• IRAs for Your Children
• Mapping Out a Long-Term Financial Strategy
• Make Your Children and Grandchildren Investors While They Are Young
• Reducing Risk with a Diversified Portfolio
• Understanding the Role of Your Executor
• New Report on Saving for Retirement
• Getting Ready for a Rollover
• New Kind of Financial Fraud: "phishing"
• Choosing Your Executor and Trustee

Establishing a retirement plan for a child might, initially, sound a bit strange—or at least premature. Truly, it is not. Establishing an IRA for your children or grandchildren can help them achieve financial independence in retirement and, possibly, for the rest of their lives. Idaho Trust can help you start an IRA for your child.

How is it possible?

Here at Idaho Trust, we would be happy to go over some of the specifics of your retirement situation. We can help you in the decision-making and/or set-up process. Simply stated, given enough years of tax-deferred compounding of investment earnings, an IRA can yield some amazing numbers. (See the examples below.)

How can my child set up an IRA?

Although the IRA will be your child's, you set it up and serve as custodian until the child reaches majority. But your child, rather than you, is the "owner" of the IRA and is subject to all the income requirements and rules.

How much can my child contribute?

The contribution rule is the same for your child as it is for you. For 2006 the maximum allowable contribution to a traditional IRA or Roth IRA is $4,000. (If you are age 50 or older, you can contribute up to $1,000 more.) But there is a catch, one that is especially relevant when we're talking about children. If the IRA owner's earned income (income from wages, not from investments) is less than the maximum contribution amount, the contribution is limited to the income that he or she earns.

How can I convince my child to give up his or her earnings and put them in an IRA?

You don't have to. You can make the contribution, by making a gift to your child of the contribution amount (up to his or her earned income). The annual gift tax exclusion ($11,000 in 2005 and $12,000 in 2006) shelters your gift from tax.

Which is better, a traditional or a Roth IRA?

A Roth IRA generally is considered to work best for children. First, withdrawals from a Roth IRA are tax free, provided that all the conditions are met. And there are no required distributions when the owner reaches age 70 1/2. But though contributions can be withdrawn tax free at any time, for the earnings to get the preferential treatment, a Roth IRA must be owned for at least five years and the owner be at least age 59 1/2. A traditional IRA allows pretax contributions, but tax is owed on withdrawals. That may not be a big benefit when your child is relatively young and owes little or no tax on that income. Both IRAs permit penalty-free withdrawals for education expenses and $10,000 in home-buying expenses for the first residence purchased.

What kind of wage income are we talking about?

Paying your child an allowance for helping out at home isn't likely to be "earned income" and survive IRS scrutiny. On the other end of the spectrum, a regular paycheck from a business or the like clearly qualifies. Whether money from in-between situations—baby-sitting, lawn mowing, snow shoveling—is earned income is less certain. The best approach is for your child to keep accurate and detailed records (dates, names of employers, amounts paid for each job) of his or her earnings. If you are employing your child at your business, be sure to treat him or her as you would any other employee.

Is there a downside to setting up an IRA for my child?

Potentially, there's a major one: Once your child reaches majority, he or she is free to take funds from the IRA as he or she pleases, even close it out. If all the Roth IRA conditions aren't met, in addition to tax on the investment earnings, penalties could apply as well. And who knows how the money will be spent?

Examples: Big things can happen to small contributions

Just how big can a Roth IRA grow? Here are two examples (all names and circumstances fictitious):

• The Smiths set up a Roth IRA for their 16-year-old daughter, Sarah, who works after high school and during summers and also will work throughout college, earning at least $3,000 a year. Each year, for six years, the Smiths contribute $3,000 a year to the IRA for Sarah. There are no subsequent contributions. Assuming an investment rate of return of 6% a year, here's what will accumulate in Sarah's IRA:*
  After the six years of contributions end (at age 22): $20,926
  After ten more years: $36,526
  When Sarah reaches age 65: $249,860


• The Petersons set up a Roth IRA for their 16-year-old son Al, who also works after high school, during summers and throughout college, earning enough to allow the Petersons to make $3,000 a year in contributions for him. At age 22 Al takes on the responsibility for making contributions from then on, putting $5,000 a year into his IRA.** Assuming retirement at age 65 and an investment return of 6% a year, here's what will accumulate in Al's IRA:*
  After six years of $3,000 contributions: $20,926
  After ten additional years of $5,000 contributions: $102,430
  When Al reaches age 65: $1,187,398

Call Idaho Trust toll free 800-549-3333 to discuss your situation or how to set up an IRA for your child. You can also email us at LKC@idahotrust.com to inquire further.

