A traditional IRA is a retirement vehicle that allows you to be in control of your retirement savings goals because it can be established without any employer participation. A traditional IRA offers immediate tax benefits. Eligible individuals can make deductible contributions, and enjoy tax-deferred growth, over time.

Eligibility Requirements
Eligibility requirements for a traditional IRA are minimal. You may contribute up to $4,000 in 2005 through 2007; and $5,000 in 2008, if the following apply:

• You are under age 70 1/2.

• You or your spouse have earned income the year you plan to make a contribution.

For calendar years beginning after 2008, the deductible amount of $5,000 is subject to a cost-of-living increase.

"Catch-up" Contributions
The Economic Growth and Tax Relief Reconciliation Act of 2001 provided a way for individuals nearing retirement age to make additional contributions to their IRAs. Individuals age 50 and over are eligible to make "catch-up" contributions. For the tax year 2007, eligible individuals can make additional contributions of $1,000 to IRAs.

Tax-Deductible Contributions
In order to receive immediate tax benefits from a traditional IRA in the form of a tax deduction, you must meet one of the following requirements:

• You are not participating in an employer-sponsored retirement plan.

• You are participating in an employer-sponsored retirement plan, but your income fits into one of the following ranges. The amount of deductible contributions you can make is phased out as your income increases (for 2007: $52,000 to $62,000 Single Tax Status; $83,000 to $103,000 Married, Filing Jointly Status).

• You or your spouse, only one of you, is participating in an employer-sponsored plan. The individual not participating in a plan may make a full deductible contribution if the couple's modified adjusted gross income joint income is less than $156,000. The non-participant's IRA contribution is partially deductible if the couple's modified adjusted gross income is between $156,000 and $166,000. The contribution is not deductible at all if the modified adjusted gross income is over $166,000.

Withdrawing Funds
You may withdraw funds at any time from your traditional IRA, whether or not your contributions were deductible. However, penalties and tax may apply to your withdrawal.

Deductible contributions and all earnings on contributions grow tax-deferred in your account. They will be taxed as income when withdrawn from your IRA. Nondeductible contributions are not subject to income tax when withdrawn, rather just the earnings on those contributions.

Before reaching age 59 1/2, all withdrawals taken will be subject to a 10% early distribution penalty with the following exceptions:

• Disability
• Death
• Qualified higher education expenses
• Substantially equal payments (penalty-free early withdrawals according to approved IRS guidelines)
• A qualified first-time home purchase up to $10,000
• Qualified medical expenses
• Insurance premium payment due to unemployment.

Required Distributions
Your Required Minimum Distribution (RMD) begins on or before your Required Beginning Date (RBD). Your RBD is April 1 of the calendar year following the tax year in which you turn 70 1/2. All traditional IRA holders are required to begin taking distributions on or before their RBD. If they do not, penalties are incurred.