17 May 2008

"How Do I Achieve a Secure Retirement?"

Irwin Bank IRAs provide tax-saving advantages and the security of knowing your retirement funds are safe and guaranteed to grow.

IRAs (Individual Retirement Accounts)

IRA investing is an excellent way to help you achieve your retirement goals. Individuals can contribute up to $4,000 per year in tax-advantaged retirement savings; $8,000 for married couples . In addition, if you are over 50 years of age, you can make an extra "catch up" contribution of $1000. There is also a tax credit for IRA contributions starting 2002 and ending in 2006. Check with your tax advisor to see if you qualify.

Irwin Bank IRAs offer these additional benefits:

No fees or commissions to pay, increasing your savings.
Unlike securities or mutual funds, the principal and interest are guaranteed.
You contribute at your own pace -- as little as $25.00 can open an account.
FDIC insured.

Tax Credits For IRA contributions:

From 2002 - 2006, certain lower-income individuals may be eligible for a non-refundable tax credit for Traditional and Roth IRA contributions.
The maximum eligible contribution for the credit is $2,000.
The credit is in addition to any deduction that might otherwise apply with respect to the contribution.
The credit is available to individuals who are 18 or over, other than individuals who are full-time students or claimed as a dependent on another taxpayer's return.
The amount of any contribution eligible for the credit is reduced by taxable distributions received by the taxpayer and his/her spouse from IRA's or qualified retirement plans during the taxable year for which the credit is claimed, and during the period after the end of the taxable year and prior to the due date for filing the taxpayer's return for the year.

Note: In the case of a distribution from a Roth IRA, this rule applies to any such distribution, whether taxable or not.

Joint Filers	Heads of Households	Other Filers*	Credit Rate
$0-$30,000	$0-$22,500	$0-$15,000	50%
$30,000-$32,500	$22,500-$24,375	$15,000-$16,500	20%
$32,500-$50,000	$24,375-$37,500	$16,500-$25,000	10%
Over $50,000	Over $37,500	Over $25,000	0

Choosing An IRA

Traditional and Roth IRAs can be used to fund your retirement, or to supplement your Social Security or company retirement plan. Because tax laws and eligibility requirements vary, we suggest you consult with your tax advisor to determine which IRA is best for you.

Traditional IRA

Traditional IRAs are available to you regardless of your adjusted gross income (AGI) level, provided you have earned income at least equal to the amount contributed to the IRA. Contributions are tax-deductible if you do not participate in an employer-sponsored retirement plan and meet certain income criteria.

Making a tax-deductible IRA contribution is like having the government subsidize your retirement savings. For example, if you are in the 28% tax bracket and you make a $2,000 deductible IRA contribution, you will lower your federal income tax bill by $560. As a result, your $2,000 contribution really only costs you $1,400.

Additionally, the money you put in an IRA grows tax-deferred until you withdraw it in retirement. Because you don't have to pay tax on the earnings that accrue each year, you can accumulate more money faster in an IRA than in an ordinary taxable account -- even if the IRA and non-IRA investments earn the same rate of return.

Penalty-free withdrawals are permitted before age 59-1/2 for a first-time home purchase (up to a $10,000 withdrawal), higher education expenses, or in the event of disability or death.

Roth IRA

Unlike a traditional IRA, Roth IRA contributions are made with after-tax money (not tax-deductible). However, withdrawal of earnings and distributions upon retirement are tax-free. So if you remain in the same tax bracket (or higher) at retirement, Roth IRAs allow you to accumulate more money than tax-deductible IRAs do.

Besides fostering tax-free growth, the Roth IRA has flexible withdrawal rules. You can take out contributions, but not gains, for any reason without penalty or taxes. And after you reach age 59-1/2 and have had the account open for five years, you may withdraw your gains tax- and penalty-free as well. Taxes and penalties do not apply if the withdrawal is a result of death, disability, or for a first-time home purchase (up to a $10,000 withdrawal). Additionally, penalty-free, but not tax-free withdrawals are permitted before age 59-1/2 for higher education expenses.

"Planning for my retirement is easy with Irwin Bank. I transfer $250 per month from my checking account to an IRA. By the end of the year I've reached my $4,000 maximum contribution. And my investment is safe with a guaranteed rate of return."

Calculate Your Retirement!

To help you plan your retirement savings, Click on the "Calculate It" icon, then scroll to "retirement calculators."

For more information on IRAs, visit your local Irwin Bank branch or call (724) 978-4500.

	Traditional IRA Deductible	Traditional IRA Non-deductible	Roth IRA
Eligibility	Those who are not active in an employer-sponsored retirement plan. Active participants may also qualify for full or partial deductions.	Everyone under age 70-1/2 with earned income at least equal to the IRA contribution.	Eligibility phases out for Adjusted Gross Income for: Individuals $95,000-$110,000 Married Filing Jointly $150,000-$160,000
Annual Contribution	$4,000 tax-deductible	$4,000 not tax-deductible	$4,000 not tax-deductible
Tax Advantages	Earnings and contributions grow tax deferred but are taxed upon withdrawal.	Earnings and contributions grow tax deferred. Earnings are taxed upon withdrawal; original contributions are withdrawn tax-free.	Tax-free withdrawals if funds are held in the account for at least five years and you are age 59-1/2 or older.
Withdrawals	Penalty-free withdrawals* permitted before age 59-1/2 for: higher education expenses up to $10,000 for first-time home purchase disability or death not in excess of the cost of an individual's deductible medical expenses exceeding 7.5% of adjusted gross income not in excess of the cost of health insurance if individual has received unemployment compensation for 12 consecutive weeks in current or prior year	Penalty-free withdrawals* permitted before age 59-1/2 for: higher education expenses up to $10,000 for first-time home purchase disability or death not in excess of the cost of an individual's deductible medical expenses exceeding 7.5% of adjusted gross income not in excess of the cost of health insurance if individual has received unemployment compensation for 12 consecutive weeks in current or prior year	Tax-free and penalty-free withdrawals* of: contributions at any time contributions and earnings at age 59-1/2 and after account has been open for five years, in the event of disability or death, and up to $10,000 for first-time home purchase Penalty-free, but not tax-free withdrawals before age 59-1/2 for higher education expenses not in excess of the cost of an individual's deductible medical expenses exceeding 7.5% of adjusted gross income not in excess of the cost of health insurance if individual has received unemployment compensation for 12 consecutive weeks in current or prior year
Withdrawals	* Refers to IRS penalties. Some bank fees may apply.

Revision 1-06