*This rate is hypothetical, chosen for illustrative purposes only. It does not represent the past or future performance of any specific investment or mutual fund.
**$5,000 per year is the maximum allowable contribution for 2008 and after, assuming that the increases that became law in 2001 become permanent instead of expiring after 2010. Contributions to a Roth IRA may be limited or unavailable above certain adjusted gross income limits.

You wouldn't start a long road trip without a map or consulting a Web site such as mapquest.com. The same holds true as you develop a strategy for managing your investments. This particular map is the strategy that will allow you to reach the financial destinations that you have chosen. Idaho Trust can help you design and execute such a strategy. If you already have a strategy, we will re-evaluate it at no cost or obligation.

Developing an investment strategy is a process—an organized, disciplined approach to making the right investment choices. It's not an end in itself, but a means to make certain that you and your loved ones will be financially secure and that you will have the peace of mind of knowing that you have provided well for them.

Idaho Trust has served as an investment "guide" for many travelers. Here we give the benefit of some of what we have learned.

Do you need to develop a strategy?

The simple answer: "Yes." Most excuses for not having developed an investment strategy really don't hold up to the light of day. Consider a few:

"I'm not old enough." There is no magic age to begin developing a systematic approach to the management of your investments. But the sooner that you begin to set aside money to invest and determine how to invest it, the greater the opportunity you will have to grow a substantial asset base—one that will allow you to achieve the goals that you have established.

"I'm not wealthy enough." The need for planning is not measured on a scale of wealth. Of course, the more that you have, the more sophisticated the planning may need to be. But, really, people at all wealth levels need to harness their assets and make them work for them.

"I'm already comfortable with doing it as I go." But wouldn't you like to do all that you can to stay comfortable? If you want to grow and preserve your financial resources and provide for your family for the long term, then a strategy is essential.

The broad outlines of the map

When Idaho Trust creates an investment strategy, we start with a comprehensive evaluation of your current financial picture—an assessment of your resources, long-term goals, strategies, milestones and contingencies. At no cost or obligation, we can create a Strategic Investment Plan (SIP) for you. Then you, with the help of your advisor, can choose the investments that best meet your goals and objectives.

Plan Items to Consider:

• Your investments. How should your investments be allocated among the various asset classes? How much risk are you willing to accept? How should your portfolio be managed on an ongoing basis?
• Income tax considerations. Without becoming overly aggressive, have all avenues of tax saving been explored? Are investments being managed in a tax-conscious manner?
• Cash needs. How much money will you need to have on hand to meet
emergencies? A sufficient cash reserve will help you avoid the need to sell off investments at an inopportune time.
• Your time horizon. How long is it before you need to reach your particular goals? A sound investment strategy will anticipate and provide for volatility in the stock market based upon when you need to reach those goals. Because time smoothes out the short-term bumps in the market, good plans have long horizons.
• Contingency planning. What happens if serious illness or injury leaves you unable to manage your investments? What strategies should be set in place?

Two stops along the way

Some trips lead to one destination. Others may encompass a series of stops along the way, each a destination of its own. That latter analogy works best with the management of your investments. Paying for college and building a retirement reserve are two common destinations. Idaho Trust has a number of options to help you with this.

College. How much will you need to have to educate your children? With today's astronomical tuition bills, borrowing may well be in the cards. But starting a regular program of investing—as early as possible—is a better approach.

Tax-advantaged ways to save may play an important role in building up a fund for college. For instance, subject to certain income limitations, a Coverdell Education Savings Account (ESA) provides tax-deferred compounding of your contributions and tax-free distributions to cover education costs. With Section 529 plans, contributions grow tax deferred, and distributions may be tax free as well when used for education costs. But unlike an ESA, a Section 529 plan allows larger contributions, with no income limits.

Retirement. How much after-tax income will be needed annually during your leisure years? What will be the sources for that income? How much capital will be required to fund a secure retirement for you and your spouse? Determining the answers will put you on the path to setting in place the retirement investment strategy that you will need.

When should you review your investment strategy?

Over time, changes in your family and your circumstances can modify your goals. And, as you travel on through life, and your assets grow, your attitude about the risk that you are willing to take may change. Developments in the economy and the markets, as well as national and international events, could have an impact on your plans. For example, reevaluation is especially important when:

• Children or grandchildren are born or adopted.
• Family members pass on.
• Marriage or divorce takes place.
• Significant career or business changes occur.
• Retirement looms.
• A large sum is received (e.g., by inheritance, court settlement).
• Tax laws change.

