Traditional IRA

Taxable vs. Tax-Advantaged Investing

IRAs (Individual Retirement Accounts) are powerful and flexible investment tools for building assets to support the retirement lifestyle you envision. A Traditional IRA offers tax-deferred earnings and, if you qualify, full or partial tax deductions on contributions. With a Traditional IRA, you pay no taxes until you begin withdrawing money from your IRA, and then withdrawals are taxed as ordinary income¹.

¹ Assumes withdrawals after age 59 1/2. Withdrawals before reaching age 59 1/2 will be subject to additional tax penalties with some exceptions

A Traditional IRA Might be Right for You if You...

You are younger than 70 1⁄2 and have compensation.2

You are seeking tax-deferred earnings and/or tax-deductible contributions.3

You don’t qualify for a Roth IRA or deductible Traditional IRA and you’ve maxed out your 401(k)contributions, but still want to benefit from tax-deferred investment growth.

You’re looking for a flexible savings vehicle.

You expect to be in a lower tax bracket at retirement.

² Compensation includes salaries, wages, tips, commissions, bonuses, alimony, royalties and ”earned income” in the case of self-employeds. Please note you cannot contribute in the year you turn age 70 1/2.

³ Income limits, tax filing status, and whether or not you are an active participant in an employer-sponsored retirement plan apply to determine deductibility of contributions.

Determining Your Eligibility

Almost anyone under age 70 1⁄2^* with compensation can contribute to a Traditional IRA. However, depending on your income, tax filing status and whether or not you are covered by an employer-sponsored retirement plan, you may not be able to deduct all or even part of your contribution.

^* Please note you cannot contribute in the year you turn age 70 1/2.

Maximizing Your Contributions—Even if You Can’t Deduct Them

Some people may overlook making contributions to a Traditional IRA because they don’t qualify for a tax deduction. However, you can still make non deductible contributions and your savings can still accumulate tax-deferred.

Contribution Limits

Year	If you’re under age 50	If you’re over age 50
2007	$4,000	$5,000
2008*	$5,000	$6,000

^* After 2008, IRA contribution limits are subject to Cost of Living Adjustments (COLA). Limits are indexed for inflation in $500 increments rounded to the lower increment. Form 8606 must be filed to calculate the portion of any IRA distribution that is not taxable.

Qualifying for Deductible IRA Contributions

Traditional IRA contributions can be either fully or partially deductible, depending on several variables.

• If you (or you and your spouse) are not covered by an employer-sponsored retirement plan, you can make the full tax-deductible contribution regardless of your income.
• If your spouse doesn’t have earned income (or earns less than you) and you file joint tax returns, you may establish a spousal IRA, which allows you and your spouse to make contributions up to the annual income limits.²
• If you and your spouse are covered by a retirement plan at work, you may be able to take a full or partial deduction, depending on your Modified Adjusted Gross Income (MAGI).³ See chart below for details.

¹ Maximum amount contributed for any year is equal to the lesser of 100% of compensation, not to exceed the
annual contribution limit.
² If one spouse is an active participant in an employer-sponsored retirement plan, the deductibility of the
non active participant spouse’s contribution is phased out for couples with adjusted gross income (AGI) between $156,000 and $166,000 for 2007 and $159,000 - $169,000 for 2008. Contributions can be divided any way you wish as long as no more than the applicable annual dollar limitation is contributed into either account.
³ You can determine your MAGI by looking at your 1040 IRS tax form.

Deductibility Schedule

	Single Filer		Married Filing Jointly
Tax Year	Fully Deductible	Partially Deductible	Fully Deductible	Partially Deductible
2007	<$52,000	$52,000 to $62,000	<$83,000	$83,000 to $103,000
2008	<$53,000	$53,000 to $63,000	<$85,000	$85,000 to $105,000

Understanding the Rules Governing Distributions

In general, to retain tax-deferral benefits and avoid penalties, you must be willing to hold assets in your Traditional IRA until you reach age 59 1⁄2. Most withdrawals made before that time will be subject to ordinary income taxes as well as a 10% penalty.

Penalty-free Withdrawals

Under section 72(t) of the Internal Revenue Code, you can take penalty-free distributions from your account before you reach age 59 1⁄2 for any of these reasons:¹

Required Minimum Distributions (RMDs)

You will be required to start taking RMDs from your Traditional IRA no later than April 1 of the year following the year in which you reach age 70 1⁄2.² These distributions will be taxable as ordinary income. The amount you’ll have to withdraw varies according to your age, the amount you’ve accumulated and other actuarial factors. Talk to your advisor and ask for the Van Kampen Investments What You Need to Know about IRA Distributions brochure to learn more about calculating your required minimum distributions and other beneficiary strategies.

¹ Prior to 59 1⁄2, no penalty applies to a timely withdrawal of a principal amount of an excess or nondeductible contribution or a qualifying rollover distribution. Also, no penalty applies to withdrawal of contributions by date for filing tax returns. However, earnings are subject to penalty.

² Failure to take your RMD could result in a 50% tax penalty.