Question: Should I open an IRA?

Answer: An IRA (Individual Retirement Account)-also known as a traditional IRA to differentiate it from a Roth IRA which has different tax treatment-is an individual retirement savings plan that offers tax advantages that are similar to your workplace-sponsored retirement program. If eligible, you can set up an IRA at many different financial institutions-such as banks, insurance companies and brokerage firms. The money that you contribute to an IRA may be fully or partially tax deductible-and the portion that is tax deductible is not taxed until withdrawal. The investment earnings in an IRA are also not taxed until they are distributed.

Some guidelines to keep in mind when considering establishing an IRA include the following:

   Eligibility: To contribute to an IRA, you must be under age 70½ at the end of the tax year and you-or your spouse if you file a joint return-must have taxable income, such as wages, salaries, commissions, tips, bonuses, or income from self-employment.

   Contribution limit:The maximum amount you can contribute to an IRA for 2007 is $4,000 or your taxable compensation for the year-whichever is less. You may contribute up to $5,000 if you are 50 or older by December 31, 2007. You can open an IRA and make a contribution for a tax year up until the due date (without extension) of the tax return for that year. Generally, this is April 15th following the tax year. For example, you can make a contribution for 2006 up until April 15, 2008.

   Qualified plan participation: If you or your spouse participates in a qualified retirement program at any time during the year, your IRA contributions may not be fully deductible. Your IRA deduction may be reduced or eliminated, depending on the level of your income and your filing status.

   If you work, but your spouse is not employed, he or she may establish his or her own IRA, subject to the IRS guidelines for this type of plan.

An IRA can be an excellent way to supplement your workplace-sponsored retirement program, but be sure you are familiar with the guidelines concerning IRAs before you establish your own plan. Since the guidelines noted above are merely a summary and do not include all the provisions associated with an IRA, you may wish to consult a financial professional for assistance.

One final note: Since you can gain greater tax benefits from your workplace-sponsored retirement program, you may wish to ensure you are maximizing those contributions before you consider establishing an IRA.