Learn the differences between Traditional and Roth IRAs, and the Education Savings Account*:

• Who is eligible to invest?
• What is the maximum annual contribution allowed?
• Are there any tax advantages with IRA investments?
• Are there any deductible contributions?
• Are penalty-free withdrawals allowed prior to age 59½?
• Will a distribution be required at any point?

Who is eligible to Invest?

• Traditional IRA - Anyone under age 70 ½ who has earned income, regardless of income level
• Roth IRA - Anyone with earned income below $95,000 (single filers) or $150,000 (married, filing jointly)
• Education Savings Account - Anyone with earned income of less than $95,000 (single filers) or $190,000 (married, filing jointly) can contribute up to $2,000 per year per child.

What is the maximum annual contribution allowed?

• Traditional IRA - $5,000 or 100% of your earned income, whichever is less ($6,000 for individuals age 50 or older)
• Roth IRA - $5,000 or 100% of your earned income, whichever is less ($6,000 for individuals age 50 or older)
• Education Savings Account - $2,000 per child, up to age 18
  Extra contributions can be made for those individuals designated with "special needs" and can be made past age 18

Are there any tax advantages with IRA investments?

• Traditional IRA - Tax-deferred growth of contributions and investment earnings
• Roth IRA - Tax-free growth of investment earnings
• Education Savings Account - Tax-free growth of investment earnings as long as the account is used for qualified elementary, secondary or higher education expenses

Are there any deductible contributions?

• Traditional IRA - Yes, if your income is below certain limits or if you are not an active participant in an employer-sponsored retirement plan
• Roth IRA - No, contributions must be made with after-tax dollars
• Education Savings Account - No, contributions must be made with after-tax dollars

Are penalty-free withdrawals allowed prior to age 59½?

• Traditional IRA - Yes, if "substantially equal periodic payments" are taken, or if used for first-time home expenses ($10,000 lifetime maximum), qualified higher education costs or for certain hardships
• Roth IRA - Yes, contributions can be withdrawn free of penalties and taxes. Earnings can be withdrawn penalty-free if used for first-time home expenses ($10,000 lifetime maximum), qualified educational expenses or for certain hardships
• Education Savings Account - Earnings and distributions are tax-and penalty-free, provided the funds are used for qualified elementary, secondary or higher education expenses, and that the amount of the withdrawal in no greater than the child's education expenses for that year.

Will a distribution be required at any point?

• Traditional IRA - Yes, distributions must begin by April 1 following the year you attain age 70 ½
• Roth IRA - No, you may continue contributions as long as you have earned income and postpone distributions for as long as you like during your lifetime
• Education Savings Account - Yes, the account must be distributed by the time the beneficiary reaches age 30 or rolled over for the benefit of another child in the same family

*This information is based on current interpretation of the language in the Economic Growth and Tax Relief Reconciliation Act of 2001. Investors should consult with their tax adviser or legal counsel for advice and information concerning their particular tax situation and any updates to the tax law.