The following accounts are eligible retirement accounts for Merrill Lynch Direct: IRA, IRA Rollover (IRRA), and Roth IRA.

Individual Retirement Account (IRA)

The traditional IRA permits individuals to make annual contributions of up to $3,000 (effective for 2002) or 100% of earned income, whichever is less. Contributions may be tax deductible (if certain conditions are met). Amounts contributed and earnings grow tax-deferred, and are not subject to ordinary income tax until withdrawn. Beginning in 2002, individuals age 50 and over, are permitted to make additional "catch-up" contributions in the amount of $500. Required minimum distributions apply once an individual reaches age 70 ½. Distributions prior to age 59 ½ are subject to a penalty, unless an exception applies.

Individual Retirement Rollover Account (IRRA)

The IRRA is a traditional IRA that holds part or all of a distribution received from a qualified plan. This account is appropriate for individuals who wish to maintain a separate IRA for those assets, which were previously distributed from a qualified plan .

Roth Individual Retirement Account (IRA)

The Roth IRA permits individuals to make non-deductible, annual contributions of up to $3,000 (effective for 2002) or 100% of earned income, if less. Married couples filing jointly can contribute up to $6,000 (or 100% of earned income, if less). Contribution limits may be further reduced if modified adjusted gross income (MAGI) is above certain amounts and eligibility to make Roth IRA contributions phases out depending on MAGI levels. Beginning in 2002, individuals age 50 and over are permitted to make additional "catch-up" contributions in the amount of $500. Additional restrictions apply if contributions are also made to a traditional IRA. While your annual contribution is not deductible, any earnings grow advantaged, which can help produce a greater total return over the long term. After five years, withdrawals taken at retirement or for other qualified purposes may be tax-free.