Navy Federal Credit Union Bank IRA Review
Navy Federal Credit Union Bank IRA review: CD IRAs, Roth IRA, Traditional IRA, rollover, Money Market IRA. NCFU IRA fees, rates, APY/APR, promotion offer for 2017. Is NCFU IRA good and safe way to invest?
Navy Federal Credit Union IRA Eligibility
Navy Federal Credit Union (NFCU) offers many financial products, such as its Traditional IRA, which can provide several advantages over those products offered by competing financial institutions. While the benefits of membership in NFCU are significant, it is important to note that membership in Navy Federal Credit Union is not open to everyone. Only active or retired servicepersons, their direct relatives, and spouses are eligible.
The NFCU Traditional IRA does not have a minimum deposit. When opening an account, the contribution limit for the current tax year is $5,500. Catch-up contributions of an additional $1k are available for individuals 50 and over. Direct deposit is available and can be set up online. NFCU does not penalize individuals for early withdrawal from their Traditional IRA, though this does not mean penalties may not be assessed by the IRS. No fees are assessed for any NFCU savings accounts with a balance over $50. Balances can dip below the $50 minimum depending on the activity of the NFCU member’s other accounts.
Navy Federal Credit Union IRA Rates
The rates offered by NFCU are usually competitive. However, rates for their Traditional IRA varies based on credit score. Accordingly, investors must apply before finding what rate will be assigned to their account. For the average investor, NFCU projects a dividend rate of 0.10% per annum, with interest compounded monthly. NFCU warns that the values they project based on assigned interest rates are only projections, not guarantees. However, it should be noted that NFCU has never failed to pay dividends at the rates they declared in advance, even during periods of national and global recession.
Taxes and Deductions
Income tax on deductible contributions is deferred until withdrawals begin. Income tax on dividends earned on both deductible and non-deductible contributions are deferred until distribution. Distribution up to a limit of $10k can be taken without a 10% IRS penalty under certain circumstances. These circumstances include first-time home purchase, disability, and education expenses.
The NFCU Traditional IRA offers potential tax deductions. Contributions are 100% tax-deductible for single filers earning less than $60k and married couples filing jointly making less than $96k. A portion of contributions are tax-deductible for individuals making between $60-70k and married couples filing jointly who earn between $96-116k.
Investors can begin withdrawing from NFCU’s Traditional IRA as early as 59.5 without paying additional penalty taxes. Investors must begin withdrawing at the age of 70.5, when the IRA’s RMD begins. The RMD can be actually distributed as late as April 1st of the following year for tax purposes. Investors must withdraw the RMD every year after this point within the calendar year. The RMD must be withdrawn regardless of financial need, if payments are going to charity, or if a trust has been named the beneficiary.
Navy Federal Credit Union IRA Pros and Cons
Utilizing a NFCU Traditional IRA has many benefits. Most people will find that all the money they contribute to their IRA goes towards a tax deduction. NFCU does not charge fees for opening or maintaining an IRA; a benefit that is not offered by all financial institutions. NFCU also does not penalize investors personally for early withdrawal. If early withdrawal is necessary for the investor, he or she will only experience tax penalties at the federal level, not at the level of the financial institution.
NFCU is a responsive institution with an up to date, easy to access website. Their online banking portal is very easy to use with either a browser or on a mobile phone. NFCU responds to email through their online portal quickly and professionally. It is easy to get customer service on the phone for problems or inquiry that require further assistance. Most if not all NFCU call centers are in the US and employ Americans.
NFCU is designed around the unique needs of active service personnel. It is easy to bank anywhere using NFCU’s online and telephone services. However, local branches of this credit union can be difficult to find. Investors who prefer face-to-face interaction may prefer a different institution’s IRA services.
Not everyone can utilize NFCU, as membership does require a connection to the armed forces. This includes not only the Navy, Army, and Air Force, but also the Coast Guard and both military and civilian arms of the Department of Defense, as well as members of several other institutions. A person may be eligible for NFCU membership if they or their spouse have a family member employed by or retired from any of these institutions.
For investors interested in a Traditional IRA, NFCU offers a product with several advantages and no associated fees. But there are definitely
better options available on the market.
Article was updated on 1/22/2017.