Explaining MRA

Traditional IRA

You can open a traditional IRA as long as you have earned income and are under age 70 1/2. Contributions are tax deductible and you may contribute up to $5000 per year (as of 2008). Earnings are not taxed as long as they remain within the account. After age 59 1/2, withdrawals are subject to regular taxes. Early withdrawal is subject to taxes and a 10 percent penalty unless it qualifies as an exception under IRS rules (for large medical expenses, purchase of a first home or certain educational expenses) or in the event you are disabled or have inherited the IRA.

Roth IRA

You may contribute $5000 per year (as of 2008) to a Roth IRA, but cannot deduct the money from your taxes. Anyone with earned income can open a Roth IRA with no age restriction. After 5 years or age 59 1/2, whichever comes first, you may withdraw earnings without penalty and they are not subject to federal taxes. Contributions can be withdrawn at any time. The exceptions that allow early withdrawal are similar to the traditional IRA, except that withdrawals for buying or repairing a first home are limited to a total of $10,000.

MRA

The legislation would provide manufacturers with the option of establishing a manufacturing reinvestment account (MRA), similar to an individual retirement account (IRA), at a local community bank, and to make annual pre-tax contributions into these accounts of up to $500,000 over a period of seven years.

-Hugh F. McCann Jr.