want tax-free withdrawals in retirement and no mandatory distributions at age 73. Enjoy the flexibility of choosing any CD term of 5 years or less.
Roth IRA Benefits:
- Tax-Free Growth. Withdraw earnings tax-free after a 5-year holding period under qualifying conditions.
- No Required Withdrawals. No mandatory distributions at age 73.
- Flexible Contributions. Continue contributing as long as you have earned income, even during retirement.
Roth and Traditional IRAs – What’s the Difference?
Why You Should Consider a Retirement Plan in Your 20s
IRA Rollover - Secure Your Retirement
