Fragasso Financial Advisors

An eNews Update to our Quarterly Newsletter

February 2007

Q: What is the difference between a tax-free account and a tax-deferred account-and which is better for me?

A: It depends. They are both good, but one may be better than the other, depending on your circumstances. In a tax-deferred account, you pay taxes later; in a tax-free account, you pay taxes sooner. A tax-deferred account, like an employer-sponsored 401(k) plan, gives you an immediate tax break. Your contribution reduces your taxable income. Your investments in the 401(k) plan grow untaxed until you start taking withdrawals. Each withdrawal is taxable. You cannot postpone withdrawals indefinitely. In general, after you turn 70½, you must begin taking annual withdrawals from your account.

By contrast, a tax-free account does not give you an upfront tax break. Take a Roth IRA, for example. Your Roth contributions do not reduce your taxable income because they are made with after-tax dollars. You do get a future tax break. Your withdrawals are tax-free if you hold the account for at least five years and you are over age 59½. There is no deadline for taking withdrawals from a Roth IRA; you can leave the entire account to your heirs.

For more information about how to best tackle taxes and your investment portfolio, please contact a member of Fragasso Financial Advisors Financial Planning Team at 412-227-3200. We will be happy to answer your questions and help to you put you on the correct path to achieving your important financial goals. We hope that you find our tax-management tips helpful in understanding the actions we take in managing your portfolio(s).

Spring 2007 Seminar Schedule
Regional Learning Alliance - Cranberry	Boyce Campus	North Campus
Achieving Life’s Goals: A Personal Financial Planning Workshop February 26, March 5, 12 6:30 PM - 8:45 PM Can You Afford to Retire? April 16, 23, 30 6:30 PM - 8:45 PM	Can You Afford to Retire? February 20, 27, March 6 6:30 PM - 8:45 PM	Financial Security During Retirement February 15, 22, March 1 6:30 PM - 8:45 PM Can You Afford to Retire? April 12, 19, 26 6:30 PM - 8:45 PM

Canon-McMillan High School

South Campus

Financial Security During Retirement
February 28, March 7, 14
6:30 PM - 8:45 PM

Financial Security for Women
March 5, 12, 19
6:30 PM - 8:45 PM

Can You Afford to Retire?
March 7, 14, 21
6:30 PM - 8:45 PM

Financial Security During Retirement
April 11, 18, 25
6:30 PM - 8:45 PM

All classes are held at Community College of Allegheny County (CCAC) locations.
Click Here for More Information

This article is for informational purposes only and not intended as financial advice. Consult your financial advisor to determine what is appropriate for your situation.
Past performance is no guarantee of future results.

If you have any comments, questions or suggestions concerning this electronic newsletter, please email us at fgi@fragassogroup.com.

Click here if you do not want to continue receiving Fragasso Financial Advisors eNews.

Visit Our Web site:
www.fragassogroup.com

A REGISTERED INVESTMENT ADVISOR
The Retirement Planning and Wealth Preservation Specialists Since 1972
610 Smithfield Street, Suite 400, Pittsburgh, PA 15222

Phone 412.227.3200, Fax 412.227.3210, Toll Free 1.800.900.4492
Fee-based investment management and securities offered through LPL Financial
Member FINRA/SIPC