Tax season tip: open a no-fee Vantagepoint IRA

Opening a No-Fee Vantagepoint IRA* is one of the best ways to grow your retirement savings.

Just as with your retirement plan at work, when you save through a Vantagepoint IRA, your investments grow tax-deferred-and in some cases, tax-free at the time of withdrawal.

Additionally, once your Vantagepoint IRA is opened, you can roll over your 401 or 457 plan assets, or transfer an IRA from another provider. Take advantage of having all your retirement accounts with ICMA-RC through the convenience of one consolidated statement.

An IRA is one of the best ways to save for retirement and are available in two types, Roth and Traditional:

Roth IRAs — The most significant advantage of Roth IRAs is that while investors contribute to them on an after-tax basis, they have the opportunity to withdraw their earnings on a tax-free basis, assuming certain conditions are met. The ability to make a full contribution of $4,000 ($8,000 for joint filers) to a Roth IRA is limited to employees with a modified adjusted gross income (“MAGI”) of below $95,000 (single tax filing status) or $150,000 (joint filing status).

Traditional IRAs — Investors realize the greatest tax advantage from Traditional IRAs when they can make contributions on a deductible (“pre-tax”) basis. However, many public sector employees are not eligible to make fully deductible (pre-tax) contributions to a Traditional IRA. If you are an active participant in an employer-sponsored retirement plan (such as a pension plan), you must have modified adjusted gross income (MAGI) below established limits (for 2005: $60,000 for single filers/$80,000 for joint filers) in order to make fully deductible contributions to a Traditional IRA. If you and/or your spouse do not actively participate in an employer-sponsored retirement plan, you may make fully deductible contributions to a Traditional IRA regardless of your MAGI.

If you are not eligible to make deductible contributions to a Traditional IRA, one of your best alternatives from a tax perspective is likely to be a Roth IRA. On the other hand, if you are not eligible to contribute to a Roth IRA based on your income (see above) your only alternative is to make nondeductible contributions to a Traditional IRA. (All taxpayers under age 70½ with earned income are eligible to make nondeductible contributions to a Traditional IRA.) Your earnings are tax-deferred until withdrawal.

You can open a No-Fee Vantagepoint IRA online in as little as 15 minutes using the IRA Wizard at www.icmarc.org/ira. If you prefer, you can have a Vantagepoint IRA kit mailed to you by contacting one of our Investor Services representatives at 1-800-669-7400.

* The No-Fee Vantagepoint IRA has a low initial minimum investment of $1,500, which is waived if funded through the convenience of an automatic investment program.