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?
- 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- Earnings grow tax-deferred until withdrawn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