Individual Retirement Account (IRA)

A personal savings plan that offers tax advantages to save and invest for retirement. Contributions are often tax deductible in whole or in part, depending on individual circumstances, including compensation levels and participation in an employer sponsored qualified retirement plan. Income derived from investments in a traditional deductible or nondeductible IRA is tax deferred until withdrawn. Under certain circumstances, withdrawals from a Roth IRA are tax-free. Tax penalties may apply to IRA distributions taken before age 59 ½. The most you can contribute to your traditional IRA for 2002 has been increased to $3,000 or if you are 50 or older, $3,500. Keep in mind that contributions on your behalf to a traditional IRA reduce your limit for contributions to a ‘Roth IRA’.

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