The ROTH IRA

Named after Senator William Roth of Delaware, the Roth IRA has the benefit of tax-free distributions.

There are several other benefits, as well.

CONTRIBUTIONS

Contributions to a Roth IRA can continue after the investor reaches age 70 1/2.

In addition, new tax laws effective January 1, 2002, have increased contribution limits for the Roth IRA, as follows:

• Tax Years 2002-2004:  $3,000 single and $6,000 married filing jointly

• Tax Years 2005-2007:  $4,000 single and $8,000 married filing jointly

• Tax Year 2008:  $5,000 single and $10,000 married filing jointly

• Tax Years 2009 & after :  Cost-of-Living Indexing

Workers age 50 and older before the end of the tax year can make additional "catch up" contributions over the maximum limits above, as follows:

• Tax Years 2002-2005 :  $500

• Tax Years 2006 & after :  $1,000

However, Roth IRA contributions are not tax-deductible.

(Individuals in the highest income brackets may be subject to contribution limits of less than the amounts given above.  Consult your tax advisor for details.)

DISTRIBUTIONS

The advantage of a Roth IRA is that distributions are made tax-free!

WITHDRAWALS

The principal balance in the IRA may be withdrawn tax-free anytime.  (Earnings, however, are subject to a 10% tax penalty for early withdrawal.)

Early withdrawal of earnings is permitted without penalty if:

• The investor is age 59 1/2 or older.
• The investor dies, resulting in a payout to a beneficiary.
• The funds are used for a first-time home purchase.
• The funds are used for qualifying higher-education expenses.