Financial Education

All About 401K and IRA

Jan 15
2020
Post-it notes with 401K, IRA, Roth, and a question mark written down
Planning for your retirement can be overwhelming, and with it being so far in the future, it’s easy to put it off to another day. In fact, in a 2018 study by Northwestern Mutual, 21% of Americans have no money saved for retirement at all. If you’re part of the 21%, it may feel overwhelming to start, butRead more

Planning for your retirement can be overwhelming, and with it being so far in the future, it’s easy to put it off to another day. In fact, in a 2018 study by Northwestern Mutual, 21% of Americans have no money saved for retirement at all. If you’re part of the 21%, it may feel overwhelming to start, but it doesn’t have to be! Idaho Central is happy to help guide you through this important planning, and there are a few different accounts to consider.

What options do I have?

There are multiple options to consider, and we will review four options here, including 401K, Traditional IRA, Roth IRA, and SEP IRA.

401K

When people think about retirement plans, a 401K is typically what their mind goes to first. You have most likely heard the term, but do you know what it is? A 401K is a qualified retirement plan that allows eligible employees of a company to save and invest for their own retirement on a tax-deferred, also known as pre-tax, basis. This means saving for retirement with earnings before getting taxed, and you will not need to pay taxes on the contributions until you withdraw them. For many people, this seems to be the easiest option, since it’s often what their employers offer, and this is deducted from their paycheck automatically.

There are limits on 401K accounts, however, which may not make this the best fit for you. For instance, 401K accounts must be established by an employer. This means that if your employer does not currently offer retirement benefits, but you are wanting to contribute to your retirement, you are not able to set up a 401K on your own. There are also limits on 401K contribution amounts. For 2020, the amount of income you can contribute to a 401K is $19,500, with a possible additional contribution of $6,500 if you’re age 50 or over. In some cases, your plan also may limit contributions to a lower amount. If a 401K does not meet all of your retirement saving goals, you may want to explore other options.

Traditional IRA

A traditional IRA is best if you want tax-deferred earnings and the possibility for tax-deductible contributions. This is the most common IRA. Established in 1975 with the Employee Retirement Income Security Act (ERISA), it has become known as a “regular” or Traditional IRA to distinguish it from a Roth IRA. Contributions to a Traditional IRA are pre-tax, making it similar to a 401K in that regard. Once you start withdrawing from your Traditional IRA, taxes would then be paid on the distributions. Anyone, regardless of income, can contribute to a traditional IRA.

For 2020, you can contribute up to the lesser of 100% of your earned income or $6,000. Once you reach age 50, contribution limits on IRAs increase by another $1,000. This allows for a “catch-up” contribution for those nearing retirement.

Roth IRA

A Roth IRA is best if you want tax-free withdrawals.The Roth IRA was established by the Taxpayer Relief Act of 1997. This differs from a Traditional IRA in that it allows you to make contributions after tax, meaning that your contribution amount is taxed before you deposit it. You will be taxed at the time of earning, not at the time of pulling the money. Since you are paying tax on the contribution amount, all future qualified distributions are then tax-free. This includes any investment earning, your money grows tax-free! There are income limits on Roth IRAs to be aware of.

For 2020, you can contribute up to the lesser of 100% of your earned income or $6,000. Similar to the Traditional IRA, once you reach age 50, contribution limits on IRAs increase by another $1,000. This allows for a “catch-up” contribution for those nearing retirement.If you choose to have both a Traditional and Roth IRA, the contribution amount for both cannot total more than your annual contribution limit.

SEP IRA

A SEP IRA is best if you are self-employed or own a small business and want to save for retirement.SEP stands for Simplified Employee Pension, and is a form of Traditional IRA. With that in mind, SEP IRA plans were created to meet the needs of small employers with few employees and limited resources. A SEP plan provides business owners with a simplified method to contribute towards their employee’s retirement as well as their own. A self-employed person can make SEP contributions to his or her own IRA. The purpose for a SEP is that they are easily established and maintained unlike traditional retirement plans.

How can Idaho Central help me?

Idaho Central is happy to answer any IRA questions you may have, and offer guidelines, such as a Roth IRA is better for those who will be in a higher tax bracket at retirement, while a Traditional IRA is better for members who will be in a lower tax bracket at retirement. However, when it comes to determining which IRA is the best option for your needs, Idaho Central recommends that members contact their Tax Advisor to determine whether you’re eligible and if it makes sense to contribute to a Traditional or Roth IRA and how much.

Idaho Central Credit Union aims to help our members achieve financial success, and believes that investing in an IRA is a great way to provide for your future financial needs. At Idaho Central we are proud to offer several individual retirement accounts, including Traditional, Roth, and SEP IRA plans with our IRA Share Savings, IRA Money Market Savings, and IRA CDs.

