Roth IRA

The decision to open a Roth IRA should be based on a number of factors, such as your age, current income tax rate, expected income tax rate in retirement, how many years you will invest and the expected rate of return. To help you analyze these often-complicated factors, it makes sense to seek the help of an investment professional.

Key benefits of a Roth IRA:

• Contributions Grow Tax-Deferred
  Contributions to a Roth IRA are not tax deductible, but they can be withdrawn tax free (this contrasts to a Traditional IRA, in which contributions may be tax deductible and taxes are owed on withdrawals).
  
  
• Withdrawals Not Mandatory During Your Lifetime
  Unlike a Traditional IRA, you are not required to start making withdrawals after age 70 1/2. If you don't need the money, the account continues to grow tax-free.
  
  In addition, you can continue to put money into a Roth IRA after you reach 70 1/2 as long as the money comes from earned income, not investment income. Because you are not required to make withdrawals during your lifetime, a Roth IRA becomes an estate planning tool because you can pass your account intact to heirs.

• Contribution Levels
  The maximum annual contribution to a Roth IRA is $5,000 for individuals and $10,000 for married couples for 2010. These limits are higher for individuals age 50 and older.
  
  
• 2010 Conversion Opportunities
  As an investor with a Traditional IRA, you may be able to benefit by converting it to a Roth IRA, especially if you do the conversion in 2010.

  There are significant changes in Roth IRA rules for 2010:

  • Conversion from a Traditional IRA to a Roth IRA may be made regardless of your income
  • Income tax on the converted assets may be paid in two
    installments — half each — in 2011 and 2012

  Converting your Traditional IRA to a Roth IRA may also provide more flexibility with your retirement funds.
  

• Tax-Free Earnings
  Earnings can be taken out tax-free and penalty-free if a Roth IRA has been held for at least five years and you meet one of the following: You are over the age of 59 1/2, the funds (up to $10,000) are used for the purchase of a first home or the withdrawal is due to death or disability.

• Ability to Pay Conversion Taxes With After-Tax Assets
• Expectations About Future Tax Rates
• Importance of Delaying Required Minimum Distributions

Lincoln Investment Can Help

Today, you may no longer rely on just your company pension and Social Security to provide adequate funds for retirement. You should consider developing a retirement investment plan that makes maximum use of available tax benefits, so that your retirement assets will grow more quickly. If you meet the criteria, consider a Roth IRA. However, because the rules governing a Roth IRA are complex, you should work with a financial and tax professional.

Lincoln Investment has specialized since 1968 in providing retirement planning services. A Lincoln Investment financial representative looks forward to working with you to explore the opportunities offered by a Roth IRA.