Start Thinking About 2007 IRA Contribution

Now that your 2006 tax return is filed, you can start thinking about your 2007 tax return :-)While the deadline is April 15, 2008, it’s not too soon to start setting aside money for your 2007 IRA contributions. As I wrote in a previous post, IRAs are one way to use “other people’s money” to save.

For 2007 the IRA contribution limits are the same as for 2006. The maximum IRA contribution is $4000 per person with a $1000 catch-up contribution for people 50 or older. The income limits to qualify for IRA deductibility and Roth IRAs have been increased.

IRA owner participates in a company sponsored retirement program

Regular IRA contributions are 100% deductible for modified adjusted gross incomes (MAGI) up to $52,000 (single) and $83,000 (married filing jointly). People with MAGI over $62,000(single) and $103,000 (married filing jointly) cannot deduct regular IRA contributions. Roth IRA contributions are not deductible and the maximum contribution can be made for MAGI up to $99,000 (single) and $156,000 (married filing jointly). People with MAGI over $114,000 (single) and $166,000 (married filing jointly) cannot make Roth IRA contributions.

IRA owner does not participate in company sponsored retirement program

No income limits for deductibility of IRA for both single and married filing jointly. If the spouse participates in a company sponsored retirement plan, then the IRA owner can deduct 100% of the contribution up to $156,000 MAGI. No deduction is allowed after $166,000 MAGI.

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This is not financial advice. Please consult a professional advisor.

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