Traditional IRA

We've offered these details to help our members better assess with IRA is right for them...

Roth IRA | Education IRA | Main IRA Page

Who can contribute?

Any individual with earned income is qualified to contribute. Income limits determine whether contributions are tax-deductible.

How are contributions treated?
Contributions are fully deductible from current taxes for:

Individuals not covered under an employer retirement plan (even if a spouse is covered) or a spouse not covered can contribute fully tax-deductible if filing jointly and income does not exceed $150,000. And,
Individuals who meet the following Adjusted Gross Income Criteria in the current tax year:

	Married Filing jointly with a combined income of $50,000 or less (partial deductions are allowed on combined incomes up to $60,000)
	Single persons with an income of $30,000 or less (partial deductions are allowed on incomes up to $40,000)

Annual contribution limit:

Total contributions to Traditional and Roth IRAs cannot exceed the limits listed in the chart below:

Increased Contribution Limits:

Tax Year

Contribution Limit

2002-2004

$3,000

2005-2007

$4,000

2008

$5,000

2009 and after

$5,000 + cost of living adjustment (COLA)

Note: Deductibility remains the same. Members should consult their tax advisor for additional information.

How are distributions treated?

All non-deductible contributions are received tax-free. All earnings and deductible contributions are taxed at the ordinary income tax rate when withdrawn.

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.

When must required distributions begin?

At age 70 1/2.

The deadline for Traditional IRA contributions is April 15th for the prior tax year.

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.