An Advocacy Win Allows Idaho Credit Unions to Offer Tax-Advantaged Savings Accounts
Help your members save for education, childcare, health care, their first home, and retirement.
Idaho credit unions’ advocacy focus this year has been on statutory and regulatory flexibility in response to COVID-19. Even with the urgency around that work, legislation was passed during the 2020 session that will benefit credit unions and their members. In addition to a bill modernizing the Credit Union Act, the legislature expanded authority for credit unions to offer tax-advantaged savings accounts. The Idaho Department of Finance announced the law took effect July 1.
The current and expanded accounts give credit union members three tax benefits: they could contribute to the account on pretax or tax-deductible basis, while also growing those savings, free of taxes, over time. Account holders can also make tax-free withdrawals to cover qualified expenses.
“Idahoans may be looking for the best possible savings accounts options for their stimulus checks, or for money they may be saving on travel, gas, and other expenses during COVID-19, and it makes sense for them to consider tax-advantaged savings accounts,” said Ryan Fitzgerald, Northwest Credit Union Association Vice President, Legislative Affairs for Idaho. “This legislation puts credit unions on a level playing field with other financial institutions who are able to offer these broad savings programs. And it certainly fits credit unions’ people helping people mission.”
Types of tax-advantaged savings plans credit unions can offer include:
- First-time home buyer savings;
- Education Savings Accounts (ESAs);
- Medical Savings Accounts; and
- Retirement options, such as 401Ks, traditional Individual Retirement Accounts (IRAs), and Simplified Employee Pension IRAs.
More information can be found in the Idaho Department of Finance’s news release here.
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