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Who can contribute? |
How much can I contribute? |
Who can make deductible contributions? |
What are the tax advantages? |
When can I withdraw without restrictions? |
| Traditional IRA |
Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation)
Anyone who has received a distribution from a qualified retirement plan and decides to roll over the proceeds of the plan into an IRA
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$4,000 for 2007$5,000 for 2008
$5,000 for 2009
For owners age 50 and older, you have higher limits:
$5,000 for 2007$6,000 for 2008
$6,000 for 2009
Restrictions:
Cannot exceed compensation
Reduces contributions that can be made to Roth IRAs
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Fully-deductible contributions:
Single individuals not active in employer retirement plans
Single individuals active in employer retirement plans with MAGI* of less than $50,000 (2007-2010)
Married couples with neither spouse active in an employer retirement plan
Married individuals active in employer retirement plans with joint tax returns showing MAGI* of less than $80,000 (tax year 2007-2010)
Married individuals not active in employer retirement plans
with spouses who are, as long as MAGI* is $150,000 or less
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Earnings grow tax-deferred until withdrawn
Contributions may be tax-deductible
|
Withdraw penalty-free for any of the following reasons:
Qualified higher-education expenses
First-time home purchase**
Age 59½
Disability
Qualifying medical expenses exceeding 7.5% of adjusted gross income
Payment to beneficiaries upon the owner's death
Payment of health insurance premiums while unemployed for 12 weeks or longer
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|
Roth IRA |
Anyone
who has income from compensation (or who is filing jointly
with a spouse who earns compensation) with the following
MAGI:*
- Up to $101,000 (single filers)
- Up to $159,000 (joint filers)
Reduced contributions allowed for higher incomes:
- Up to $116,000 (single filers)
- Up to $169,000 (joint filers)
Persons who are married and filing separately with incomes:
- Up to $10,000
|
$4,000 for 2007$5,000 for 2008
$5,000 for 2009
For owners age 50 and older, you have higher limits:
$5,000 for 2007 $6,000 for 2008
$6,000 for 2009
Restrictions:
Cannot exceed compensation
Reduces contributions that can be made to traditional IRAs
|
No one can deduct contributions
|
Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59½, disability, death or a first-time home purchase**)
Not required to start withdrawals at age 70 1/2
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Regular contributions can be withdrawn tax-free and penalty-free at any time
After the account has been open five tax years, earnings can be withdrawn tax-free and penalty-free for any of these reasons: age 59½, disability, death, or a first-time home purchase**
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