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Traditional IRA

Who can contribute?

  • 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.

How much can I contribute?

  • $5k for 2008-2010
  • $6k for 2009-2010 for owners age 50 and older

Who can make deductible contributions?

Fully-deductible contributions:

  • Single individuals not active in employer retirement plans
  • Single individuals active in employer retirement plans with MAGI of less than:
    • $50k (2005-2010)
  • 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:
    • $80k (2007-2010)
  • Married individuals not active in employer retirement plans with spouses who are, as long as MAGI is $150k or less

What are the tax advantages?

  • Earnings grow tax-deferred until withdrawn
  • Contributions may be tax-deductible

When can I withdraw without restrictions?

Withdraw penalty-free for any of the following reasons:

  • Qualified higher-education expenses
  • First time home purchase
  • Age 59 1/2
  • Qualifying medical expenses exceeding 7.5% of adjusted gross income
  • Payment to beneficiaries upon owner's death
  • Payment of health insurance premiums while unemployed for 12 weeks or longer
     
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