Mutual Fund Education Alliance - Investment Strategies

Traditional IRA

Roth IRA

Eligibility Requirements

You must be under age 70½ with earned compensation

You may contribute at any age as long as you have earned compensation subject to income limits:

For single filers:

2006: Up to $95,000 (to qualify for a full contribution); $95,000-$110,000 (to be eligible for a partial contribution)

2007: Up to $99,000 for full contribution; $99,0001 to $114,000 for partial contribution

For joint filers:

2006: Up to $150,000 (to qualify for a full contribution); $150,000-$160,000 (to be eligible for a partial contribution)

2007: Up to $156,000 for full contribution;
$156,001 to $166,000 for partial contribution

Key Tax Advantage

Tax-deferred growth

Federally Tax-free growth

Maximum Annual Contribution


Year	Contribution Limit
2006-2007	$4,000
2008	$5,000

After 2008, the limit will be adjusted for inflation in $500 increments.

In addition, workers age 50 and over (as of the end of the year) will be able to make increased annual contributions of $1,000 each year (2006 and beyond)


Year	Contribution Limit
2006-2007	$4,000
2008	$5,000

After 2008, the limit will be adjusted for inflation in $500 increments.

In addition, workers age 50 and over (as of the end of the year) will be able to make increased annual contributions of $1,000 each year (2006 and beyond)

Tax Deductible Contributions

Yes, subject to retirement plan participation status and Adjusted Gross Income (AGI) limits

Full deductibility of 2006 contribution is available for active participants in a retirement plan whose 2006 AGI is $75,000 or less (joint) and $50,000 or less (single); partial deductibility for up to $85,000 AGI (joint) and $60,000 AGI (single).

For tax year 2007, the full deductibility AGI limits are raised to $83,000 or less (joint) and $52,000 or less (single); partial deductibility AGI limits are raised to $103,000 (joint) and $83,000 (single).

No

Tax Treatment of Withdrawals

Any earnings and deductible contributions subject to tax upon withdrawal. Distributions of contributions and qualified distributions of earnings are federally tax-free.

Assets grow federally tax-free with a Roth IRA. This means you'll never have to pay federal income taxes on your earnings, provided certain requirements are met. (Roth IRA distributions are also exempt from state taxes in most states.) Contributions can be withdrawn at any time penalty and tax-free.

10% Early Withdrawal Penalty

Yes, if you are under age 59 1/2 and the withdrawal is not for the following reasons:

*Death or disability of the account owner

*Part of a series of substantially equal periodic payments

*Health insurance premium payments for unemployed individuals

*Payments of medical expenses in excess of 7.5% of an individual's adjusted gross income

*Qualified First Time Homebuyer

*Higher Education Expenses

*IRS levy

Same as Traditional, plus your Roth IRA must meet five-year aging requirements.

Mandatory Distributions

Minimum required distributions must start at age 70½

None

Please consult your financial planner or tax advisor for advice regarding your individual situation.