Longer life expectancies and early retirements make sound investment strategies essential. With an increasing number of choices and ever-changing tax laws, we have gathered some of the more common IRA options together. Review these alternatives then turn to the professionals at the Northwestern Mutual Financial Network for advice on helping you implement a solution to fit your individual needs.

Traditional IRA

• The most basic IRA available. Offers potential deductible contributions and tax-deferred growth.



• Eligibility—Individuals under the age of 70 1/2 with earned income.



• Contribution guidelines—Deductible contribution limits depend upon the individual's participation in an employer-sponsored plan and modified adjusted gross income but for 2007 cannot exceed 100% of income or $4000, whichever is less.
  
  Additional "catch-up contributions" of $1000 are allowed for 2007 for people age 50 and over.



• Distribution rules—Withdrawals before age 59 1/2 are subject to income tax and a 10% penalty. The penalty is not assessed in special situations. Distributions must begin by April 1 of the year following the year the individual reaches age 70 1/2.



• Contribution timeframes—The account must be set up and contributions made by April 15 in order to be considered qualifying contributions for the previous tax year.

Roth IRA

• Offers non-deductible contributions to eligible individuals. Distributions are received income tax-free if requirements are met.



• Eligibility—Individuals with earned income and whose modified adjusted gross income is within specific limits.



• Contribution guidelines—Contributions are not deductible. Maximum contributions depend upon the individuals modified adjusted gross income, but for 2005, cannot exceed 100% of earned income or $4,000, whichever is less.
  
  Additional "catch-up contributions" of $1000 are allowed for 2007 for people age 50 and over.



• Distribution rules—Withdrawals before age 59 1/2 are generally subject to both income tax and a 10% penalty, except in special situations.
  
  Distributions are not mandatory at any age.



• Contribution timeframes—The account must be set up and contributions made by April 15 to qualify as a contribution for the previous tax year. There is no maximum contribution age; as long as there is earned income, an individual can contribute.

Roth Conversion IRA*

• A Roth IRA can be established and/or funded by converting your traditional IRA to a Roth IRA.



• Eligibility—Single individuals or married individuals filing jointly with adjusted gross income of $100,000 or less.



• Contribution guidelines—Rollover contributions are not deductible and they are generally included in the individual's gross income. The 10% penalty does not apply.
  
  There is no limit on the conversion amount. Subsequent contributions to the Roth IRA are capped at the lesser of 100% of earned income or $4,000 for 2007.
  
  Additional "catch-up contributions" of $1000 are allowed for 2007 for people age 50 and over.



• Distribution rules—Withdrawals before age 59 1/2 are generally subject to both income tax and a 10% penalty, except in special situations. Also, the Roth IRA must be in existence a minimum of five years. Please note the Roth contributions (but not conversions) may be distributed at any time for any reason without incurring income tax or a penalty.
  
  Distributions are not mandatory at any age.



• Contribution timeframes—The account may be established whenever the conversion from traditional IRA to Roth IRA is desired, and it is recognized on a calendar-year basis.

IRA Rollover

• A traditional IRA used by individuals who want to continue their retirement savings after closing an employee-sponsored retirement account or wish to move it to a new funding vehicle or trustee.



• Eligibility—Individuals with distributions from an employer-sponsored plan or other Traditional IRA.



• Contribution guidelines—Rollover contributions are not deductible and they are not included in the individual's gross income.
  
  There is no limit on the initial rollover amount. Regular contributions may be made under previously mentioned guidelines.



• Distribution rules—Withdrawals before age 59 1/2 are subject to income tax and a 10% penalty. The penalty is not assessed in special situations.
  
  Distributions must begin by April 1 of the year following the year the individual reaches age 70 1/2 minimum. Distributions are based upon life expectancy as determined by the Uniform Table, in most cases



• Contribution timeframes—To avoid income taxation, the account must be set up and contributions made within 60 days of receiving the distribution from the employer-sponsored account.