The following information is designed to help you better understand the different features and potential benefits of various types of IRAs.

• Eligibility to Contribute
• Maximum Annual Contribution
• Eligible Income Ranges
• Tax Treatment of Contributions and Earnings
• When Distributions May be Taken Without Penalty
• Minimum Distributions
• Tax Treatment of Distributions Subject to Penalties
• Rollovers/Conversions

Eligibility to Contribute
Type of IRA	Provision
Traditional IRA	Account holder or spouse must have taxable compensation and account holder must be under age 70½. Spousal IRAs available to couples with taxable compensation even if one spouse has little or no compensation, is less than age 70½, and couple files jointly.
Roth IRA	Working taxpayer, any age, with modified adjusted gross income under $110,000 (single) or $160,000 (joint filers).

Maximum Annual Contribution
Type of IRA	Provision
Traditional IRA	For 2006, the lesser of taxable compensation or $4,000 (the combined limit for Traditional and Roth IRAs) per person or spouse or $5,000 if over age 50, subject to income limits below.
Roth IRA	For 2006, the lesser of taxable compensation or $4,000 (the combined limit for Traditional and Roth IRAs)or $5,000 if over age 50, subject to income limits below.

Eligible Income Ranges Ranges for maximum deductible contribution (Traditional IRA) or maximum contribution (Roth IRA).
Type of IRA	Provision
Traditional IRA	For 2006, $50,000 to $60,000 (single) for active participants in employer-sponsored retirement plans; $75,000 to $85,000 (joint filers) for active participants in employer-sponsored retirement plans (lower limits may apply if married filing separately).For incomes between $50,000 and $60,000 (single) and incomes between $75,000 and $85,000 (joint filers), a partial deduction is allowed. No deductions are allowed for income at or above $60,000 (single) or $85,000 (joint filers). Individuals whose spouses are active participants in an employer-sponsored retirement plan can make deductible contributions subject to a phase-out rule, which applies to taxpayers with AGI between $150,000 and $160,000. If you are unmarried and not covered (or married and neither spouse is covered) by a plan at work and you qualify to contribute to an IRA, you may make fully deductible contributions regardless of your income level.
Roth IRA	$95,000 to $110,000 (single); $150,000 to $160,000 (joint filers)

Tax Treatment of Contributions and Earnings
Type of IRA	Provision
Traditional IRA	All or part of contributions may be deductible, depending on income and filing status. Earnings accumulate tax deferred until withdrawn, and are subject to income taxation at the time of distribution.
Roth IRA	Contributions are not deductible, but earnings accumulate tax–deferred, and qualified distributions are free from federal income taxes.

When Distributions May be Taken Without Penalty
Type of IRA	Provision
Traditional IRA	10% early withdrawal penalty applies, unless distribution is made upon attainment of age 59½, disability, death, for certain medical expenses, for qualified higher education expenses, or for first–time home buyer expenses (up to $10,000); and withdrawals that are part of a series of substantially equal payments. Distributions of earnings and deductible contributions are taxed as ordinary income.
Roth IRA	Contributions may be withdrawn without federal income taxes or penalties. Earnings may be withdrawn after five taxable years in the account and as of age 59½, disability, death, and up to $10,000 may be withdrawn for first-time homebuyer expenses. Such qualified distributions are federally tax free. Earnings withdrawn for higher-education expenses are taxed as ordinary income but are not subject to a 10% early withdrawal penalty.Withdrawals from Roth IRAs converted from Traditional IRAs will be subject to an early withdrawal penalty within five years of conversion (excluding any converted nondeductible contributions).

Minimum Distributions
Type of IRA	Provision
Traditional IRA	Minimum distributions are required beginning April 1 of the year following attainment of age 70½.
Roth IRA	Not required during the owner's lifetime.

Tax Treatment of Distributions Subject to Penalties
Type of IRA	Provision
Traditional IRA	Amounts treated as earnings includible in gross income are taxed as ordinary income. Withdrawals made prior to age 59½ may be subject to a 10% early withdrawal penalty.
Roth IRA	Amounts treated as earnings includible in gross income are taxed as ordinary income and subject to a 10% early withdrawal penalty.

Rollovers/Conversions
Type of IRA	Provision
Traditional IRA	Rollovers are allowed from IRAs and other qualified retirement plans. Except for trustee-to-trustee transfers, withholding and other provisions may apply. For indirect rollovers, amounts received must be rolled over within 60 days of distribution from the original IRA or retirement plan.
Roth IRA	Conversions allowed from Traditional IRAs if adjusted gross income is $100,000 or less and taxpayer doesn't file "married filing separately." Conversion amounts subject to tax at time of conversion will be included in income without a 10% early withdrawal penalty.

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