Your Individual Retirement Account (IRA) is one of the four main components of a financially secure retirement. Anyone with wages under the age of 70 ½ can contribute, the annual contribution limits have been increasing and there are tax benefits.

Benefits Add Up
The amount you can accumulate depends on two factors - what you contribute and how much the funds grow within the account. Of course, the more contributions you make and the higher the earnings rate, the more you will accumulate. No one can control (or accurately predict) what will happen with interest rates or the stock market. But, you control how much and how often you contribute.

Start Now
The contribution limit for 2008 is $5000 for those under the age of 50 and $6000 for those 50 and above. If you make annual contributions of $5000 for 20 years and earn 6%, your IRA will grow to almost $184,000. Ten years' contributions will grow to almost $66,000. The keys are to start early and contribute every year. Waiting just one year or missing a year can cost you plenty.

Make It Easy with an Automatic Savings Plan

Use an automatic savings plan to make it easy. If you are under the age of 50 and start in January, you can make your full contribution with only $416 each month. If you are 50 or above, it only takes $500 each month. Use the calculator below to determine how much you can contribute each month depending on your age and when you start.

Start Your Automatic Savings Today
There is no easier way to save than with an automatic savings plan. If you are already using direct deposit for your paycheck, have Forest Bluff Financial Services transfer the amount each month. Here is an Automatic Transfer Authorization form to help you enroll. You can also have your employer deduct the amount each month and deposit into your IRA account. Here is a Payroll Deduction Direct Deposit form.

If you are not already using direct deposit for your paycheck, here is a Payroll Direct Deposit form to help you get started. You can also call a service representative at 800/723-7237 or email for more information.

Basic Rules for Regular IRAs

• Contribution limits for 2008 - Those under the age of 50 can contribute $5000 and those ages 50 and above can contribute $6000. The only requirement is that you have wages in excess of your contribution level.
• Deductibility of contributions - Contributions are tax deductible if you are not eligible to participate in your employer's qualified retirement plan or if your Adjusted Gross Income is below certain levels ($53,000 for single filers and $85,000 for those filing jointly).
• Tax benefits - The earnings on funds within an IRA are not subject to income tax when earned.
• Distributions - You must start taking distributions in the year you reach age 70 ½ and distributions are taxable.
• Penalties for early withdrawals - Withdrawals before age 59 ½ are subject to a penalty tax of 10% along with regular income taxes.

Roth IRAs
Roth IRAs have the same contribution limits, however contributions are not allowed for those with Adjusted Gross Income above certain levels. Contributions are not deductible, earnings are tax-deferred like a regular IRA and there are no distribution requirements. Early withdrawals are subject to the 10% penalty tax.

Consult Your Tax Advisor
Everyone's tax situation is different and you may want to discuss your situation with a qualified tax advisor to learn how the rules may apply in your situation.

Take Control of Your Financial Future

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