Common use of TAX TREATMENT OF XXXX XXX CONTRIBUTIONS Clause in Contracts

TAX TREATMENT OF XXXX XXX CONTRIBUTIONS. No Deduction. You may not take a tax deduction for Xxxx XXX contributions. Tax Credits for Contributions. You may be eligible to take a tax credit for your Xxxx XXX contribution. The maximum annual tax credit is $1,000 and, if you are eligible, the credit will reduce the federal income tax you owe dollar for dollar. You may be eligible for the tax credit if you are age 18 or older, not a dependent of another taxpayer, not a full-time student, and have adjusted gross income (AGI) within any applicable limits. DISTRIBUTIONS DURING YOUR LIFETIME You may withdraw any or all of your Xxxx XXX balance at any time. If you take a qualified distribution from your Xxxx XXX, neither the contributions nor the earnings are taxable. If your Xxxx XXX distributions are nonqualified distributions, certain taxes and penalties may apply. Due to the complexity of the Xxxx XXX distribution rules and tax ramifications, you should consult a tax advisor prior to taking distributions from your Xxxx XXX. Distribution Ordering Rules. The “ordering” rules treat distributions as coming from the following categories in the following order:

TAX TREATMENT OF XXXX XXX CONTRIBUTIONS. No Deduction. You may not take a tax deduction for Xxxx XXX contributions. Tax Credits for Contributions. You may be eligible to take a tax credit for your Xxxx XXX contribution. The maximum annual tax credit is $1,000 and, if you are eligible, the credit will reduce the federal income tax you owe dollar for dollar. You may be eligible for the tax credit if you are age 18 or older, not a dependent of another taxpayer, and not a full-time student, and have adjusted gross income (AGI) within any applicable limits. DISTRIBUTIONS DURING YOUR LIFETIME You may withdraw any or all of your Xxxx XXX balance at any time. If you take a qualified distribution from your Xxxx XXX, neither the contributions nor the earnings are taxable. If your Xxxx XXX distributions are nonqualified non-qualified distributions, certain taxes and penalties may apply. Due to the complexity of the Xxxx XXX distribution rules and tax ramifications, you should consult a tax advisor prior to taking distributions from your Xxxx XXX. Distribution Ordering Rules. The “ordering” rules treat distributions as coming from the following categories in the following order: