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Keeping You InformedTraditional or Roth IRA –Which One Is Best For You?Traditional IRAMost individuals who are saving for retirement can contribute to aTraditional IRA. If you meet certain requirements, your contributionsare tax deductible. Whether your contributions are deductible ornot, your earnings accumulate tax deferred, so you won’t owe incometaxes until you make withdrawals. Deductible contributions andearnings are taxed at your regular income tax rate as you withdraw them.

Roth IRAContributions are not tax deductible with a Roth IRA. Compared toa Traditional IRA, the Roth has the advantage of tax free earnings uponwithdrawal, if you meet certain conditions. You are not obligated totake required distributions at age 701/2 with a Roth as you are witha Traditional IRA.

Several factors are important to consider when determining whichIRA account is right for you:

• Your tax rate when you are contributing and your tax rate duringretirement.

• Your age at the time you are contributing.• Your plans for needing this money prior to age 591/2, and yourplans for leaving this money to your heirs. �

Remember, IRAs are insured separately for

$250,000.00

Traditional & Roth IRAsWorkers 50 or older before the end of the taxable year, can make up for lost time

with additional IRA contributions over and above the maximum limits as follows:

For Year 2010: $1,000

“CATCH-UP” CONTRIBUTIONS

NEW Rules For ConvertingA Traditional IRA To A Roth IRAThe new tax rules that deal with converting a Traditional IRA toa Roth IRA eliminate permanently, the $100,000 income limitfor Roth conversions, as well as the restrictions on spouses whofile separate tax returns.

This change will offer more opportunity for investing in Roth accountsto individuals with higher incomes.

Please keep in mind, the new tax rules (part of the Tax Increaseand Reconciliation Act of 2006) do not change the income limitsrequired to be eligible to contribute to a Roth IRA.

When an individual converts assets from a Traditional IRA to aRoth IRA, you have to pay income tax on all pretax contributionsand earnings included in the amount you convert. According totax rules, you can report the amount you convert in 2010 onyour tax return for that year. You also have the option of spreadingthe amount converted equally across 2011 and 2012 tax returns,paying any resulting tax in those years. For example, if you convert$40,000 this year and plan not to declare the conversion on your2010 return, you must declare $20,000 on your return for 2011and $20,000 on your return for 2012.

Living Longer – Will You Have Enough Cash?

Improved nutrition, fitness, preventative medicines, advances ingeriatric care, safety regulations – all of these things add up to alonger and healthier life expectancy. As a result, your retirementassets and personal savings will have to work longer and harderto accommodate your lifestyle options during your retirementyears.

One of the best ways to meet this financial challenge is duringyour working years to maximize your contributions to accountsdesigned for retirement savings, such as IRAs. They offer theadvantage of tax deferral with a Traditional IRA, tax-free earningswith a Roth IRA and investment growth.

With life spans of 25 to 30 years “in retirement” possible, properplanning and savings for the future are a necessity. �

towerfinancialmarketingwest Deptford, nJ 08066

800-368-9053

2010©towerFinancial marketing. not for reproduction.

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LEJ10A ©TOWER FINANCIAL MARKETING, WEST DEPTFORD, NJ 800-368-9053

IMPORTANT NOTE: The information contained in this newsletter is not intended to provide specific advice or recommendations for any individual.

We suggest that you consult your attorney, accountant, tax or financial advisor with regard to your personal situation.

DEBUNKINGRETIREMENT MYTHS

When it comes to retirement saving, many people feelthey either don’t need to save or that they have plenty oftime to do so. These beliefs are based on faulty underlyingassumptions, including the following “myths” aboutretirement.

MYTH #1:My cost of living will go down when I retire.According to certified financial planners, retirees usuallyspend more than theythink they will. Not onlyare people living longer,they are retiring earlierand living more activelifestyles. In fact, most oftoday’s retirees spendmore than 70% of theirpre-retirement earnings –the figure that manypeople recommend usingin estimating neededretirement income.

