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Finance Quick Answers

 

 

What are the changes to the tax laws for contributions limits for IRAs and Roth IRAs?

 

What's New for 2008:

 

Traditional IRA

The contribution limit has been increased to the smaller of:

  • $5,000, or
  • Your taxable compensation for the year

 

If you were age 50 or older before 2009, the most that can be contributed is the smaller of:

  • $6,000, or
  • Your taxable compensation for the year

 

For more information, see How Much Can Be Contributed? in chapter 1 of IRS Publication 590, Individual Retirement Arrangements (IRAs): http://www.irs.gov/pub/irs-pdf/p590.pdf.

 

 

Roth IRA

If contributions on your behalf are made only to Roth IRAs, your contribution limit is generally the lesser of:

  • $5,000, or
  • Your taxable compensation for the year

 

If you were age 50 or older before 2009 and contributions on your behalf were made only to Roth IRAs, your contribution limit is generally the lesser of:

  • $6,000, or
  • Your taxable compensation for the year

 

However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced.

 

For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2 of IRS Publication 590, Individual Retirement Arrangements (IRAs): http://www.irs.gov/pub/irs-pdf/p590.pdf.

 

 

Graham McCaulley, Graduate Research Assistant, Department of Human Development and Family Studies, University of Missouri

 

 

 

 

 

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Last update: Monday, November 17, 2008

 

 

 


 
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