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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