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Tax-Reduction Strategies IRAs With an Individual Retirement Account (IRA), you may accumulate additional funds for retirement on a tax-deferred or a tax-free basis. Roth IRA Limits for a Roth IRA are $4,000 for tax year 2007, and will increase to $5,000 in 2008. If you are 50 or over, you can contribute an additional $1,000. Contributions are made with after-tax dollars. Money accumulates tax deferred. Money may be withdrawn tax free if certain conditions are met. Funds can be withdrawn penalty-free after age 59˝ for any reason. Prior to 59˝, funds may be withdrawn only under certain specific circumstances without penalty. Distributions are not subject to the age 70˝ minimum distribution rules, but are subject to post-death minimum distribution requirements. Traditional IRA Limits for a traditional IRA are $4,000 for tax year 2007, and will increase to $5,000 in 2008. If you are 50 or over, you can contribute an additional $1,000. Contributions may be tax deductible depending on your situation. Money accumulates tax deferred, taxes are payable at withdrawal. Funds can be withdrawn penalty free for a qualifying first-time home purchase*, qualifying education expenses, unreimbursed deductible medical expenses, disability or death, and of course, once you've reached the age of 59˝. Distributions are subject to all minimum distribution rules. At age 70˝, you are required to take minimum distributions. * Restricted to the purchase of a home by anyone who has not owned a principal residence for the previous two years. Maximum lifetime cumulative withdrawals for home purchases cannot exceed $10,000. < PREVIOUS NEXT > #40213