IRAs have always offered tax advantages and an excellent way to save and invest for retirement. With the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), significant enhancements were made to IRAs in 2002, including increased contribution levels, new catch-up contributions for people aged 50 years and older, and expanded rollover opportunities.

Traditional IRAs
With a Traditional IRA, you can save up to $4,000 ($8,000 for married couples filing jointly) for 2006 and 2007 towards your retirement, some or all of which may be deductible from current taxable income. And if you're over 50, recent legislation includes a new catch-up provision where you can put in an additional $1,000 in an IRA for 2006, and an additional $1,000 for 2007 Depending on adjusted gross income, the Traditional IRA allows you to take a tax deduction for the money you deposit into your account today, and pay taxes later when you begin withdrawing the funds at retirement. The tax-deferred earnings on your contributions will help your savings grow more quickly since you don't pay taxes until you withdraw the funds.

Roth IRAs
Roth IRAs allow you to save up to $4,000 ($8,000 for married couples filing jointly) for 2006 and 2007 towards your retirement. And if you're over 50, the recent legislation also applies to Roth IRAs: the new catch-up provision allows you to put in an additional $1,000 in an IRA for 2006, and an additional $1,000 for 2007 The Roth IRA allows you to deposit after tax funds into your account, but growth is tax-free. Once you put your money in, you never pay taxes on it again. Since withdrawals are not reportable income, they won't affect your adjusted gross income during retirement. Contributions to a Traditional IRA may be converted to a Roth IRA if the individual's Annual Gross Income (AGI) is less than $100,000.

Rollover IRAs from Employer-sponsored Plans
When changing jobs or retiring, it pays to consider what you will do with your employee retirement assets. Many people make the mistake of taking a lump sum payout of the assets when they change jobs, only to find out that they may have to sacrifice a significant portion of their retirement savings to federal taxes and penalties. A Rollover IRA is an excellent way to preserve the tax-deferred status of your retirement savings and avoid any additional taxes or penalties. It also allows continued growth potential of your retirement assets and keeps your money working hard for you. You may now rollover assets from any 401(k), 403(b), 457 or other qualified pension plan into an IRA.

Securities are offered by and Financial Consultants are registered with UVEST Financial Services, member NASD/SIPC. UVEST is independent of any financial institution. Members of the First Niagara Financial Group, Inc. do not offer tax advice. Please consult a tax advisor.
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