However, at Idaho Trust we encourage clients to review their investments at least annually.

Idaho Trust is here to help

We will be glad to do a complete analysis (or reanalysis) of your holdings as well as your current and future goals and objectives. Of course, we will also help you choose the investments that will put you on the way to meeting those goals. We look forward to helping you travel down the road to long-term financial security. You can contact us toll free at 800-549-3333 or email us at LKC@idahotrust.com with your questions, to request a Strategic Investment Plan or request an evaluation of your current plan. We would love to hear from you.

As an investor, you're likely to have learned any number of valuable lessons over the years. Some came from observation, some from experience. Why not share some of your life lessons with your children and/or grandchildren, helping them become knowledgeable investors at an early age?

Here are four ideas Idaho Trust would suggest to begin their training.

1. Reveal the magic of compounding.

Has it dawned on your children and/or grandchildren that employment isn't the only way to fill their wallet or purse? Investments produce income as well. And when that income is reinvested, the income earns income. In short, it's the power of compounding, something that Albert Einstein is reputed to have called "the greatest mathematical discovery of all time." Because time is a critical element in wielding its magic, and you're dealing with youth, you can introduce the concept of investing for the long term dramatically, as shown in the following story, courtesy of www.greekshares.com.

In ancient Greece an Athenian merchant with sound investment sense was entrusted by a friend with a large sum of money. He was directed to put the money in a trust and invest it for 2,000 years.

But the merchant kept all the money for himself, save for a single drachma (a coin that was equivalent to about 19 cents). That drachma was invested in bonds paying 3% annually, issued by the Athenian government.

It is said that even with the merchant's thievery, the descendants of the merchant would have had quite a sum to pay over to the descendants of the friend. After 2,000 years that single drachma would have grown to exceed the value of all of the other assets on Earth!

2. Explain the importance of paying themselves first.

Stress the significance of figuring out what the children and/or grandchildren can set aside for saving and investing rather than waiting to see what's left over after expenses and luxuries. By establishing this pattern of saving regularly as youngsters, the habit may well become ingrained. There's a great deal of money to be saved, says Paul W. Lermitte in Making Allowances: A Dollars-and-Sense Guide to Teaching Kids About Money. He reports that on any given day, North American children between the ages of five and 18 have tens of billions of dollars at their disposal.

3. Keep the discussions lively and simple.

A good starting point for investment education is the Internet. Today's kids, sad though it may be, aren't all that interested in libraries and bookstores. But using the Internet is second nature to them. Make it a point to spend some time "surfing the net" with your children, and look at some of the sites devoted to educating young investors about the principles of investing. There are many creative places to visit that offer games and simulations that will teach without seeming like lectures.

4. Concrete is better than hypothetical.

Investing will become exciting to your children if they can see their investments at work. They can track their shares on the Internet and get a bit of feeling for their risk tolerance. (Ask them to describe how they feel when their shares go up or down and how they would react if they had put a great deal of money in the company.) Owning dividend-producing shares of a company means regular checks in the mail. To stimulate their interest, have them pick the stocks of companies with brand names that they recognize. For instance, they might buy shares in the brand labels that they wear, the fast food that they eat or the forms of entertainment that they especially enjoy. Feel free to contact Idaho Trust at 800-549-3333 and our Investment Department would be happy to help your youngster get started.

Money sense won't be learned in the classroom nor can parents expect that saving and investing automatically will become part of their children's lives without parental guidance. We hope that these starting points help you with your discussions.

Diversification is a fundamental investment concept that most investors have no trouble understanding. If, for example, an investor owns equal dollar amounts of only two stocks, and one suffers a 50% loss, his or her portfolio has gone down in value by 25%. But if the investor owns ten stocks, and one drops by 50%, his or her portfolio has suffered only a 5% loss.

With a diversified stock portfolio, risk is reduced because different stocks rise and fall independently of each other. On a broader scale, combinations of different investment assets may well cancel out each other's fluctuations in price, reducing the overall risk.

Categorizing risk

A primary goal at Idaho Trust is to improve investment performance while reducing risk, all the while having a sound, long-term strategy that accomplishes your goals and meets your objectives. One way to categorize risk is to distinguish between unsystematic risk and systematic risk.

