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 Earnings are tax free if the account is open for five taxable years and withdrawn for a qualified reason: attainment of age 59 ½, disability, death, or a first time home purchase (lifetime limit for exemption on first time home purchase is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). The contribution limit for 2011 is generally the lesser of $5,000 ($6,000 if you are age 50 or older), or your taxable compensation.

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 $105,000 or less can make a full contribution
• Single filers with an MAGI of $105,000 to $120,000 can make a partial contribution
• Single filers with an MAGI of $120,000 or more is not eligible to make a contribution
• Married individuals filing jointly can make a full contribution if their MAGI is $167,000 or less
• Married individuals filing jointly are eligible to make a partial contribution if their MAGI is between $167,000 and $176,000
• Married individuals filing jointly cannot make a contribution if their MAGI is $177,000 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. The 2011 spousal contribution limit is the smaller of:

• $5,000 ($6,000 if age 50 or older), or
• Both spouses' total compensation includible in gross income for the year, reduced by:
  • The spouse's IRA contribution for the year to a tradtional IRA.
  • Any contributions for the spouse's Roth IRA for the year.

Contributions to a Roth IRA are never tax deductible. See your tax advisor for detailed information. Contributions may continue after age 70 ½ as long as the Roth IRA holder has eligible earned income. Persons are not required to start withdrawals at age 70 ½.

All of United Bank'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After the account has been open five tax years, earnings can be withdrawn tax- and penalty-free for any of these reasons: attainment of age 59 ½, disability, death, or a first time home purchase (lifetime limit for exemption on first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 an United Bank Office Manager for more information and to open your account today!