A Traditional IRA allows you to contribute up to $4,000 annually through 2007 and $5,000 in 2008. If your income is less than these maximums, you may contribute up to the full amount of your gross income. The annual contribution has periodic cost-ofliving increases. Note that the IRS has made provisions for people over 50 years of age to "catch up" by increasing their annual contribution.* See "Catch-Up" Contributions.

Are My Contributions Tax-Deductible?
Your contributions to a Traditional IRA are fully tax deductible regardless of your income provided that neither you nor your spouse also participate in a qualified employer retirement plan (e.g., a 401(k) plan). If you participate in another retirement plan, your income level will be the determining factor.

If you are not an active participant in a qualified retirement plan, but your spouse is, you will be able to deduct your Traditional IRA contribution as long as your jointly filed Adjusted Gross Income (AGI) in 2008 is less than $159,000. If your AGI is greater than $159,000, but less than $169,000, your deduction is reduced. If your AGI is $169,000 or more, you cannot take a deduction for a contribution to a traditional IRA.

If you are an active participant in a qualified retirement plan, file as a single and your 2008 AGI is $53,000 or less you can take a
full deduction. If your AGI is more than $53,000, but less than 63,000, you can take a partial deduction. If your AGI is more than  $63,000 there is no deduction for a contribution to a traditional IRA.

Withdrawals from a Traditional IRA
Withdrawals, sometimes called distributions, from Traditional IRAs are generally subject to ordinary income tax. If you make withdrawals prior to age 591⁄2, however, you may be subject to an additional 10 percent early withdrawal penalty. The 10 percent penalty may not apply if you:

• Die or are disabled
• Incur deductible medical expenses
• Are unemployed and use withdrawals to pay for health insurance premiums
• Make withdrawals to cover qualifying higher education expenses
• Use up to $10,000 for a qualifying first-time home purchase

Withdrawals (distributions) from these IRAs are taxed as ordinary income. You must begin taking withdrawals no later than April 1 of the year following the year in which you turn 70 1⁄2.Withdrawal rates must meet yearly Minimum Required Distribution (MRD) amounts. If you do not begin withdrawals at that time, you may incur serious tax liabilities. See your tax professional for further information on calculating your MRD.

You can change your beneficiary at any time. Additionally, upon your death, your spouse can roll over your IRA and treat it as if it were his or her own IRA, thus allowing your spouse to take distributions and pay taxes over time. Non-spouse beneficiaries cannot treat your IRA as their own but they can generally take distributions over their life expectancy

* You cannot contribute to a Traditional IRA after age 70 1⁄2.