Wednesday, September 26, 2007

Time To Plan for 2007 IRA Contributions

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. However, the income limits that qualify for IRA deductibility and Roth IRAs have been increased.

IRA owner participates in a company sponsored retirement program

The tables show the deductibility for regular IRA contributions at different Modified Adjusted Gross Incomes (MAGI).

IRA Deductibility
Single Taxpayer

the IRA contribution is

From $0

up to $52,000

100% deductible

Over $52,000

and less than $62,000

partially deductible

From $62,000

__

not deductible



IRA Deductibility
Married Filing Jointly

the IRA contribution is

From $0

Up to $83,000

100% deductible

Over $83,000

and less than $156,000

partially deductible

From $156,000

__

not deductible



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. For MAGIs between the limits, the maximum amount of the Roth IRA contribution is phased out to zero.

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.

For more on The Practice of Personal Finance , check back every Wednesday for a new segment.

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

Copyright © 2007 Achievement Catalyst, LLC

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