Roth IRA

• Earnings and distributions can be income tax free.
• Contributions may be made even after age 70-1/2.
• No minimum distributions required during life.
• Qualified distributions are excluded from gross income and penalty taxes.

The Roth IRA is an exciting vehicle for accumulating a significant retirement savings. Being able to count on tax-free income at retirement should be an extremely attractive feature for many taxpayers, albeit at the expense of a current deduction. Roth IRAs will make a nice addition to your retirement portfolio and should be considered among the many options available to those serious about protecting their financial futures. Be sure to consult with your own professional tax advisor about your own specific tax situation to see if a Roth IRA can benefit you!

If you own a regular IRA, you can generally roll it over or convert it to a Roth IRA if it better meets your needs. The rollover or conversion will be considered a "distribution" from the current IRA.

It will not be subject to the 10% penalty on early withdrawals unless you then withdraw the rolled-over funds from the Roth IRA within 5 years and do not qualify for one of the otherwise available exceptions to the early withdrawal penalty tax.

Rollover / conversions are not permitted if your adjusted gross income exceeds $100,000 or you are married and file a separate return.

Contribution limitations are essentially the same for Roth IRAs as they are for regular IRAs. That is, they are limited to 100% of compensation, but not greater than $5,000 per year (to age 50) or $6,0000 per year (after age 50).

If you consider rolling over or converting a regular IRA to a new Roth IRA, be sure to have funds available to pay the taxes as they come due! If you make a withdrawal from your IRA to pay the taxes, this distribution may be subject to the 10% penalty tax on early withdrawals, as well as withdrawal charges imposed by the company where you have your IRA.

Qualified distributions from Roth IRAs are excluded from gross income and all penalty taxes. A "qualified distribution" generally includes any payment made more than five years after* the year of the first Roth contribution and that is made:

• On or after reaching age 59-1/2
• To a beneficiary or estate after the owner's death
• For a "* special purpose" as defined in regulations

* "Special purpose" includes, in addition to exceptions already provided under the law, up to $10,000 of first-time home buyer expenses and certain distributions for higher education expenses.

Other distributions may be subject to the 10% penalty tax, so be sure to check with your tax advisor if you need to consider making a distribution of any kind.

If you make multiple rollover contributions to a Roth IRA, the 5 year holding period begins with the year the last rollover occurs.

Unlike regular IRAs, contributions to a Roth IRA can be made even after reaching age 70-1/2.

Under a Roth IRA, there are no minimum distributions required before the owner's death! At the owner's death, the regular IRA rules applicable to minimum required distributions for designated beneficiaries will apply.