Unsystematic risk is risk that is specific to a company. Often, this risk involves some kind of dramatic event such as a strike, a fire or some natural disaster. A company's slumping sales also fall within this category. Diversification among the stocks of many companies reduces unsystematic risk because, of course, it's highly unlikely that every one of the unhappy events listed above will occur in all companies.

Conversely, some events can affect all companies at the same time. This systematic risk includes such occurrences as inflation, war and fluctuating interest rates—generally, those events that influence the entire economy. Of course, diversification cannot eliminate the likelihood of these events happening. Systematic risk accounts for most of the risk in a diversified portfolio. However, in exchange for enduring systematic risk, investors may be rewarded in terms of their investment return. There is no reward for taking on unneeded or unsystematic risk and at Idaho Trust we don't.

A diversified stock portfolio: how much?

One way that we measure investment risk is by looking at stock price volatility. A classic 1968 study by J.L. Evans and S.H. Archer, "Diversification and the Reduction of Dispersion," concluded that an investor who owned 15 randomly chosen stocks would have a portfolio no more risky than the market as a whole. This research confirmed earlier advice, coming from instinct and experience, that Benjamin Graham gave to investors in his 1949 book, The Intelligent Investor. Graham recommended owning from ten to 30 stocks to achieve proper diversification.

A study published in 2001 ("Have Individual Stocks Become More Volatile?" by John Campbell, Martin Lettau, Burton Malkiel and Yexiao Xu) suggests that those numbers may be too small. To replicate the risk of the market as a whole, according to the study, the "excess standard deviation" of portfolio returns needs to be brought down to 5%. In the 20 years ending in 1985, an investor could have achieved this goal by owning 20 stocks. But, in the period from 1986 through 1997, the professors concluded that one needed to own 50 stocks to reach the same result!

Choices in diversification

Of course, an investor who invests for income will diversify his or her holdings among different bonds. In this case, diversification usually means owning long-, intermediate- and short-term government bonds. Other categories might include, when appropriate, municipal, corporate and, sometimes, high-yield bonds.

For some investors the goal of diversification within an asset class can be achieved relatively easily by purchasing shares in a mutual fund, which, by definition, offers automatic diversification.

It is possible for an entire asset class to do poorly for an extended period of time (as we have seen in recent years). Therefore, it's a common diversification strategy for investors to spread their money across asset classes—including, for example, stocks, bonds, money market funds and real estate—in their portfolios. We create this diversification for our clients at Idaho Trust.

Finally, some investors may want to think in global terms. By investing outside of the U.S., investors are addressing the risk of extended bear markets at home. Global investing includes additional risks, however, such as currency fluctuations and political uncertainty.

Idaho Trust can assist you !

Risk will always be a cause for concern. There's always a fear of the unknown. Still, knowledge and experience can help improve the odds that you'll achieve success as an investor in the long term.

We'll be glad to help you develop a strategy that meets your specific needs as an investor. A portfolio designed and implemented to take only the risks with which you are most comfortable to achieve your goals and objectives.

We look forward to the opportunity to tell you more. Call us toll free 800-549-3333 to discover what the professionals at Idaho Trust can do for you.

Your will is a thorough, logical way to plan and control how the assets that you own will be managed and distributed at your death. It will permit an orderly transition of your property to whom and in what manner that you choose.

Your executor (or personal representative as the role in known in some states) takes charge of your estate, once formally approved by the local probate court. Your estate will consist of both probate property (which passes according to your instructions in your will) and nonprobate property (for which you have designated a beneficiary in a separate document—for instance, joint property, retirement plans and life insurance). Your executor will be instrumental in overseeing all of these assets for however long that it takes for them to pass assets into the hands of your beneficiaries.

The responsibilities of an executor

Your executor has a great many tasks to fulfill and details to attend to. Here are some of the key responsibilities:

• Arrange for the probate of your will.
• Assemble and inventory the assets in your estate.
• Arrange for the necessary appraisals of your property.
• Protect and manage estate assets.
• Notify estate creditors and handle claims against your estate.
• Find out the family's immediate cash needs and make sure that funds are available as needed.
• File tax returns and pay taxes.
• Distribute your estate.

This list is by no means a complete catalogue of everything that must be done, but it should be sufficient to persuade you that serving as an executor is neither an easy task nor one for the inexperienced. Idaho Trust has many, many years of experience to draw upon as serving as executor.

