| Who’s Eligible to Invest
|
Individuals under 70 ½ who have earned income, regardless of income level. Spouses with one earned income can contribute for both.
|
| Maximum Annual Contribution
|
Year…Amount of Contribution
2002-2004…$3,000
2005-2007…$4,000
2008 and beyond…$5,000
|
| Contribution Deadlines
|
IRA’s for the taxable year can be opened and funded any time between the first day of your tax year and the date your tax return is due for the year, excluding extensions. This due date is normally April 15 of the following year.
|
| Catch-up Contribution Limits
|
Individuals age 50 and over will be eligible to make additional “cat-up” IRA contributions of up of $500 in 2002 through 2005. The catch-up contribution limit will increase to $1,000 for 2006 and later years.
|
| Tax Advantages
|
Tax-deferred investment growth and possible tax deduction.
|
| Contribution Deductibility
|
Possible, if you do not have an employer-sponsored retirement plan or if your income is below certain levels. These levels will increase in future years.
|
| Withdrawal of Assets
|
Income tax is due on all withdrawals. Withdrawals made prior to age 59 ½ may be subject to additional 10% IRA penalty tax.
|
| Tax Credit
|
For taxable years 2002 through 2006 only, eligible lower income individuals will be allowed a contribution tax credit. This credit will be allowed in addition to any tax deduction that may apply.
|
| Mandatory Distributions
|
Distribution must start by age 70 ½. New methods for calculating mandatory distribution can help reduce your taxes.
|
| Eligibility with other Retirement Plans
|
Other retirement plans do not effect eligibility.
|
Conversions
Traditional IRA to Roth IRA
|
Yes, but you must have an adjusted gross income of less than $100,000. You are taxed on rollover amount of the taxable portion of the traditional IRA. However, the funds are not subject to the 10% IRS penalty tax.
|
| Transfers and Rollovers
|
Yes
|