MYTH #2: I won’t have any dependents to pay for.Some people think retirement equals an “empty nest.” Butthat’s not as common today as it once may have been.Again, people are living longer – sometimes outliving theirfinancial resources. You could be called upon to supportyour own aged parents. If you have children, it is alsopossible that you will bear their college educations orsimilar expenses during your retirement. And in today’suncertain economic environment, many adult childrenare returning to their parents’ homes, unable to afford tolive on their own.

MYTH #3: Social Security is going under; the economy’sa mess. I have no control over my financial future, so Imay as well not worry about it. This may be the biggestmyth of all. While no one can give us an iron-clad guaranteethat our retirement years will be rosy, what we save duringour employment years certainly does have an impact.

TRUTH #1: Start Now – Save Regularly – RetireSmart. Every action has consequences – even failing totake action. So we urge you not to fall prey to these commonretirement fallacies. Open an IRA today. If you alreadyhave an IRA, make sure you fund it to the fullest extentpossible, as early in the year as possible – and do it everyyear, without fail. This simple habit will pay you backhandsomely when you are ready to say goodbye to workingand pursue your retirement dreams. �

Financial statements, credit card bills, cancelled checks, ATM receipts...You know these documents can come in handy. But you may be savingsome records too long and others not long enough.

We can’t tell you when it’s safe to destroy certain financial documents –that’s for you to decide, perhaps after talking with your accountant orattorney. But we can tell you that it’s important to develop a plan formanaging all this paperwork. Maybe the most compelling reason: Federaltax rules require you to have receipts and other records that supportitems on a return for as long as the IRS can assess you additional tax.

Generally, the IRS can assess a tax up to three years from the date youfiled your tax return, but it’s six years if the IRS suspects you underreportedincome by more than 25 percent. This can happen to even the most honestperson if you make a serious blunder.

Most experts offer the following record retention system as a reasonableapproach for many people:

• ATM, Credit Card and Debit Card Receipts: Save them until thetransaction appears on your statement and you’ve verified that theinformation is accurate.

• Cancelled Checks:Those with no long-term significance for tax or otherpurposes probably can be destroyed after about a year. But cancelledchecks that support your tax returns, such as charitable contributionsor tax payments, probably should be held for at least seven years –long enough to cover the six-year tax assessment period that startswhen you file your tax return for the year the check was written. And,keep indefinitely (for other tax reasons) any cancelled checks and relatedreceipts or documents for a home purchase or sale, renovations orother improvements to a property you own, and non-deductible contributions to an Individual Retirement Account.

• Credit Card Contracts and Other Loan Agreements: Keep for as longas the account is active, in case you have a dispute with your lenderover the terms of your contract.

• Documents of your Purchase or Sale of Stocks, Bonds and OtherInvestments: Retain these while you own the investment and thenseven years after that.

• Credit Card and Financial Institution Account Statements: Save thosewith no tax or other long-term significance for about a year, but savethe rest for up to seven years. If you get a detailed annual statement,keep that and discard the corresponding monthly statements. Be sure tomark closed accounts as such, so your heirs don’t waste time wonderingwhat happened to the money. �

HOW LONG & WHAT TO KEEP WHENIT COMES TO FINANCIAL RECORDS

Annual Catch-Up Maximum Annual Contribution INDIVIDUAL Annual Contribution Contribution Age Limit Age 50 or Older Tax Year Limit 50 or Older (including Catch-Up)

2010 $ 5,000 $ 1,000 $ 6,000

Annual Catch-Up Maximum Annual Contribution MARRIED/SPOUSAL Annual Contribution Contribution Both Limit Both Age 50 or Older Tax Year Limit Age 50 or Older (including Catch-Up)

2010 $ 10,000 $ 2,000 $ 12,000

AT A GLANCE - Traditional & Roth IRA Contribution Limits

Total yearly contributions that can be made by an individual to all IRAs(Traditional and Roth) is $5,000 ($6,000 if age 50 or older).

IRA Fast Fact...IRA Fast Fact...IRA�contributions�including�spousal�IRAs�are�voluntary.

Making�a�contribution�this�year�does�not�obligate�youto�make�contributions�in�later�years.

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