This hypothetical example assumes the following: (1) one regular annual $5,000 IRA contribution made on January 1 of the first year, (2) one $1,000 catch-up contribution made at the same time (which requires that the investor to be age 50 or older), (3) annual rate of return of 7%, and (4) no taxes on any earnings within the IRA. The ending values do not reflect taxes, fees or inflation. If they did, amounts would be lower. Earnings and pre-tax (deductible) contributions from a Traditional IRA are subject to taxes when withdrawn. Earnings distributed from Roth IRAs are income tax free provided certain requirements are met. IRA distributions before age 59½ may also be subject to a 10% penalty. Systematic investing does not ensure a profit and does not protect against loss in a declining market.