Winter 2006

	ROTH 401(K) Offers New Choice for Retirement Savings				New Energy Tax Breaks
	New tax rules now allow you to combine the power of the traditional 401(k) with the flexibility of the Roth IRA. Starting this year, employers can let 401(k) participants designate their elective deferrals as Roth contributions. Should you consider this important option? First, a little history: When 401(k)s and IRAs were created years ago, Americans were provided with a new way to set aside money for retirement and reduce their current tax bill to boot. But there was a catch. Withdrawals at retirement were 100% taxable. In 1998, a new IRA was created, the Roth IRA, which worked just the opposite-contributions were not tax-deductible, but withdrawals were 100% tax-free. Unfortunately, 401(k) plans did not have this Roth-like flexibility, until now. However, there are some important differences between the old Roth IRA and the new Roth 401(k). On the plus side, Roth 401(k)s have a higher contribution cap: $15,000 vs. $4,000 for the traditional Roth IRA ($5,000 for taxpayers 50 or older). Also, thee is no income limitation for Roth 401(k) contributions, unlike a traditional Roth that excludes participation when adjusted gross income exceeds $110,000 for singles and $160,000 for couples.		On the down side, Roth 401(k)s require annual distributions after you reach age 70. Roth IRAs have no such condition. What's more, employer matches of contributions can only be made to regular 401(k) accounts, which means you might have two investment accounts to keep track of. Young professionals who expect to be in a higher tax bracket when they retire might choose to sacrifice a current tax deduction in favor of tax-free withdrawals later. High tax bracket individuals, who have been shut out of Roth IRAs because of the income limitation, might also want to join in. The Roth 401(k) provides yet another option to consider in your financial plan. Do you have questions about all the choices? Contact Nolan, Giere at (937) 339-3118 and we'll help you find the retirement plan that suits you best.		Provisions of The Energy Tax Incentives Act of 2005 go into effect this year. Many of the Act's provisions are designed to either encourage energy conservation or expand the use of alternative energy sources. Here are a few key provisions that may save you significant tax dollars. • Credit for energy-efficient home improvements. If you make qualifying home improvements in 2006 or 2007, you could be eligible for a tax credit of up to $500. Your credit will equal 10% of the costs of making energy-efficient improvements to your home, such as adding insulation or replacing exterior windows. • Credit for energy-efficient residential property. You can earn a larger tax credit by installing qualifying solar energy or fuel cell property in your home in 2006 or 2007. This credit is 30% of the installation costs, with a maximum tax credit of $2,000 for solar energy property, and $500 per 0.5 kilowatt of capacity for fuel cell property. Solar energy property includes solar water heating equipment and electricity-generating solar equipment. • Deduction for energy-efficient commercial buildings. Business owners can benefit from a new deduction for the cost of significant energy-saving improvements made to commercial buildings. Instead of recovering these costs over the depreciable life of the building - usually 30 years - you'll generally be allowed an immediate deduction of up to $1.80 per square foot. The improvements must be made in 2006 or 2007 and meet certain energy-reduction standards to qualify.