Eligibility
You can open a traditional IRA if you earn income from wages or salary of at least $2000 and you're under the age of 70 1/2.

Contributions
Your maximum IRA contribution per year can be $4,000 or 100% of earned income, whichever is less. Please note your contributions to all IRAs cannot exceed $4,000

Individuals over the age of 50 may be eligible for a $500 annual "catch-up" contribution.

Deductibility
Your contributions are fully tax-deductible if you are:

• Single and don't participate in your employer's retirement plan OR you do participate and your Adjusted Gross Income (AGI) is $45,000 or under.
  
  
• Married, but neither spouse participates in an employer's retirement plan, OR you do participate and your Adjusted Gross Income is $65,000 or under. (If you are married and only one of you is an active participant in an employer's retirement plan, and joint AGI is less than $70,000, each can deduct up to $5,000. However, if you are married and only one of you is an active participant in an employer-sponsored retirement plan, and your joint agi is less than $150,000 , then the other spouse can deduct a maximum of $3000 in 2004 and $3500 in 2005)  If the spouse is 50 or older, the deductable amount rises to $4000 in 2004 and $4500 in 2005.

If you do participate in your employer’s plan:

Your contributions are fully tax-deductible if you are:

• Single and your Adjusted Gross Income (AGI) is less than $45,000.
• Married and, filing jointly, your Adjusted Gross Income is less than $65,000.

Your contributions are partially tax-deductible if you are:

• Single and your Adjusted Gross Income (AGI) is less than $55,000.
• Married and, filing jointly, your Adjusted Gross Income is less than $75,000.

Your contributions are NOT tax-deductible if you are:

• Single, participate in your employer's retirement plan, and your AGI is more than $55,000
  
  
• Married, participate in your employer's retirement plan, and filing jointly your combined income is more than $75,000

All of these numbers are generalizations for informational purposes only.  For more detailed information, consult IRS form 590 at:

http://www.irs.gov/pub/irs-pdf/p590.pdf

Tax Benefits

Withdrawals
You MUST begin taking money from your account at age 70 1/2. Withdrawals are taxable as ordinary income.

You MAY begin penalty-free withdrawals at age 59 1/2. After you are this age, withdrawals are subject to the following tax treatment:

For pre-tax contributions: Both the contributions and the investment earnings are treated as income. For after-tax contributions: The contributions are treated as a nontaxable return of capital, but all investment earnings are treated as income.

The IRA has penalties for withdrawal before age 59 1/2 (early withdrawals). You will owe both the tax due and a 10% early withdrawal penalty on the taxable portion of the withdrawal. There are some EXCEPTIONS to this 10% early withdrawal penalty:

• You can make penalty-free withdrawals of up to $10,000 for first-time home purchases.
  
  
• Disability (as defined by the IRS)
  
  
• Death
  
  
• Payments for medical insurance for yourself, your spouse, and your
  dependents.
  
  
• Payments for unreimbursed medical expenses that are more than 7 1/2% of your adjusted gross income
  
  
• Withdrawals for qualified higher education costs (for yourself, your spouse, children, or grandchildren