Harris - Roth IRA

Investments and Retirement Planning

The Roth IRA

The Roth IRA offers flexibility and control in both the short-term and at retirement, and may provide tax-free earnings for those who are eligible to contribute.

Primary Benefits

	•	Earnings accumulate tax-free. You will not have to pay tax on your compounded earnings if they are withdrawn as part of a Qualified Distribution.
	•	Distribution Flexibility. You do not need to begin distributions when you reach age 70½. This gives you more flexibility in controlling your retirement income and taxes.
	•	Penalty-Free Usage. Your funds can be used penalty free for first-time home purchase (up to $10,000) and qualified higher education expenses.

Eligibility
You and/or your spouse must have earned income (for example, salary or wages) for at least the amount of your contribution. You may contribute whether or not you participate in an employer-sponsored retirement program. There are no age restrictions, but there are income limitations (see Table C).

Contributions
The contribution limit for individuals will be increasing through year 2008, and will continue to be subject to cost of living adjustments thereafter. And to help those who may have started saving for retirement late, a higher "catch up" contribution limit is available for those age 50 and over. Contributions are limited to the lesser of the following two options: (1) applicable contribution limit; or (2) an individual's and/or spouse's earned income for a given year; (see Table C and D). The deadline to contribute is the tax filing deadline for that year (excluding extensions).

Other investment considerations

	•	Contributions are made on an after-tax basis so no deductions are allowed. Consult your tax advisor.
	•	There are no required distributions. You have the flexibility of withdrawing contributions any time without penalty.
	•	Earnings are NOT federal income tax-free and may be subject to IRS penalty if withdrawn prior to five years from the first valid contribution to the account.
	•	Contribution eligibility varies by your Modified Adjusted Gross Income (MAGI).

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