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	The Taxpayer Relief Act of 1997 created a variety of new IRA options. Not only did it change rules for the traditional IRA, but it also introduced the Roth and Education IRAs. These options were improved by the Economic Growth and Tax Relief Reconciliation Act of 2001. Traditional IRAs are more attractive than ever because expanded income limits mean more people will be able to make tax-deductible contributions. In addition, penalty-free withdrawals are allowed for qualified higher- education expenses and for a first-time home purchase. Contributions to the Roth IRA or Education IRA (now known as the Coverdell Education Savings Account) aren't tax-deductible, but the accounts offer the opportunity for tax-free earnings. Your tax adviser can offer more guidance on which type of IRA may be best for your needs. Of course, we are always here to answer your questions and assist you with opening an IRA. Please stop by or call us today for more information on the benefits of a credit union IRA.

Roth IRAs	Who can contribute?	How much can I contribute?	Who can make deductible contributions?	What are the tax advantages?	When can I withdraw without restrictions?

	• Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following MAGI: - Up to $95,000 (single filers) - Up to $150,000 (joint filers) • Reduced contributions allowed for higher incomes (up to $110,000 for single filers and $160,000 for joint filers)	• $2,000 for 2001 • $3,000 for 2002 through 2004 • Higher limit if age 50 or older • Cannot exceed compensation • Reduced by contributions to traditional IRAs	• No one can deduct contributions	• Regular contributions can be withdrawn tax- and penalty-free at any time • After the account has been open five tax years, earnings can be withdrawn tax- and penalty-free for any of these reasons: age 59½, disability, death, or a first-time home purchase	• Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59½, disability, death, or a first- time home purchase • Not required to start withdrawals at age 70½
Traditional IRAs	Who can contribute?	How much can I contribute?	Who can make deductible contributions?	What are the tax advantages?	When can I withdraw without restrictions?

	• Anyone under age 70½ who has income from compensation (or who is filing jointly with a spouse who earns compensation)	• $3,000 for 2004 • Higher limit if age 50 or older • Cannot exceed compensation • Reduced by contributions to Roth IRAs	• Fully-deductible contributions: - Single individuals not active in employer retirement plans - Single individuals active in employer retirement plans with MAGI* of $45,000 or less (tax year 2004) - Married couples with neither spouse active in an employer retirement plan - Married individuals active in employer retirement plans with joint tax returns showing MAGI° of $65,000tt or less - Married individuals not active in employer retirement plans with spouses who are, as long as MACI is $150,000 or less • Individuals with incomes exceeding the above limits may be able to deduct an amount that is less than the amount that can be contributed	• Earnings grow tax-deferred until withdrawn • Contributions may be tax-deductible	Withdraw penalty-free for any of the following reasons: • Qualified higher-education expenses • First-time home purchase • Age 59½ • Disability • Qualifying medical expenses exceeding 7.5% of adjusted gross income • Payment to beneficiaries upon the owner's death • Payment of health insurance premiums while unemployed for 12 weeks or longer
Educational IRAs	Who can contribute?	How much can I contribute?	Who can make deductible contributions?	What are the tax advantages?	When can I withdraw without restrictions?

	• Anyone who has MAGI - Single filer: up to $95,000 - Joint income for filers: • Some people with higher MAGI may be able to make smaller contributions • Contributions not allowed after the beneficiary reaches age 18 (except for special needs beneficiaries)	• $2,000 per child for 2004 and later years• Limit applies to all Education IRAs (also known as the Coverdell Education Savings Account) for the same child	• No one can deduct contributions	• Withdrawals for certain qualified education expenses are tax-free • Special-needs beneficiaries can withdraw funds tax-free to pay for qualified education expenses at any age • Qualified education expenses may include tuition, fees, books, computer equipment and technology required for elementary, secondary and post-secondary education • A beneficiary may receive tax-rlee distributions from a Coverdell ESA in the same year he or she claims the Lifetime Learning or HOPE Scholarship tax credits	• Withdrawals are tax- and penalty-free only for qualified education expenses (earnings are subject to tax and penalty for most other withdrawals) • Funds can be transferred from one child's account to an account for another child in the family

	() MAGI – modified adjusted gross income from the federal tax form () Lifetime limit for exemption on first-time home purchase is $10,000. (**) Coverdell Education Savings Account
	Not intended as tax advice. Please consult a tax professional.

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