The information set forth below is intended only as a brief, general overview of certain federal income tax provisions. It should not be considered tax, legal, or investment advice. Domini Social Investments LLC, DSIL Investment Services LLC, and their affiliates and agents are not tax advisors, and do not provide tax advice.

 

Each person’s financial situation is unique. All information and examples provided here are for general illustrative purposes only, and are addressed in general to a hypothetical reader, not to you specifically. Tax law is complex, subject to change at any time, and has many rules, details, and exceptions. State and local tax law varies from federal tax law. To learn about federal tax law and rules, details and exceptions concerning IRAs, you should read IRS Publication 590 “Individual Retirement Arrangements (IRAs)” available at www.irs.gov or by calling the IRS at 1-800-TAX-FORM (1-800-829-3676). If you have questions and for tax advice, you should consult a financial or tax advisor before acting.

 

How Can I Withdraw Money from My Traditional IRA?

 

Beginning at age 59 ½, you can withdraw money from your IRA as desired without penalty. You can do this whether or not you are still employed.

 

Withdrawals before you are age 59 ½ are called "early distributions," and are subject to an additional penalty of 10%. There are several exceptions to the penalty on early distributions:

• You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
• The distributions are not more than the cost of your medical insurance.
• You are disabled.
• You are the beneficiary of a deceased IRA owner.
• You are receiving distributions in the form of an annuity.
• The distributions are not more than your qualified higher education expenses.
• You use the distributions to buy, build, or rebuild a first home.
• The distribution is due to an IRS levy of the qualified plan.
• You withdraw money in a series of “substantially equal period payments” based on your life expectancy. Please consult your tax advisor or visit the IRS website at www.irs.gov for details on this method.

 

Do I Have to Take Distributions from My Traditional IRA Between Ages 59 ½ and 70 ½?
No, you have complete flexibility between ages 59 ½ and 70 ½.

 

Do I Have to Take Distributions from My Traditional IRA After 70 ½?
Yes. By April 1 following the year in which you reach age 70 ½, and by December 31 thereafter, you must begin to withdraw a certain minimum amount annually. If by the applicable deadline the required minimum amount is not distributed, the amount not taken is subject to a 50% IRS excise tax. This tax may be waived by the IRS upon submission of a written request. Due to a special law, the required minimum distribution is not required to be taken for 2009.

 

How Are Distributions Taxed?
With one exception, all distributions from a Traditional IRA are taxed as ordinary income. There is no special tax treatment for lump-sum distributions from an IRA. The exception is that if you have made nondeductible contributions to your IRA, a certain portion of your withdrawals will be nontaxable until you have recovered the exact amount of your nondeductible contributions.

 

Are Federal Income Taxes Withheld from My Distributions?
The tax code requires that you make a choice concerning the distributions you receive from your Traditional IRA. The law requires that federal income tax be withheld from IRA distributions (other than certain distributions of excess contributions) — unless you tell us that you do not want any taxes withheld. If you choose to have taxes withheld, they will be withheld at a flat rate of 10% of the amount of each distribution and turned over to the government as a prepayment of your federal income tax liability for the year the distribution is made.

 

The Domini Funds are subject to market fluctuations and are not insured. You may lose money. Investment return and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Although the Domini Funds Investor class shares are no load, certain fees and expenses apply to a continued investment that are described in the Prospectus. There is, for example, an annual $10 maintenance fee for Domini IRA accounts.