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The Roth IRA offers unique and exciting savings opportunities. Not
only can it help with retirement needs, but also a first-time home
purchase or other financial goals. This flexibility makes the Roth
IRA appealing to many different age and income groups. Who
can contribute?
Anyone who has income from compensation or who is filing jointly
with a spouse who earns compensation with the following MAGI*:
- Up to $95,000 for single filers
- Up to $150,000 for joint filers
Reduced contributions are allowed for higher MAGI*:
- $95,000 to $110,000 for single filers
- $150,000 to $160,000 for joint filers
* MAGI - modified adjusted gross income from your federal tax
return
How much can I contribute?
|
ANNUAL CONTRIBUTION LIMITS (No age limitation) |
| YEAR |
INDIVIDUAL |
SPOUSAL |
|
2004 |
$3000 |
$6000 |
| 2005 |
$4000 |
$8000 |
|
2006 |
$4000 |
$8000 |
| 2007 |
$4000 |
$8000 |
|
2008 |
$5000 |
$10,000 |
- Higher limit if age 50 or older
- Cannot exceed compensation
- Reduces contributions that can be made to Traditional IRAs
Are contributions tax deductible?
No
What are the tax advantages?
After the account has been opened for five tax years, earnings
can be withdrawn tax and penalty free for any of these reasons:
- Disability
- Death
- First-time home purchase**
- Age 59 ½
**Lifetime limit for exemption on first-time home purchase is
$10,000
When can I withdraw without restrictions?
Earnings are tax-free if account is open five tax years and
withdrawn for a qualified reason.
Not required to start withdrawals at age 70 ½.
For further information contact U.P.
Connection Federal Credit Union.
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