Farmers and Mechanics Federal Savings and Loans Association offers fixed interest rate retirement accounts. IRA benefits include tax-free options…higher earnings…FDIC insured. Start planning now to make your retirement years more enjoyable and less financially stressful.

Quick Comparison Chart

Qualifier	Traditional IRA	Roth IRA
Maximum Condition	$4,000 single $8,000 married filing jointly*(For individuals age 50 and older, the 2006 limit is $5,000.)	$4,000 single or $8,000 married filing jointly*(For individuals age 50 and older, the 2006 limit is $5,000.)
Income Grows	Tax-deferred	Earnings are non-taxable for qualified distributions**
Annual Contributions	Can be tax-deductible, if you meet certain requirements	Non-tax-deductible
Qualified Withdrawals	Both deductible contributions and income are taxed	Neither contributions nor income are subject to federal income tax**
Other Withdrawals are allowed without penalty to buy a first home or for higher education of children	Taxed, but no longer penalized (lifetime withdrawal for first home purchase of up to $10,000)**	A qualified distribution of earnings can be taken when the five-year holding period is over and one of the following applies: -The Roth IRA owner has reached age 59½, -The Roth IRA owner has died, -The Roth IRA owner is permanently and totally disabled, -The distributed earnings are used for a qualified first-time home purchase.
Income Eligibility	Anyone with earned income and under age 70 ½ can contribute	Single-Up to $110,000 (modified adjusted gross income) Married - Up to $160,000 MAGI filing joint return Conversion contributions: Up to $100,000 MAGI married or single
Age at which withdrawals must begin	70 ½	No required distributions

* For more information about the IRA that is right for you, contact our tellers at either of our conveniently located offices in Bloomfield or Bloomington. Contributions you make to a Traditional or Roth IRA both count toward this limit.

** For more qualified distributions, consult your tax advisor to learn whether state or local taxes may apply.

Traditional IRA - Your income grows tax-deferred, and your contribution can be tax-deductible, if you meet the eligibility requirements. You can save on taxes and watch your retirement savings grow faster. Select your own fixed interest rate and fixed term from any of the CD's we have available.

Roth IRA - The Roth IRA is a non-deductible account that features tax-free withdrawals for certain distribution reasons after a five-year holding period. Consider investing in a Roth IRA if you:

• Are over age 59 ½ and still saving for retirement.
• Are over age 70 ½ and still earning income and wanting to invest in a savings plan.
• Will be in the same or higher tax bracket at the time you take distributions from your IRA.
• Make too much earned income (AGI) to make a fully deductible contribution to a regular IRA.

Coverdell Education Savings Account (CESA) Enhancement

The CESA is a non-deductible account that features tax-free withdrawals for a very specific purpose-a child's higher education expenses. While similar to both the Traditional and Roth IRAs, distributions from a CESA are penalty free and tax-free. What a great way to assure the future for your loved ones.

Note: New Revisions in Effect

• Contribution limit increased to $2,000 per beneficiary.
• Contributions may come from different sources as long as the CESA does not receive greater than $2,000 in any taxable year.
• Contribution deadline is the contributor's tax filing deadline for such year.
• Contributors may be individuals, other entities (employers, etc.), and non-profit groups.
• Marriage penalty eliminated.
  A married couple filing a joint tax return may contribute to CESAs so long as their adjusted gross income does not exceed $220,000. However, such contributions may be limited if the couple's adjusted income falls into a phase-out range of $190,000 to $220,000.
• CESA assets may be used to pay qualified elementary and secondary education expenses for public, private, or religious schools. This includes Kindergarten thru Grade 12.

Qualified educational expenses (paid tax-free with CESA assets) include:

• Expenses for tuition, fees, academic tutoring, certain special needs services, books, supplies, and other equipment which are incurred in connection with enrollment or attendance;
• Expenses for room and board, uniforms, transportation, and supplementary items and services (including extended day programs) which are required or provided by the school in connection with such enrollment or attendance;
• Expenses for the purchase of certain computer technology, equipment, or Internet access and related services if such technology, equipment, or services are to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in school. (Expenses not included are software designed for sports, games, or hobbies unless the software is predominately educational in nature.) Elementary and secondary education expenses are defined differently from qualified higher education expenses.
• A special needs beneficiary may receive CESA contributions at any age, and need not use up or distribute the CESA assets by age 30.
• A beneficiary may receive on his/her behalf a CESA contribution and a tuition program contribution in the same year. Beneficiaries may also take distributions from the CESA and tuition programs in the same year, provided such distributions are not used for the same expenses. Distributions may also be taken in the same year the beneficiary claims a HOPE scholarship and lifetime learning credit, provided the distribution and credit are not used for the same expenses.

18 Month IRA Certificate of Deposit
This is an interest earning account that matures in 18 months. Additional deposits are accepted at any time.