Choosing Idaho Trust National Bank

Idaho Trust has been providing professional, comprehensive estate settlement services for many years, and has served as executor for the estates of many individuals in Idaho, in our community and across the United States. The advantages that we offer as a corporate executor are many and significant:

• Constant availability. We have a continued corporate existence. If an individual is named to settle your estate, that person could become sick or travel extensively. When his or her presence is crucial you may not have constant availability. There's no guarantee that the person won't die before the job is done either. Naming Idaho Trust guarantees constant availability and a great solution.
• Specialized knowledge. A qualified executor must have good business sense; understand the ins and outs of taxes; be able to pay close attention to record keeping, correspondence and other details, responsibilities that Idaho Trust is well equipped to carry out when you need it most. We utilize the specialized knowledge needed to do a good job efficiently and effectively.
• Professional investment management. By choosing Idaho Trust to serve as your executor, you are assured that your assets will be managed by investment specialists who will shape an investment strategy and make decisions based upon the instructions in your will and the needs of your beneficiaries.
• Impartiality. It is Idaho Trust's policy to treat all beneficiaries objectively. There is no worry that we will be influenced to favor one of your beneficiaries over another.
• Personal consideration. The Idaho Trust professional staff, through their decades of experience in settling estates, will appreciate the importance of sympathy, understanding and consideration in all their contacts with your beneficiaries during a particularly emotional and difficult time.
• Accountability. Idaho Trust is a corporate executor that possesses substantial capital and financial resources to stand behind all of the decisions that are made. What's more, our actions are subject to periodic reviews by independent auditors and examiners. This gives our clients even more peace of mind.

Continuity with Idaho Trust

You may create a trust under your will or leave a portion of your estate to a trust that was set up independently of your will. By naming Idaho Trust to serve as both executor and trustee, we are in on the important decisions from the outset.

As trustee, we are aware of the investment requirements of the trust so that assets that we manage as executor can be coordinated with the needs of the trust. We know, as executor, what liquid assets will be required to settle the estate, and, as trustee, we make sure that those assets will be made available by the most efficient means. Then, too, we know, as trustee, what the needs of the trust's beneficiaries are, and, as executor, we can make early distribution of assets to the trust to ensure that those needs are met.

Act now

Idaho Trust's extensive experience as executor can offer you distinct advantages in planning for the security and well-being of your family. If you are concerned about the burden placed upon the executor you named in your will, or if you are ready to select an executor, we suggest that you arrange for a meeting with an Idaho Trust representative or call us toll free 800-549-3333 to discuss this matter and the options available to you.

We look forward to hearing with you.

The annual Retirement Confidence Survey, cosponsored by the Employee Benefit Research Institute (EBRI), a private, nonprofit, nonpartisan public policy research organization and a Washington, D.C.- based market research firm, measures expectations and attitudes about retirement among current workers and retirees.

Idaho Trust thought you would enjoy the most recent survey, released in early April of 2005, includes not only some interesting information, but also offers some ideas that you may want to incorporate into your retirement planning. Idaho Trust works with clients striving to achieve such retirement goals every day.

A few key findings

• The percentage of workers who are very confident about having enough money to live comfortably in retirement has remained relatively steady since 1998 (25% for 2005). The survey concludes that retirement confidence "does not seem to be affected by either stock market performance or varying economic conditions."
• A majority of today's workers (55%) believe that they are behind schedule when it comes to planning and saving for retirement. Most of these workers point to high everyday expenses, child-rearing expenses and medical costs as major factors that keep them from being able to save sufficiently.
• Almost 70% of workers are skeptical that Social Security will continue to provide benefits of at least equal value to those received by current retirees. Many continue to be unable to identify the age at which they will be eligible for full Social Security benefits.
• Workers may be underestimating how much of their pre-retirement income that they will need to replace in order to fund an adequate lifestyle in retirement. Although one-half of retirees say that they use 70% or more of their pre-retirement income, a majority of workers expect that they will need less than 70%.
• Among retirees 45% said that they are now more concerned about their financial future than they were immediately after they stopped working. An approximately equal number (44%) said that they were less concerned.

Guidance from the survey

Dallas Salisbury, president and CEO of EBRI, offers a list of tips about retirement planning that he has based upon the results of this year's survey. Some of his suggestions include:

Review your Social Security benefit statement every year. Social Security benefits may make up a relatively small part of your retirement income, but it's still important to know at what age you will be eligible for full benefits and the amount of benefits that you are projected to receive, part of which will depend upon the age that you elect to begin to receive benefits.

