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A Roth IRA is an individual retirement account like a traditional IRA but designated as a Roth IRA when set up in a financial institution such as a bank, federally insured credit union, savings and loan association, or a stockbroker. It is subject to the same rules that apply to a traditional IRA except for some rules described as follows.

1. The contribution to this account is not deductible like the traditional IRA. For 2008, the contribution limit is the lesser of $5,000.00($6,000.00 if you are age 50 or older) minus your contributions for the year to all IRAs other than Roth IRA, or your taxable compensation. If you participated in a 401(k) plan where the employer who maintained the plan went into bankruptcy, you may contribute an additional $3,000.00 to your Roth IRA if the following conditions are met, i.e. the employer matched at least 50% of your contribution to the plan with stock of the company, you have been a participant in the plan 6 months before the employer went into bankruptcy, the employer (or a controlling corporation) have been a debtor in a bankruptcy case in an earlier year, and the employer (or any other person) have been subject to indictment or conviction based on business transactions related to the bankruptcy. If you avail of the catch-up contribution of $3,000.00, the $6000.00 contribution limit for age 50 or older does not apply. The most that can be contributed to your Roth IRA is the smaller of $8,000.00 or your taxable compensation for the year.

2. If your modified Aggregate Gross Income is above a certain amount, your contribution limit is gradually reduced. For 2008, your Roth IRA contribution limit is reduced (phased out) in the following situations. If you are married filing jointly or qualifying widow/widower and your modified AGI is less than $159,000.00 you can contribute to a Roth IRA in accordance with item 1. With the same filing status and a modified AGI of at least $159,000.00 but less than $169,000.00 the amount you can contribute is reduced in accordance with a calculation method provided by the IRS. Again, with the same filing status you can not contribute to a Roth IRA with a modified AGI of $169,000.00 or more.

If your filing status is married filing separately and you live with your spouse at any time during the year and your modified AGI is zero you can contribute to a Roth IRA in accordance with item 1. With the same filing status and a modified AGI of more than zero but less than $10,000.00 the amount you can contribute is reduced accordingly. Again, with the same filing status you can not contribute to a Roth IRA with a modified AGI of $10,000.00 or more.

If your filing status is single, head of household or married filing separately and you did not live with your spouse at any time during the year and your modified AGI is less than $101,000.00 you can contribute to a Roth IRA in accordance with item 1. With the same filing status and a modified AGI of at least $101,000.00 but less than $116,000.00 the amount you can contribute is reduced accordingly. Again, with the same filing status you can not contribute to a Roth IRA with a modified AGI of $116,000.00 or more.

3. For 2008 Roth IRA, a rollover from eligible retirement plans such as a qualified pension, profit sharing or stock bonus plan including a
401(k) plan, an annuity plan, a tax sheltered annuity plan (403(b) plan), a deferred compensation plan of a state or local government (457
Plan), or an IRA is now allowed. This completes the highlights of what is new in the 2008 Roth IRA.

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