If you’re ready to open an account, you can do so in any ICCU branch, through our new VideoChat feature, or give us a call.

Financial Education

How Can a Business Retain Quality Employees?

Jan 02
2020
small business employees giving the thumbs up in approval of their company

As one year comes to an end and another begins, employee retention is a hot topic as some businesses struggle to retain their employees. Unfortunately, towards the end of the year, many employees begin to look for new opportunities, allowing time to get their year-end bonus (if there is one), and start fresh in aRead more

As one year comes to an end and another begins, employee retention is a hot topic as some businesses struggle to retain their employees. Unfortunately, towards the end of the year, many employees begin to look for new opportunities, allowing time to get their year-end bonus (if there is one), and start fresh in a new organization at the beginning of the year.

Research shows that the #1 reason an employee looks for a new job is the inability to learn and grow, while some of the other reasons include things such as unhealthy work environment, working too hard or too much, amount of travel time, inability to get promoted, not getting an adequate raise, and so forth. While pay and benefits are some of the most important aspects of retaining great employees, it’s definitely a comprehensive package of things that determines the overall retention. So what can businesses do to increase retention of quality employees?

  1. Build a positive company culture

Building a positive company culture can help employees feel safe, empowered, and have a sense of purpose. Simon Sinek, popular author and motivational speaker, said, “The role of a leader is not to come up with all the great ideas. The role of a leader is to create an environment in which great ideas can happen.” Great and high quality employees want a positive space where they can put their talents and skills to work, and feel valued while doing so.

  1. Hire the right people from the start

Retaining employees can go all the way back to the beginning. Simon Sinek said, “Great companies don’t hire skilled people and motivate them, they hire already motivated people and inspire them.” Hiring the right people with the right mindsets that are aligned with the company culture can help employees feel like they are part of something bigger, where they belong to the company and its culture. Hiring the right people also means hiring the people with similar personal value, where it’s more enjoyable for the employees to adapt to the company’s culture, and easier for them to be ingrained with the culture as well.

  1. Help employees find a personal sense of meaning in their work

Each person has their own personal goals and purpose for life. In a Harvard Business Review, Kristi Hedges said, “What workers really need, to feel engaged in and satisfied by their jobs, is an inner sense of purpose.” When we help employees find personal sense of meaning and purpose in their work, they will treat their work more seriously, and with passion, where they can expand their talents, skills, and dedication towards the company’s mission.

  1. Celebrate together

What feels better than being celebrated? Celebrating employees is a good way to show them how important they are for you and for your business. Quality employees want to feel their work is worth celebrating, and that they are an important part of the community. Celebrating small victories can increase employees’ confidence to keep doing good work.

Become an Idaho Central business member today and experience our amazing culture!

Financial Education

6 Actionable Steps to Launch Your New Business Successfully

Nov 19
2019
small business owner placing open sign in store window

Your dreams of actually starting that pottery studio are finally coming together! But wait… have you thought about insurance? Licensing requirements? What about hiring employees or getting a business loan? These are questions that every new business owner will face, and one wrong misstep can end up costing you. It’s important that you are prepared and knowledgeable before opening those studio doors. 

Your dreams of starting a new business are becoming more concrete and you’re ready to take the plunge! But wait…have you thought about insurance? Licensing requirements? What about hiring employees or getting a business loan? These are questions that every new business owner will face and one wrong misstep can cost you. It’s important to take the proper steps before officially launching your business. Here are 6 actionable steps to take to set yourself (and your business) up for success:

1. Come up with a game plan
Contact your local Small Business Development Center (SBDC). SBDC resources can help you develop a business plan, conduct market research, and to prepare for a business loan. The best part? Many of their services are completely free

2. Fund your business
Do you have a nest egg that you plan on investing or will you need a loan? Most financial institutions partner with the Small Business Administration (SBA) to offer start-up loans. Contact your local Idaho Central branch and ask to have a Commercial Loan Officer get in touch with you.

3. Choose a business structure
There are four basic business structures: Sole Proprietorship, Partnership, Limited Liability Corporation (LLC), and Corporation. If you are unsure which structure will best suit your business, consult with an attorney specialized in business law and a reputable Certified Public Accountant (CPA). These professionals will become critical assets to your business and can help you decide which entity best fits your business model.

4. Register your business
Once you’ve established your business name, make it legal and protect your brand! You’ll need to register your business with Idaho’s Secretary of State and, in some instances, the federal government.

5. Apply for your EIN number
An EIN number is like a social security number for your business. You’ll use your Employer Identification Number (EIN) for important steps to start and grow your business, like opening a bank account and paying taxes. Apply for free through the IRS and be wary of fraudulent websites that charge for this service.

