Ordinary income and short-term capital gains are taxed at the shareholder’s marginal income tax rate with a maximum of 35%. A mutual fund will report to its shareholders the amount of ordinary income and short-term capital gain distributions in Box 1a of Form 1099-DIV.

The tax rate assessed on certain “qualifying dividends” is 15% for most taxpayers and 5% for those in the lowest income tax bracket and beginning in 2008, the qualifying dividends tax rate for taxpayers in the lowest income bracket is reduced to 0%. Dividends received from domestic corporations, including mutual funds, and from certain foreign corporations are deemed qualifying dividends if the security on which the distribution is received is held for a minimum period of time. A mutual fund will report to its shareholders the amount of qualifying dividends paid in a calendar year in Box 1b of Form 1099-DIV. You should consult a tax adviser to determine how much of that amount qualifies for the reduced rates based on your specific tax situation.

The top tax rate on net long-term capital gains is 15%. A mutual fund will report to its shareholders the amount of capital gain distributions in Box 2a of Form 1099-DIV.

The annual contribution limit for both Traditional and Roth IRAs is currently $5,000. In addition individuals who are at least 50 years of age will be permitted to make “catch-up” contributions of $1,000 annually. These amounts will change according to the following schedule.

For more information on investing in a Westcore IRA visit the IRA section of our website.

The maximum contribution per beneficiary for a Coverdell Education Savings Account (“CESA Account”) is $2,000 per year. The Adjusted Gross Income phase-out range for single taxpayers is $95,000 to $110,000 and for married taxpayers filing jointly is $190,000 to $220,000.

For more information on investing in a Westcore CESA Account, visit the Education Savings section of our web site.