Roth IRAs

The tax advantages for a Roth IRA are different from a Traditional IRA. When you withdraw the money from a Roth IRA, none of it--including the earnings--will be taxed, assuming that the Roth has been open for at least five tax-years and you are taking a qualified distribution. (See below) Before that time, contributions, but not earnings, can be withdrawn tax free. Since earnings accumulate tax-free, Roth IRA contributions are not deductible from income.

Provided the qualified distribution rules are met, Roth IRAs allow accountholders and their heirs to avoid all federal income taxes on earnings for as long as the accountholders and heirs have the account. There are also no minimum distributions that need to be made at age 70 ½.

With a Roth IRA, you pay no tax on withdrawals of account earnings if you have had the account for at least five years AND you meet one of the following qualifications:

The accountholder is at least 59 1/2 years old.
The accountholder is deceased or disabled.
The funds will be used for a first-time home purchase.

IRS penalties and/or taxes will only be assessed on unqualified distributions of earnings.

You are eligible to contribute to a Roth IRA if you have earned income or compensation* and you meet certain income limitations. The combined contribution limits** are the same as the Traditional IRA, shown in the following schedule:

Combined contribution limits** for a person who is not age 50 or older:

Tax Year	Amount
2008 - 2010	$5,000

Combined contribution limits** for a person who is age 50 or older:

Tax Year	Amount
2008 - 2010	$6,000

*Compensation is defined as income earned from performing material personal services including wages, salaries, fees, tips, bonuses, commissions, taxable alimony and separate maintenance payments.

**These limits must be reduced by any amount that you contributed to your Traditional IRA for the same tax year.

The income limitations are summarized in the following chart:

Roth IRA Contribution Chart

Amount of AGI and Filing Status

Single, Head of Household or Qualifying Widow(er) Below $95,000 - Entitled to full contribution $95,000-$109,999 - Entitled to prorated contribution $110,000 or over - No contribution permissible

Married Filing Jointly Below $150,000 - Entitled to full contribution $150,000-159,999 - Entitled to prorated contribution $160,000 or over - No contribution permissible

Married Filing Separate Returns

$0-$9,999 $10,000 or over No contribution permissible

As with a Traditional IRA, you may be eligible to make a spousal contribution to a Roth IRA if certain rules are satisfied.

If you meet certain requirements, you may qualify for a tax credit when you make a contribution to an IRA. This tax credit reduces one's tax liability on a dollar-for-dollar basis. Ask an IRA Specialist for more information on this credit or consult with your tax advisor.

Traditional IRA funds may be converted to a Roth IRA, provided you meet the adjusted gross income (AGI) limitations. To do so, you will have to pay taxes on your the converted amount, but there will be no penalty for early withdrawal. Please consult your tax advisor if you are considering a conversion. Disclosure