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Roth IRA
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| We've offered these details to
help our members better assess with IRA is right for them...
Traditional
IRA | Education IRA
| Main IRA Page
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Who can contribute?
Individuals who meet the following Adjusted Gross Income
Criteria in the current tax year can make full
contributions:
 | Married Filing Jointly with a combined income of
$150,000 or less (partial deductions are allowed on
combined incomes up to $160,000)
| Single persons with an income of $95,000 or less
(partial deductions are allowed on incomes up to
$110,000) |
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How are contributions treated?
| All contributions are made on an after-tax basis.
No deductions are allowed from current taxes. |
Annual contribution limit:
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Total contributions to Traditional and Roth IRAs
cannot exceed the limits listed in the chart
below:
Increased Contribution Limits:
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Tax Year
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Contribution Limit
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2002-2004
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$3,000
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2005-2007
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$4,000
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2008
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$5,000
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2009 and after
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$5,000 + cost of living adjustment
(COLA)
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Note: Deductibility remains the same. Members should
consult their tax advisor for additional information.
How are distributions treated?
Contributions are not taxable upon withdrawal.
Dividend earnings are not taxable if the following two
stipulations are met:
| The distribution occurs after the fifth tax year
since the first contribution was made to the Roth
IRA.
| The distribution is made:
| After age 59 1/2;
| Due to death or disability; or
| To purchase a first home. |
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When are distributions subject to a 10% penalty
tax?
A 10% premature distribution penalty applies unless
the distribution is:
| Made after age 59 1/2;
| Due to death or disability;
| Used to pay certain medical expenses;
| Used to pay medical insurance premiums while
unemployed;
| Used to purchase a first home; or
| Used to pay higher education expenses. |
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When must required distributions begin?
| Not required. |
The deadline for Roth IRA contributions is April 15th
for the prior tax year.
Catch-Up Provision
| Individuals who have attained age 50 before the
close of the taxable year 2002 may make additional
contributions.
| Applies to Traditional & Roth IRAs. |
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Tax Year
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Standard Limit
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Additional Catch-Up
Contribution Amount
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Total Contribution Limit
for Age 50 and Over
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2002-2004
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$3,000
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$500
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$3,500
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2005
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$4,000
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$500
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$4,500
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2006-2007
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$4,000
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$1,000
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$5,000
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2008
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$5,000
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$1,000
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$6,000
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2009 and
thereafter
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$5,000 + COLA
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$1,000
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$6,000 + COLA
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Note:
This is provided for informational
purposes and should not be considered tax advice. For tax
advice, you should consult your tax advisor or accountant. You
may also call the IRS Information Hotline at 1-800-829-1040,
or visit their IRA
and Tax Implications web site.
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