Traditional IRA

Q. Who is eligible to contribute to a Traditional IRA?
A. Anyone under age 70½ who has earned income.

Q. How much can I contribute to my Traditional IRA each year?
A. It depends on your age and tax year. See the table below.

Age on December 31	Maximum Contribution Permitted
	2007 Tax Year	2008 Tax Year
Under age 50	$4,000	$5,000
50 – 70 years old	$5,000	$6,000
70½ or older	Not permitted	Not permitted

Q. Can I make a contribution and designate it for the prior tax year?
A. Yes, if it is made by April 15th.

Q. I am under 50 years old. Can I contribute $4,000 to my Traditional IRA and $4,000 to my Roth IRA?
A. No. However, if you’d like, you can contribute to a Traditional IRA and Roth IRA as long as the total contribution to both IRAs does not exceed $4,000 for tax year 2007 and $5,000 for tax year 2008.

Q. Is my Traditional IRA contribution tax deductible?
A. Maybe. It depends on:

• what your tax filing status is and
• what your Modified Adjusted Gross Income (MAGI) was and
• whether or not you were an active participant in an employer-sponsored retirement plan

Q. How do I know if I was an active participant in an employer-sponsored retirement plan?
A. Your Form W-2 (Wage and Tax Statement) provided to you by your employer in January will indicate if you participated in a plan.

Q. My tax filing status is single and I was not a participant in an employer-sponsored retirement plan during the tax year. Is my contribution completely deductible?
A. Yes.

Q. My spouse and I are filing our taxes jointly and neither one of us were participants in an employer-sponsored retirement plan during the tax year. Are our contributions completely deductible?
A. Yes.

Q. I was a participant in an employer-sponsored retirement plan. What portion of my Traditional IRA contribution can I deduct?
A. It depends on your tax year, tax filing status, MAGI and age. See the tables below.

Tax Year 2007: Active Participant Deduction Limits
Tax Filing Status	MAGI	Less than 50 Years Old	50 - 70 Years Old
Single	<$52,000	$4,000	$5,000
	$52,000– $62,000	Pro-rata deduction of $4,000	Pro-rata deduction of $5,000
	$62,000+	No deduction permitted	No deduction permitted
Married and Filing Jointly	<$83,000	$4,000	$5,000
	$83,000– $103,000	Pro-rata deduction of $4,000	Pro-rata deduction of $5,000
	$103,000+	No deduction permitted	No deduction permitted

Tax Year 2008: Active Participant Deduction Limits
Tax Filing Status	MAGI	Less than 50 Years Old	50 - 70 Years Old
Single	<$53,000	$5,000	$6,000
	$53,000– $63,000	Pro-rata deduction of $5,000	Pro-rata deduction of $6,000
	$63,000+	No deduction permitted	No deduction permitted
Married and Filing Jointly	<$85,000	$5,000	$6,000
	$85,000– $105,000	Pro-rata deduction of $5,000	Pro-rata deduction of $6,000
	$105,000+	No deduction permitted	No deduction permitted

Q. I am a non-working spouse. If we file a joint return, can I deduct my Traditional IRA contribution if my spouse was a participant in an employer-sponsored retirement plan?
A. Maybe. As a non-working spouse, you have your own MAGI phaseout range of $156,000 - $166,000 in 2007 and $159,000 - $169,000 in 2008.

Q. Is there an investment minimum?
A. Yes. It is $2,000 per Fund.

Q. Is there a custodial fee?
A. Yes. If your IRA balance is less than $10,000, there is a charge of $15 per year (per IRA type).

 

• Printable Traditional IRA Q&A

Questions? Call 800-332-5580.