
The Personal Advisor
1997 Tax Law

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© Copyright 1997, Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member, Securities Investor Protection Corporation (SIPC). All rights reserved. Legal and Trademark Notices.
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What the Expansion of IRAs Means to You
Has all the talk about the Taxpayer Relief Act of 1997 left you wondering, "How will these changes affect my IRA? Should I do anything differently?" Here's some background information to help you decide.
The new law gives you three different IRAs starting in 1998:
- The traditional IRA has been expanded by raising income limits on deductibility for
individuals who are active participants in an employer-sponsored retirement plan. For married couples, the new law eliminates the restriction that prevented a spouse from contributing to an IRA because his or her spouse participated in an employer-sponsored retirement plan.
- The new Roth IRA is a nondeductible IRA
permitting contributions up to $2,000 a year and providing tax-free withdrawals, if certain requirements are met.
- The Education IRA is a new, tax-advantaged account subject to income caps on an individual or couple establishing one. Individuals are allowed up to $500 in annual nondeductible contributions for each child, prior to the child's 18th birthday. Withdrawals for qualified higher - education expenses are tax-free and anyone - parents, grandparents, other relatives and friends - can set up and contribute to an account.
To help you make the right choice, your Merrill Lynch Financial Consultant can provide you with
a free, computer-generated IRA analysis that will enable you to:
- Compare the result of making annual contributions to a traditional IRA and a Roth IRA.
- Project certain basic tax consequences of converting your present IRA to a Roth IRA.
- Evaluate the impact of using different strategies to pay the taxes related to a conversion.
Talk with your Merrill Lynch Financial Consultant soon about which of these exciting opportunities might best meet your needs.
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