Who's Eligible |
Anyone under age 70½ with earned income
No income limitations |
Anyone with earned income
Single filers―MAG income limitations:
2006: up to $95,000 - $110,000
2007: up to $99,000 - $114,000
Joint filers―MAG income limitations:
2006: up to $150,000 - $160,000
2007: up to $156,000 - $166,000
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Contribution Limit
(2006-2007) |
Individual: $4,000 or 100% of earned income, whichever is less, for 2006 and 2007
If age 50 or over, $5,000 or 100% of earned income, whichever is less, for 2006 and 2007
Married Couple: $8,000 total (or 100% earned income): $4,000 for IRA of working spouse and $4,000 for IRA of non-working spouse.
Additional catch up contributions for those age 50 and over, as noted above, also apply. |
Individual: $4,000 or 100% of earned income, whichever is less, for 2006 and 2007
If age 50 or over, $5,000 or 100% of earned income, whichever is less for 2006 and 2007
Married Couple: $8,000 total: $4,000 for IRA of working spouse and $4,000 for IRA of non-working spouse.
Additional catch up contributions for those age 50 and over, as noted above, also apply. |
Tax-Advantaged Growth |
Tax-deferred growth - No federal income taxes due until distributions are taken. |
Tax-free growth - No federal income taxes due when money is taken out if account is open for at least five years and one of the following events occurs:
- Attainment of age 59½
- First-time home purchase (up to $10,000)
- Disability
- Payment to beneficiary due to death of owner
|
Withdrawals prior to age 59½ |
Subject to a 10% IRA premature distribution penalty and taxed as ordinary income unless one of the following exceptions applies:
- First-time home purchase (up to $10,000)
- Qualified medical expenses
- Qualified higher education expenses
- Health insurance premiums while unemployed
- Substantially equal periodic payments
- Disability
- Death
- IRS levy
|
"Earnings" portion may be subject to a 10% IRS premature distribution penalty and taxed as ordinary income unless one of the following exceptions applies:
- First-time home purchase (up to $10,000)
- Qualified medical expenses
- Qualified higher education expenses
- Health insurance premiums while unemployed
- Substantially equal periodic payments
- Disability
- Death
- IRS levy
|
Required minimum distributions |
Must begin by April 1 of year following that in which owner reaches age 70½. If less than required amount is withdrawn, difference is subject to 50% IRS penalty tax. |
No minimum distribution requirement |