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Which IRA Is Right for You?
Discover the Benefits of a Roth IRA
Straight Answers to Your IRA Questions
Rollovers, Direct Rollovers, and Transfers

What's the difference?

Traditional IRA - The traditional IRA is an account which allows you to defer taxes on your earnings until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which they are made.

Roth IRA - The Roth IRA is a nondeductible account that features tax-free withdrawals for certain distribution reasons after a five-year holding period. Since Roth IRA contributions are nondeductible and taxed in the year they are earned, people who expect to be in a higher tax bracket when they retire may benefit more from these accounts than from a traditional IRA.

Am I Eligible for Either Account?

Traditional IRA - If you are under age 70 1/2 for the entire tax year and have earned income (or your spouse has earned income), you are eligible to establish a traditional IRA, even if you already participate in any type of government plan, tax-sheltered annuity, simplified employee pension (SEP) plan, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE), or qualified plan (pension or profit sharing) established by an employer.

Roth IRA - Basically, there are two requirements for eligibility to contribute to a Roth IRA: you must have earned income (or your spouse) must have earned income, and your modified adjusted gross income (MAGI) cannot exceed certain limits (see the Single / Married, Joint Filers table below).

How Much Can I Contribute?

The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 increased the contribution amounts for both traditional and Roth IRAs. EGTRRA further increased contribution amounts for IRA owners who attain age 50 or older by the end of the year, allowing them to "catch-up" on their lost retirement savings.

Tax
Year
Standard
Limit
Catch-up
Amount
Total Limit for Age 50 and Over
2006 - 2007
$4,000
$1,000
$5,000
2008
$5,000
$1,000
$6,000
2009 and thereafter
$5,000 + COLA*
$1,000
$6,000 + COLA*

You can contribute the lesser of the amount applicable to you each year or 100 percent of your earned income. The chart shows the aggregate amount that you can contribute to any Roth and / or traditional IRA for each year.

Roth IRA contributions are further limited by your MAGI.
These prescribed:

Single Filers
MAGI of $95,000 or Less
MAGI Between $95,000 and $110,000
MAGI of $110,000 or More
Full Contribution
Partial Contribution
No Contribution

Married, Joint Filers

MAGI of $150,000 or Less
MAGI Between $150,000 and $160,000
MAGI of $160,000 or More
Full Contribution
Partial Contribution
No Contribution

How Do I Find Out More About Traditional and Roth IRAs?

See any of our IRA representatives. We will explain the nature of these accounts in more detail and help you complete the forms necessary to establish your traditional and / or Roth IRA.

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This information is effective for tax-year 2006 and thereafter. This information is intended to provide general information concerning IRAs. It is not intended to provide legal advice or to be a detailed explanation of the regulations covering these accounts or how they may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 590, individual Retirement Arrangements, and the IRS' web site, www.irs.gov , may also provide helpful information.

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