Memorandum
TO: FROM: DATE: JMU Employees Human Resources July 16, 2008
SUBJECT: Roth IRA ______________________________________________________________________________ James Madison University offers the ability to participant in a Roth IRA through payroll deduction. The Taxpayer Relief Act of 1997 created the Roth IRA, a completely new type of IRA. The Roth IRA allows you to invest in a tax-advantaged retirement account, and you (or your spouse) must work in order to contribute. The Roth IRA contribution limit is $5,000 in 2008. Contributions are made with after-tax dollars, but are tax-free at the time of withdrawal. Eligibility to participate in a Roth IRA depends on several factors such as adjusted gross income, your tax-filing status, and whether you currently participate in a company-sponsored retirement plan. A financial advisor will be able to provide you with additional information on a Roth IRA. To participate, you must contact one of the companies listed below to set up an account and complete a Roth IRA Deduction form. Ameriprise Financial Services Andy Huggins (540) 434-4956 Frank Driver (540) 434-8278 Linda Hoover (540) 434-0484 Jim Fraizer (540) 434-6344 Christopher Goehner (540) 432-0978 Stephen Krech (540) 434-3622 Beth Croushorn (540) 434-4956 Michael Bowen (540) 434-0432 Met Life Ed Morrison (540) 433-9178 We are happy to provide you with this benefit. Lincoln National Deborah Scalise(540) 433-9575
AIG Retirement Sean Lankard (888) 477-2680 Michael Cooley (540) 459-7384
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ROTH IRA Benefits to the Taxpayer Tax free earnings (provided certain conditions are met) Tax free distributions; no need to project for future tax bites. No required minimum distribution before death Contributions can continue as long as the owner has income (no age limitation) Easier access to money before retirement Contributions Made with after-tax dollars; therefore, no deduction is available Limited to $3,000 per year total contributions in 2004 ($6000 per married couple) made to all Traditional Roth IRAs..*($4,000 in 2005-2007, $5,000 in 2008) Contribution is reduced if Adjusted Gross Income (AGI) hits $95,000 (single filer) and $150,000 (joint filer). No contribution is allowed if AGI reaches $110,000 (single) and $160,000 (joint). Contributions can be made even after age 70-1/2. Earnings Earnings grow tax free Distributions All qualified distributions are tax-free. Non-qualified distributions may be subject to taxes and penalties. Distributions are deducted from the contribution amount in the Roth IRA. After the contribution amount is used up, distributions are taken from earnings, which would be subject to tax and possibly penalties. There are no required minimum distributions before death. Distribution on death follow Tradition IRA rules, which generally: If the beneficiary is the spouse, the spouse may roll the IRA into his/her own IRA. If not a spouse, beneficiaries must take a lump-sum distribution within five years of life expectancy. Tax-free Withdrawals Always tax-free Earnings Satisfy the 5-year invested period (5 years from date of initial contribution or, if a conversion, 5 years from date of latest conversion) AND satisfy one of the following Penalty-free Withdrawals Always tax-free Earnings Satisfy one of the conditions listed below:
-age 59-1/2 -death -disability
-age 59-1/2 -death -first-home purchase -college expenses -to take periodic payments -to pay health insurance after lengthy employment -to pay catastrophic medical expenses -to return excess contributions (earnings on contributions may be subject 10% penalty tax)
Converting from a Traditional IRA Assets in a Traditional IRA may be rolled over to a Roth IRA if the taxpayer’s adjusted gross income for that year is $100,000 or less (married or single).A married person filing a separate return cannot convert a traditional IRA to a Roth IRA. The taxable portion of the rollover amount will be treated as income. You may consult with a financial advisor for additional information or questions.
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JAMES MADISON UNIVERSITY ROTH IRA PAYROLL DEDUCTION FORM Contributions to a Roth IRA will be submitted on a semi-monthly basis and will be processed beginning the first payroll cycle after receipt of this form. New Deduction _____ Change Cancellation
I, ________________________________, hereby authorize James Madison University to deduct $____________ from my salary each pay period, on a post-tax basis, for deposit into my Roth IRA account. This amount is to be forwarded on a semi-monthly basis to ______________________________________(company). This authorization will continue until amended or terminated in writing. The employee and company are responsible for compliance with all laws and regulations pertaining to a Roth IRA. The employee agrees that the employer shall have no liability whatsoever for any loss suffered by the employee with regard to the selection of a Roth IRA.
_____________________________ Employee Signature Date _____________________________ Social Security # or PeopleSoft ID#
_________________________________ Company Agent Signature Date _________________________________ HR Representative
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