Prepare an estimated budget. Although it may require some assumptions, if not outright guesswork, try to determine the annual retirement income that you expect to receive and the expenses that you are likely to incur to offset that income.

Estimate your longevity. With longer life spans, today's retirees are apt to need a much larger capital base to get them all the way through their retirement years. Your projected life expectancy, your health and your family history are the main factors to consider. You can find help in making your estimate at www.choosetosave.org.

Determine how much you will need to save for retirement. According to the survey, only about four in ten workers have done any calculations to determine how much that they will need to accumulate in order to have sufficient funds for retirement. Among those workers who have done a calculation, 44% say that they have made changes to their planning as a result; the chief one, starting to set aside more money (52%).

Make health care a part of the equation. Salisbury points out that approximately 40% of those who retire early do so for health reasons. The costs of health- and long-term care continue to rise dramatically. For example, he points out, Medicare Part B premiums went up 17% in 2004, and another 14% increase is coming.

Add this to the list: Seek professional help.

According to the survey, among retirement resources that workers found most helpful, advice from a financial professional topped the list (38%).

Idaho Trust National Bank would be pleased to serve as a professional resource for you or your clients planning for retirement. We can offer valuable insights with regard to the management of your investments both today, as you plan for retirement, and later as you enjoy your retirement years. Call us toll free 800-549-3333 or email us at LKC@idahotrust.com to inquire further. There's no cost or obligation for an initial consultation.

Generally, if you are a participant in a 401(k) or other company retirement plan, the income earned from your investments escapes tax for as long as you remain a participant in the plan.

When you change jobs or retire, you will have several options. You may be able to keep the money in your former employer's plan or transfer your funds to your new employer's plan (if permitted). Two other choices also are available to everyone: One choice is to take the money in hand, paying tax (and possibly penalties, depending upon your age) in the year that you receive the money. The other is to continue to avoid all current tax and potential penalties by opening a Rollover IRA. Many clients at the bank have IRA's. Idaho Trust has assisted those clients with their Rollover IRA's.

What may be rolled over

You are permitted to roll over the full amount of your plan payout (a "lump sum distribution") or a part of it. You cannot roll over: amounts that represent a return of your after-tax contributions; a payment that is part of a series of payments that lasts for your life expectancy or ten or more years; or minimum distributions that you are required to withdraw from an IRA after you have reached age 70 1/2.

Opening a Rollover IRA

Once you choose the rollover option, the most important point to keep in mind is advanced planning so Idaho Trust is prepared to receive your distribution directly from your employer. Don't accept the check yourself. Why? If you receive the money, your employer, by law, is required to withhold 20% of your distribution for income taxes.

One of our Rollover IRA specialists will be glad to explain how the rollover process works, assist you with the paperwork and answer any questions that you may have. You may want to contact Idaho Trust in advance of the rollover to discuss your options.

What happens if you don't arrange for a direct rollover? Don't worry, all is not lost. If you receive a check from your plan, you still can roll over your money into an IRA, as long as it's done within 60 days. You also are allowed to contribute the amount withheld for taxes. (You will be entitled to a tax refund for the amount withheld.) If you don't add in the withheld amount, it's considered a distribution and taxed as ordinary income.

The "life" of your Rollover IRA

If you are still in your working years, you may be able to move your Rollover IRA funds into a new employer's plan, as long as the new plan allows contributions from other employer plans. If that's your strategy, it's best not to "commingle" funds from any other IRAs that you own or make your own contributions to your Rollover IRA.

During the life of your Rollover IRA, you are free to make withdrawals at any time. With a minimum of exceptions, there will be a 10% penalty in addition to the tax owed on any amounts withdrawn if they are made before you reach age 59 1/2.

The law requires you to begin withdrawing funds from your IRA once you reach age 70 1/2. You don't have to draw all of it at once, good news if your goal is to keep as much money as you can earning tax-deferred income. In that case, we can help you set up a schedule that allows you to withdraw the minimum required amount each year. (Of course, you always can take out more.)

Under recently liberalized rules, if you make only the minimum withdrawals, it's quite likely that you Rollover IRA will last your lifetime and, probably, longer.

The results are harsh when you don't withdraw enough from your IRA. Any time that you don't make the required minimum annual withdrawal, you will have to pay a 50% penalty tax on the difference between what you did withdraw and what you should have withdrawn. At Idaho Trust we calculate the Required Minimum Distribution for our clients and assist them in taking that amount out every year to avoid the harsh penalties.

