A Roth IRA is a type of retirement account which enjoys tax free distributions, including earnings. Earnings are tax free if the account is open for five taxable years and withdrawn for a qualified reason: attainment of age 59 ½, disability, death, or a first time home purchase (lifetime limit for exemption on first time home purchase is $10,000). Wage earners may deposit up to $3,000 or 100% of earned income, whichever is less. The limit is $4,000 in 2006. In 2008, the limit will increase to $5,000.

To contribute to a Roth IRA, an individual must receive earned income and is subject to Modified Adjusted Gross Income (MAGI) limits:

• Single filers with an MAGI of $95,000 or less can make a full contribution
• Single filers with an MAGI of $95,000 to $110,000 can make a partial contribution
• Single filers with an MAGI of $110,000 or more is not eligible to make a contribution
• Married individuals filing jointly can make a full contribution if their MAGI is $150,000 or less
• Married individuals filing jointly are eligible to make a partial contribution if their MAGI is between $150,000 and $160,000
• Married individuals filing jointly cannot make a contribution if their MAGI is $160,000 or more

A married individual filing separately is eligible only for a partial contribution if the individual MAGI is less than $10,000. If the MAGI is $10,000 or more, no contribution is allowed. Husbands and wives may each have a Roth IRA, even if one person in that marriage is not working. A separate spousal IRA account must be established, not to exceed $4,000 per year.

Contributions to a Roth IRA are never tax deductible. See your tax advisor for detailed information. Contributions may continue after age 70½ as long as the Roth IRA holder has eligible earned income. Persons are not required to start withdrawals at age 70½.

All of United’s certificates of deposit are available as an IRA as long as the minimum requirements are met. There are no set-up, transaction or annual fees on a Roth IRA account.

After the account has been open five tax years, earnings can be withdrawn tax- and penalty-free for any of these reasons: attainment of age 59 ½, disability, death, or a first time home purchase (lifetime limit for exemption on first time home purchase is $10,000). Any withdrawals that are not qualified distributions made from the Roth IRA account before the individual reaches age 59 ½ may be subject to penalties of the Internal Revenue Service. These funds will be subject to both ordinary income tax and possibly an additional 10% IRS penalty tax.

There are eight exceptions to the 10% penalty for IRA withdrawals prior to age 59 ½. The early withdrawal penalty does not apply to distributions that:

• Occur because of the IRA owner’s disability
• Occur because of the IRA owner’s death
• Are a series of "substantially equal periodic payments" made over the life expectancy of the IRA owner
• Are used to pay for non-reimbursed medical expenses that exceed 7 ½% of adjusted gross income
• Are used to pay medical insurance premiums after the IRA owner has received unemployment compensation for more than 12 weeks
• Are used to pay the costs of a first time home purchase (subject to a lifetime limit of $10,000)
• Are used to pay for the qualified expenses of higher education for the IRA owner and/or eligible family members
• Are used to pay back taxes because of an Internal Revenue Service levy placed against the IRA.

In addition, if a certificate is withdrawn before the maturity date, the Bank charges the certificate penalty. 

Please contact one of United's Banking Center Managers for more information and to open your IRA account today!