Tax Tips: IRA Limitations

New Contribution Limits for Traditional & Roth IRAs

Year	General Contribution Limit	Catch-Up Contribution Limit (Over 50 years old)
2005 2006 2007 2008 2009 2010	$4,000 $4,000 $4,000 $5,000 $5000 $5000	$4,500 $5,000 $5,000 $6,000 $6000 $6000

IRA Limitations

If you are covered by an employer-sponsored plan but your spouse is not - your spouse may contribute to an IRA if your joint income is less than $176,000.

If both of you are in employer-sponsored plans then you can only contribute to IRA if your joint income is less than $109,000.

Roth IRA

To contribute to a Roth IRA, your joint income must be less than $176,000.

Conversion of Traditional IRA to Roth IRA

Beginning in 2010, Traditional IRAs can be converted to Roth IRAs. There is no income limitation. The amount converted from Traditional IRA to Roth IRA is taxable income. Tax Tip: If you are a high income individual and expect to be in a higher tax bracket in the future, 2010 may be a good time to convert your IRA to Roth IRA to minimize taxes.

For further analysis of the benefits and tax impact of IRAs on your unique situation email .