Traditional Ira Contribution Limits

Posts Tagged ‘traditional ira contribution limits’

Traditional IRA Contribution

May 21st, 2006

Who is eligible to make a Traditional IRA contribution and what are the Traditional IRA contribution limits?

To be eligible to make a Traditional IRA contribution, either deductible or non-deductible, a wage earner must

have earned income and
be less than age 70 �.

A non working spouse or a low wage earning spouse may rely on the working spouse’s earned income.

The maximum contribution was increased to

$4,000 for 2006
$4,000 for 2007
$5,000 for 2008 and later

An additional $1000 catch up IRA contribution can be made if the wage earner or spouse is age 50 or older (but under 70 �).

Therefore a married couple both over the age of 50 could contribute a total of $10,000 for 2006. A Traditional IRA contribution must be made by the taxpayer’s filing due date, generally April 15. Filing an extension does not extend the time for making a Traditional IRA contribution.

When can a non working spouse make a deductible Traditional IRA contribution?

A non working spouse can contribute to his or her own Traditional IRA, relying on the working spouse’s earned income.

Please note that while one or both spouses may qualify for a deductible Traditional IRA contribution under the rules discussed on this website, if joint income is below $150,000, both spouses will be eligible to make Roth IRA contributions.

A contribution to a non deductible Roth IRA may provide more attractive long-term benefits compared to a deductible IRA.