PPT Putnam Premier Income Trust

Putnam Investments today announced that it has launched a new, content-rich Roth IRA Conversion Resource Center with a full range of information about traditional IRA conversions, how to evaluate whether they make sense, what investors should consider before converting, and how Putnam can help an advisor have this important conversation with their clients. The Roth IRA Conversion Resource Center is aimed at financial advisors who are responding to a flood of demand from their clients for advice on conversions, since the tax law change eliminating income caps that restricted higher-income investors from converting traditional IRA assets to Roth IRAs took place on January 1.

The Conversion Resource Center features the innovative Putnam Roth IRA Conversion Evaluator – an interactive, visually impactful tool designed to facilitate a conversation between advisors and their clients. Unlike traditional calculators, the Putnam Roth IRA Conversion Evaluator is designed to provide a framework for a deeper financial planning conversation through a consultative approach. The Conversion Evaluator results, for example, are displayed upon a spectrum of how strongly or not clients should consider a Roth IRA conversion, depending upon their current tax situation, age, legacy wishes, and other factors.

“With all investors becoming eligible to convert to Roth IRAs, $2 trillion* in traditional IRA assets held by higher-income investors will qualify for conversion. While Roth IRAs make sense for many of these investors, a thorough review of their overall financial assets and goals is critical. Clients are already seeking guidance – and the demand for help will grow as more investors become aware of the new conversion opportunity,” said William Cass, Putnam Investments Senior Vice President and Retirement Products Marketing Manager. “It’s clear that the demand for assistance is there among advisors who we think will find great value in the new Roth IRA Conversion Resource Center.” Cass noted that a recent informational call conducted for advisors drew over 1,000 participants.

The Roth IRA Conversion Resource Center also provides advisors with a wide range of support materials and Putnam solutions, including comprehensive Roth IRA conversion background, considerations for clients thinking about a conversion, information on conversion wealth management and tax strategies, “to-do” checklists and letters than can be adapted to explain the new changes to clients.

Background on Roth IRAs

Created in 1997, Roth IRAs differ from traditional IRAs in several respects. While contributions to Roth IRAs are not tax-deductible, assets typically grow tax free and withdrawals are also usually tax free. In addition, Roth IRAs do not have required minimum withdrawals beginning at age 70 1/2, so assets can be passed on to heirs.

Wealthier investors have had little opportunity to invest in Roth IRAs because only those with modified adjusted gross incomes of less than $100,000 currently could convert from a traditional IRA to a Roth IRA. This restriction was eliminated as of January 1, 2010, allowing these investors to convert some or all of their traditional IRA assets to Roth IRAs.

Converting to a Roth IRA can make sense for affluent investors for several reasons. Having a tax-free source of income to draw from can help investors better manage their personal tax bill, and a Roth IRA can act as a hedge against the future direction of tax rates. The lack of required withdrawals beginning at age 70 1/2 means more years of tax free growth for retirees and also enables income tax free withdrawals by the investor’s heirs, making Roth IRAs useful wealth transfer vehicles.

Because contributions to Roth IRAs are not tax-deductible, those converting from a traditional IRA are liable for taxes owed on the amount converted; those converting in 2010 have the option of paying the tax owed with their 2010 tax filings or paying it off equally with their tax filings for 2011 and 2012. This option adds to the complexity of Roth IRA decision-making.

Roth IRA assets were $165 billion at year-end 2008, although this was still only about 5 percent of total IRA assets, which were $3.6 trillion, according to data from the Investment Company Institute (ICI). The elimination of the income restriction on Roth IRA conversions beginning in 2010 could make as much as $2 trillion of IRA assets eligible for conversion to Roth IRAs, according to calculations by Putnam Investments, based on data from the ICI and the Employee Benefits Research Institute. Cerulli Associates projects that assets in Roth IRAs and other nontraditional IRAs will grow by over 15 percent annually over the next five years.

Putnam Investments and Retirement

The Roth IRA Resource Center is part of Putnam’s deepened commitment to the retirement market. Putnam’s President and Chief Executive Officer, Robert L. Reynolds, himself a 30-year retirement industry veteran, has called for sweeping reforms to help meet the nation’s emergent retirement savings challenge.

Further, Putnam has expanded the services it offers to retirement plans and developed products to meet the needs of those planning for or already in retirement. The firm has created a platform that provides flexible and scalable services and solutions for advisors, consultants, and their plan sponsor clients in every segment of the retirement market.

Putnam RetirementReady® Funds, the firm’s suite of 10 target-date/lifecycle retirement funds, recently added target Absolute Return Funds** to its mix of underlying investments. RetirementReady Funds became the only suite of lifecycle funds to integrate absolute return strategies, which seek positive returns over time with less volatility than more traditional mutual funds. Employed in retirement portfolios, Putnam Absolute Return Funds are intended to pursue positive returns in up and down markets, to protect against the harmful effects of adverse investment returns and to reduce volatility, particularly for investors in or near retirement.

About Putnam Investments

Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. At the end of December 2009, Putnam had $115 billion in assets under management. Putnam has offices in Boston, London, Frankfurt, Amsterdam, Tokyo, Singapore, and Sydney. For more information, go to putnam.com.

Putnam mutual funds are distributed by Putnam Retail Management.

* The elimination of the income restriction on Roth IRA conversions beginning in 2010 could make as much as $2 trillion of IRA assets eligible for conversion to Roth IRAs, according to calculations by Putnam Investments based on data from the ICI and the Employee Benefits Research Institute.

** Putnam’s target Absolute Return Funds are not intended to outperform stocks and bonds during strong market rallies.

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