Before you invest, you should consider some important questions:

• What are your retirement income needs? Should you invest in riskier investments that may produce higher returns?
• What is the interest rate, if applicable, and will it fluctuate over the life of the investment?
• What are the administrative fees or commissions that a particular investment will charge?

SUGGESTION: Interest-bearing vehicles, such as bonds, are taxed as ordinary income annually. Purchased inside a traditional IRA, you are deferring tax until you make a withdrawal (the income is tax-free in a Roth IRA). Growth-oriented investments, such as non-dividend paying stocks, are taxed at the more favorable capital gains rates when sold after a 1 year holding period. So, while your investment may substantially increase in value over a long period of time, you avoid taxes on the gain until sold. Putting that same stock inside a traditional IRA, you lose the more favorable capital gains treatment because the investment is taxed at ordinary income tax rates upon distribution. Keeping these two issues in mind, you should invest your IRA funds to maximize your total after-tax return.

IMPORTANT NOTE: Tax-free municipal securities, as well as annuities, don't provide any additional tax advantage within an IRA.

SUGGESTION: You often have a choice to either pay the annual maintenance fee separately from the annual IRA contribution or to have the fee deducted from your IRA account value. The annual fee can be deducted on your income tax return (subject to the 2% miscellaneous itemized deduction rule). So, if your miscellaneous itemized deductions will exceed 2% of your AGI, it is wise to pay the IRA fee separately to get the tax deduction. Get an itemized statement from your IRA administrator or broker so you can easily identify account management fees.

IMPORTANT NOTE: Investment fees incurred in connection with a tax-exempt or tax-free investment (Roth IRA) are not deductible.