Investment choices for your Rollover IRA

Once you have rolled over your retirement distribution to an IRA, we can meet with you to discuss your investment choices. Idaho Trust offers a wide range of investments from which to choose, including stocks, bonds and money market funds.

Is it time for a rollover?

In order to make the proper arrangements, it's very important to begin planning for the rollover of your retirement plan distribution well in advance of the time that you are leaving your employer.

Call us to discuss your future IRA plans 800-549-3333 or 208-373-6500. We look forward to serving you.

The National Association of Security Dealers (NASD) recently issued an alert concerning "phishing", a scam that uses spam e-mail to lure investors into revealing bank or brokerage account information, passwords or PINs, or other types of confidential information. Often the e-mails falsely claim to be from brokerage firms, banks or other services that investors are likely to use. Idaho Trust wants to make our clients and advisors aware of such fraud.

According to some estimates, scam artists are able to convince up to 5% of e-mail recipients to respond to them. And, alarmingly, the number and sophistication of phishing scams are continuing to increase dramatically, according to the "anti-phishing work group" (www.antiphishing.org).

Here's what to look for

Scam e-mails may use the names of real people, or legitimate-looking addresses, authentic-looking logos or graphics, links to pages of a bona fide Web site and official-looking fine print or references to laws. This seeming authenticity lures the investor into providing sensitive information, usually by requesting that he or she send a reply e-mail or click on a link to a Web site that mimics a legitimate site.

To lower an investor's guard, he or she may be told that: an account will be closed unless information is updated; the investor's identity must be verified because the account is being used by a third party in violation of the law; because of a technical update, the account must be reactivated; or recent law changes require users to identify themselves.

How to protect yourself

NASD offers several tips, developed by the Federal Trade Commission, to help prevent you from becoming a victim of phishing or other online identity theft:

• If you receive an e-mail that warns you, with little or no notice, that an account of yours will be shut down unless you reconfirm your billing information, do not reply or click on the link in the e-mail. Instead, contact the company cited in the e-mail using a telephone number or Web site address that you know to be genuine.
• Avoid e-mailing personal and financial information. Before submitting financial information through a Web site, look for the "lock" icon on the browser's status bar. It signals that your information is secure during transmission.
• Review credit card and bank account statements as soon as you receive them in order to determine whether there are any unauthorized charges. If your statement is late by more than a few days, call your credit card company or bank to confirm your billing address and account balances.
• Keep your personal and financial information secure online. Make certain that your computer system is up to date with the latest security patches and use antivirus and spyware detection software. Firewall software should thwart intruders from getting access to your PC over a network. Never download software or files from an unknown source.
• Report suspicious activity to the FTC. Send the actual spam to uce@ftc.gov. If you believe that you've been scammed, file your complaint at www.ftc.gov, and then visit the FTC's Identity Theft Web site (www.ftc.gov/idtheft) to learn how to minimize your risk of damage from identity theft.
• If you would like to discuss this article further or have questions, you can contact Idaho Trust toll free at 800-549-3333. We are here to assist.

You can find more information about phishing or other identity-theft scams by reviewing the investor alerts available at www.nasd.com.

New IRA contribution limits

Did you make your IRA contribution for 2004? If you didn't, there's still time. Idaho Trust likes to remind our clients of this important contribution.

The deadline for making an IRA contribution for 2004 is the same as the deadline for filing your 2004 tax return (April 15, 2005). If you can, it's a good idea to make your contribution for 2005 as well. Doing so allows you to take advantage for the full year of the tax-deferred growth of the income from your contribution. You can contribute $3,000 for 2004 ($3,500 if you are age 50 or older) and $4,000 for 2005 ($4,500 if you are age 50 or older).

If you are covered by a company retirement plan, you may not be able to make a full tax-deductible contribution to an IRA, or you may not be able to deduct your contribution at all. It depends upon your adjusted gross income (AGI). The limits on the availability of the deduction have been rising every year.

This year, if you are married and file a joint return, you are entitled to make a fully deductible IRA contribution until your AGI reaches $70,000 (up from $65,000 in 2004). Starting at $70,000, the amount that you can deduct begins to phase out until, at $80,000 (up from $75,000 last year), the tax-deduction opportunity is gone completely. If you are single, the full deduction is available as long as your AGI doesn't exceed $50,000 (up from $45,000) and the phase-out range this year is between $50,000 and $60,000 (up from $45,000 and $55,000).

