| For
those who annually contribute to their IRA account and
wish they could contribute more, there is good news.
The annual contribution limit is inflation adjusted
each year and is slowly increasing. Taxpayers 50 and
older are allowed larger contributions through so-called
“make-up” provisions (see table below).
For 2008, the contribution limit for Traditional IRA
Accounts is $5,000 ($6,000 for taxpayers 50 and older)
for taxpayers that do not have a qualified plan with
their employer.
IRA
Contribution Limits
| Year |
2006-2007 |
2008 |
AFTER
2008 |
Under Age 50 |
4,000 |
5,000 |
Inflation Adjusted |
Age 50 & Over |
5,000 |
6,000 |
Inflation Adjusted |
However, if a taxpayer is an active participant
in an employer’s pension plan or a self-employed
pension plan, the deductible amount will be ratably
phased out if their income for the year (AGI) is within
the phase out range and not allowed at all if the AGI
exceeds the phase out range (see the table below). The
phase-out ranges are adjusted annually for inflation.
Phase-Out Ranges
| Filing
Status |
2007 |
2008 |
| Single & Head of Household |
52,000 - 62,000 |
53,000 - 63,000 |
| Married Filing Jointly |
83,000 - 103,000 |
85,000 - 105,000 |
| Married Filing Separately |
0 - 10,000 |
0 - 10,000 |
Special rule for a nonactive participant
spouse - The limits for deductible IRA contributions
do not apply to the spouse of an active participant.
Rather, the maximum deductible IRA contribution for
an individual who is not an active participant but whose
spouse is an active participant, is phased out for the
non-active participant if their combined AGI is between
the inflation adjusted limits for the year as illustrated
in the table below.
Nonactive Spouse Phase-Out Ranges
| Year |
2007 |
2008 |
| Phase-Out Range |
156,000 - 166,000 |
159,000 - 169,000 |
|
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