6. Open a business account
It’s no secret that Idaho Central Credit Union offers great options for business accounts! One of our talented Business Relationship Officers would be happy to assist you in choosing the right products and services for your new business. Contact our Business Relationship Department for more information.

Now you have the steps to start your new business off right! We, at Idaho Central Credit Union, are excited to support you in your new venture!

Financial Education

What does a dedicated local team mean to my business?

Nov 01
2019
Corporate woman on the phone.

Idaho Central Credit Union offers a dedicated local team to our business members. Whether you’re here locally, or you’re on a trip outside of Idaho, we are here to help. So what does a dedicated local team mean to your business?

Idaho Central Credit Union offers a dedicated local team to our business members. Whether you’re here locally, or you’re on a trip outside of Idaho, we are here to help. So what does a dedicated local team mean to your business?

  1. Local hours and local people that know your business

For many financial institutions, you are just a number. For us, you are our members. With a dedicated local team comes local hours and local people that know you and your business. Instead of calling and finding out you have just missed business hours in the east coast or some other time zone, you know you will get an answer when the people that you are calling are in the same time zone as you. Not only are we available to take your calls, but to make things easier, we are happy to meet you at your place of business. Our business relationship specialists also know your business. Our dedicated team only serves our business members to ensure we deliver the most professional and personal experience to you. Sometimes it might even be the same business relationship specialist that has solved your other questions. Idaho Central also offers extended hours to serve you. We typically open earlier than other financial institutions in the area, and close later as well. We are big enough to help, and small enough to care.

  1. Direct line to the experts

Not only do we offer local hours and a local team. Our dedicated team has a direct line for our business members where you get in touch with the experts directly. We know how precious your time is, so we try hard to ensure you don’t need to call into a call center, wait for a representative to redirect your call, or have someone other than experts answer your questions. Our business relationship specialists are trained for business, and they are knowledgeable in all the business products that we offer. Our experts can help you save time and answer your questions when you need them.

Idaho Central Credit Union is proud to offer the best business banking experience to our members. From user-friendly online banking and treasury services, to a dedicated local team just a phone call away. Call our business team directly at 208.846.7034 to open your new business membership.

Financial Education

How to Prepare for Retirement

Oct 24
2019
Tree growing out of jar with coins to symbolize growing savings

Time flies, and it can catch us by surprise. Set yourself up for financial success by taking control of your retirement plan now.

Have you ever had a day where the hours flew by? You were just going into work, but now it’s time for bed again.  What about those weeks where it is Monday, but now suddenly it’s Saturday? The week seems to end as quickly as it began. Have you ever been planting your flowers in the spring, but the next thing you know you’re putting your Christmas lights up? Does it feel like yesterday you were leaving the hospital with the newest member of your family, but now you’re helping them submit college applications?

Time flies, and it catches all of us by surprise sometimes.

You’re applying for your first job, and then you’re at your retirement party.

When thinking about retirement, it’s easy to put it at the bottom of your list of priorities. You have years to worry about it, and there’s always something that seems more pressing. Maybe you’re more worried about buying a new car, saving up for your first home, paying off some debt, or looking to go back to school. No matter what financial decisions you are currently making, saving for retirement is often not at the forefront of our minds.

In fact, in a 2018 study by Northwestern Mutual, 21% of Americans have no money saved for retirement at all. If you’re part of the 21%, it may feel overwhelming to start, but the time to start is now! Here are some easy tips to start planning ahead for your retirement.

Budget
It may seem like a small suggestion, but having a budget is the first step to success. If you are not currently saving any money for retirement and want to start, it is essential to look at your current spending and see where your money is currently going. This will help you know where you can adjust, and where your retirement savings can come from.

Know Your Options
Many employers offer 401(k) plans, and can make it automatic for you, and may even offer matched employer contributions. Utilizing an employer-offered 401(k) plan can allow you to save money from your paycheck before it is deposited into your account, which will help you avoid spending money that you plan to save. Talk to your employer and know what is available to you. If you do not have an employer-offered 401(k), Idaho Central is proud to offer retirement products like Traditional and Roth IRAs to help our members prepare for retirement.

Review Often
Once you make your retirement savings plan, it’s tempting to just check it off of your to do list. Planning for retirement doesn’t have to be stressful, but it shouldn’t be totally hands off! Set aside time to regularly review your plan, and adjust when needed. As you receive pay increases or bonuses, increase your retirement contributions as well.

Retirement is an exciting time of life, and can bring a lot of fear along with it. Set yourself up for financial success throughout your entire life by taking control of your retirement plan now.