A "tax-advantaged" account (similar to a traditional IRA) that is funded with annual, non-deductible, post-tax contributions and conversions (from traditional IRAs, but not company-sponsored retirement plans). The Roth IRA allows account holders to withdraw account contributions and earnings without incurring ordinary income tax or penalties, provided certain qualifying criteria are met.

Eligibility:

In order to open a Roth IRA, the account holder must receive earned income (including a non-working spouse) and possess a valid Social Security Number.

Roth Contribution Guidelines:

As with a traditional IRA, eligible individuals can contribute the lesser of $5,000 or 100% of compensation (for 2008). Married couples, filing jointly, are entitled to establish individual accounts, even if one spouse has little or no earned income. The maximum contribution to all account holders Roth IRAs each year is determined by earned income, tax-filing status, modified adjusted gross income (MAGI) and contributions, if any, to traditional IRAs for the year.

Full $5,000 contributions (for 2008) are allowed for:

• Single filers with a MAGI of $101,000 or less
• Married couples filing jointly with a MAGI of $159,000 or less

Partial contributions may be made when MAGI is between::

• $101,000 and $116,000 for individuals
• $159,000 and $169,000 if married filing a joint return
• $0 and $10,000 if married filing separately

No contributions can be made to a Roth IRA when MAGI is::

• $116,000 or more for individuals
• $169,000 or more if married filing joint return
• $10,000 or more if married filing separately

Note: To be eligible to contribute $5,000 to a Roth IRA, the client cannot make a current year contribution to a traditional IRA. Clients who are eligible for both a traditional IRA and a Roth IRA must coordinate their contributions between the two accounts. The maximum combined dollar amount an individual can contribute to both accounts for 2008 is $5,000 or the amount of their earned income, whichever is less.

Distribution Guidelines:

Clients taking "qualified distributions" from a Roth IRA will not be subject to ordinary income tax or the 10% early distribution penalty tax. Qualified distributions are distributions that meet both five year holding period requirements and are due to:

• Death
• Disability
• Attainment of age 59 ½
• The purchase of a first home ($10,000 lifetime limit)

There are no mandatory distribution requirements for Roth IRA clients during their lifetime; however, minimum distributions do apply to an account holder's beneficiaries.