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?
- $5,500 for 2016
- $6,500 for 2016 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:
- $61,000 - $71,000 (2016)
- Married couples with neither spouse active in an employer retirement plan
Married active participant filing a joint income tax return:
- $98,000 - $118,000 (2016)
Married active participant filing a separate income tax return:
- $0 - $10,000 (2016)
Spouse of an active participant:
- $184,000 - $194,000 (2016)
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- Earnings grow tax-deferred until withdrawn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
* Saver's Tax Credit
The income limits associated with the income tax credit for IRA contributions and salary deferrals in retirement plans, which taxpayers calculate and claim on Form 8880, Credit for Qualified Retirement Savings Contributions, have increased. Eligibility for this tax credit is based on the individual’s age, adjusted gross income, student status, status as a dependent, and tax return filing status. The adjusted gross income limits are subject to cost-of-living adjustments. The 2016 maximum income limits for tax credit eligibility are $61,500 for joint filers, $46,125 for head of household, and $30,750 for all other filing statuses.