Individual Retirement AccountsTraditional IRA

What is a Traditional IRA?

• A Traditional IRA allows eligible individuals to invest up to $5,000 of earned income, tax-deferred until age 70 1/2.
• Plus, contributions to Traditional IRAs are tax-deductible for many taxpayers. Over time, these tax benefits can result in significant investment income and growth.
•  If you are 50 years or older, you may contribute up to $6,000.

Who is eligible to contribute and how much?

• Any individual under the age of 70 1/2 who has earned income.
• You may contribute up to a maximum of $5,000 of earned income. If you are 50 years or older, you may contribute up to $6,000.
• Even if your spouse is not working, you may contribute up to $5,000 into your spouse's IRA, if your earned income allows it.

Are my contributions tax-deductible?

• The deductibility of your annual contribution depends on your income, marital status and whether you and your spouse receive benefits under an employer's retirement plan.
• For those who are active participants in an employer plan, the ability to fully deduct contributions are limited. The following chart shows the Modified Adjusted Gross Income (MAGI) that can be earned while still allowing a full deduction.

Tax Year	Married Filing Jointly	Single Filer
2006	$75,000-$85,000	$50,000-$60,000
2007	$83,000-$103,000	$52,000-$62,000
2008	$85,000-$105,000	$53,000-$63,000

When can I withdraw my funds?

• Beginning at age 59 1/2 you can start making withdrawals from your Traditional IRAs with no IRS penalties. (Bank fees may apply if you are breaking terms before account maturity).
• Any earnings and deductible contributions will be taxable as ordinary income.
• You can withdraw funds at any time before reaching 59 1/2, but your withdrawal is then subject to a 10% IRS early withdrawal penalty and any additional bank penalties that may apply.
• The following exceptions apply to the early withdrawal penalty:
  • Disability
  • Qualifying medical expenses (under certain conditions)
  • Qualifying education expenses
  • Unemployment (under certain conditions)
  • Qualifying first home purchase
  • Death
  • Levy

Am I required to take distributions?

•  Beginning at age 70 1/2, you're required to start taking distributions from your IRA.
•  These distributions are based on the contributors IRA beginning year balance or fair market value using the regulations Uniform Lifetime Table (ULT Table). For more information about this chart, please refer to the IRS Publication-590 (see Appendix C).

What are some other investment options?

First National offers a wide variety of non-FDIC insured investment products and services through First National Investments & Planning.* U.S. Treasury Securities Municipal Bonds Stocks Options Mutual Funds Annuities * Products offered by PrimeVest Financial Services, Inc., located at First National Investments & Planning, at the Bank, are not federally insured by the FDIC, the Federal Reserve Board, or any other agency; are not deposits or guaranteed by the Bank or PrimeVest Financial Services, Inc.; are subject to investment risks, including possible loss of principal invested. Financial Advisors at First National Investments & Planning are employees of the Bank and registered representatives of PrimeVest Financial Services, Inc.