• 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.

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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.

The amount rolled over will be taxed as ordinary income to the extent it represents untaxed contributions and earnings, but if you act before 1999, the income will be spread over 4 years, beginning with the year of the rollover or conversion! After 1998, rollovers or conversions from a regular IRA to a Roth IRA will be entirely includable in income in the year of the rollover. Beware...early withdrawals of rolled-over or converted funds subject to the 4-year income inclusion rule will be subject to an additional 10% penalty tax over and above the regular penalty tax mentioned above!

No other types of rollovers are permitted to Roth IRAs, unless they are from another Roth IRA. Rollovers must still be accomplished within 60 days of a distribution.

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 $3,500 per year (to age 50) or $4,500 per year (after age 50). This limit is reduced by any IRA contributions to non- Roth IRAs you may own.

Contributions are phased out if a couple's adjusted gross income exceeds $150,000 or if a single person's adjusted gross income exceeds $95,000. Check with your tax advisor if your income exceeds these thresholds.

PLANNING TIP: 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.

PLANNING TIP: 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 may be made even after reaching age 70-1/ 2!

Spousal Roth IRAs are also available. They are governed by the regular Spousal IRA rules and the new Roth IRA rules.

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.

The new 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!

* Five years after a contribution is first made, or amounts are converted to, a Roth IRA.  Subsequent contribution or conversions do not start a new five-year waiting period.  See IRC Sec.  408A(d)(2)(B), as amended by the Internal Revenue Restructuring and Reform Act of 1998.

The following information reflects a summarization of the 1998 tax treatment applicable to Roth IRAs. As in all tax questions involving your own personal situation, you should consult your own tax advisor or the Internal Revenue Service.

With the passage of the "Taxpayer Relief Act of 1997" (TRA 97) comes a brand new type of IRA. Known as the "Roth

IRA", this IRA features income tax-free interest accumulations and income tax- free distributions provided specific requirements are met. As with other IRAs, North Coast Life's flexible premium deferred annuity plan is well structured to receive Roth IRA contributions.

Contributions to Roth IRAs are non-deductible. This means that the money that goes into them does so on an after-tax basis. Roth IRAs do not reduce current taxable income.

However, provided the Roth IRA is held at least 5 years beginning with the year the first contribution is made, both the earnings achieved and the distributions received will be free of income tax!

These are the significant advantages and requirements to note about the new Roth IRA.