New 401(k) contribution limits

In recent years the limits on how much that you can set aside in your company 401(k) or other similar retirement plan have been rising as well, and will continue to do so through 2006. This year the 401(k) limit has risen from $13,000 to $14,000. Next year it jumps to $15,000.

If you are at least age 50, the increases are more dramatic. You are entitled to a bonus contribution that bumps up how much you can set aside in your retirement plan to $18,000 (up from $16,000 last year). Your maximum 2006 contribution, with the bonus figured in, will be $20,000.

Starting in 2007, the maximum contribution amounts will be inflation indexed in $500 increments. But, based upon a provision in a 2001 tax law, these limits are set to drop back to 2001 levels in 2011—unless Congress acts to extend these increases or make them permanent.

Idaho Trust believes it is important to utilize these tax-saving strategies and encourages you to pass this information on to your clients. If we can be of assistance, please call us toll free at 800-549-3333 or email us at LKC@idahotrust.com. We would love to hear from you!

You know that it's vital to make a proper will and keep it up to date. No less critical is the need to select your executor or personal representative with care.

You may believe that any friend or relative whom you might select could do the job. Perhaps so. But all too often the horror stories one hears about botched-up estates prove to be all too true.

Don't underestimate the weight of an executor's burden. When an estate has any substance, the task of settlement can prove overwhelming for anyone who lacks the time, experience and specialized know-how required to do the job right.

Complexities

The ideal executor has been described as a combination of detective, bill collector, investment analyst, bookkeeper, property manager, business executive, tax specialist, corresponding secretary and financial counselor. This is what we do at Idaho Trust.

The detective work may involve both a search for estate assets and for key people, such as long-lost relatives or witnesses to the will.

An estate's representative must locate and safeguard all assets, pay those creditors whose claims are valid and collect all debts owed to the estate.

From an investment standpoint the executor's primary task is to preserve estate values. Usually, some securities must be sold to raise money for cash bequests, expenses and taxes. The executor must decide which securities to retain, which to sell and when to sell.

Along with difficult decisions comes a heavy load of paperwork. Careful records must be kept of all transactions, all income received by the estate, and all disbursements.

If you're "in business", your executor will be, too. This is one of the most demanding aspects of estate settlement. Even when the terms of a will call for an enterprise to be sold, it must be kept functioning in the meantime. Orders must be filled, sales efforts maintained.

An executor must file final income tax returns for the deceased and returns reporting estate income. State, federal and, perhaps, even foreign death tax returns may be required.

The voluminous federal estate tax return must be prepared when an estate exceeds the "applicable exclusion amount". Even if no tax is due because of deductions for assets left to the surviving spouse or to charity, accurate tax valuations are essential.

Commonsense alternative

It is easy to see, then, why it is so often unfair to place the burden wholly on the shoulders of a spouse, relative or friend. There is a commonsense alternative: naming a corporate executor.

If you desire, your will can designate a trust institution to settle your estate. Idaho Trust can be your trustee and executor. If you feel that participation by a family member or other individual is essential—because of that individual's insights into your beneficiaries' personal needs, perhaps, or special knowledge of your business—you may name that person as co-executor.

Choosing a trust institution like Idaho Trust makes good sense for a number of reasons:

• An individual executor may move away, become ill or incapacitated or turn out to need an executor before you do.
• Professionals are trained and experienced in handling estates. They won't be learning the job at your family's expense.
• In human terms a corporate executor will be helpful but never play favorites.
• Fees for estate settlement generally are comparable to what an inexperienced individual might receive. The net cost of professional estate settlement services actually is often lower.

Choosing your trustee

Estate settlement ends when the executor completes distribution of the estate and renders a final accounting. Estate trusteeship begins when funds to be held in trust are distributed to the trustee and ends only when the trust has run its course. A trust designed to save estate tax at the death of a relatively young beneficiary might last for many decades. A charitable trust might be designed to last "forever".

Because experienced investment judgment plus the ability to serve a long time if need be are such important characteristics for a trustee, most people readily understand the advantages of naming a trust institution. Here's one added point to consider:

Although the job of settling an estate and the job of providing continuing management of securities and other assets are technically distinct, in practice the two are closely linked. For example, an executor's decisions concerning what securities to sell may really depend upon which securities are best to keep as trust holdings. Also dealing with one institution from the start is easier on the family.

By making your will, you do more than control how your estate will be divided. Your choice of an executor and, perhaps, trustee determines who will manage your estate. A wise choice, such as Idaho Trust, can save your beneficiaries needless worry. To contact Idaho Trust call us toll free at 800-549-3333.