Roth IRA

A non-deductible account that features tax-free withdrawals for certain distribution reasons after a five-year holding period.

Eligibility
You or your spouse must have earned income and your modified adjusted gross income must meet certain requirements.

Contribution
The Economic Growth and Tax Relief Reconciliation Act of 2001 has increased contribution limits to the following levels:

2002 - 2004	$3,000
2005 - 2007	$4,000
2008 and thereafter	$5,000

Withdrawal without penalty
The 10% IRS premature-distribution penalty does not apply to earnings you withdraw when you take any of the qualified distributions listed below. In addition, the 10% IRS penalty is also waived for certain other distribution reasons. The Roth IRA distributions that are subject to taxes, but no penalty include:

• Substantially equal periodic payments
• For medical expenses in excess of 7.5% of your Adjusted Gross Income (AGI)
• For health care insurance if you've been receiving unemployment compensation for at least 12 weeks.
• Qualified higher education expenses
• Distributions taken within the first 5 years for any of these reasons: age 59 1/2, death, disability, or first-time home purchase.

Distribution
Qualified distributions are not subject to federal income taxes. Contributions are not subject to taxation or the 10% penalty when distributed.