An IRA is a vehicle for accumulating money for retirement.
If you are not covered by an employer-sponsored pension plan at work, the amount of your IRA contribution can be deducted fromm your taxable income. The IRA contribution limit is $4,000 for 2007 and $5,000 for 2008. A special catch-up contribution is available if you will be age 50 or greater during the 2007 tax year. The catch-up contribution is $1,000 for the 2007 tax year.
If you are a nonworking spouse, you may be eligible to contribute to an IRA and deduct the contribution from your taxable income. The spousal contribution limit is $4,000 for 2007 and $5,000for 2008. A catch-up contribution is available if you will be age 50 or greater during the 2007 tax year.
The catchup contribution is $1,000 for the 2007 tax year. Even if you participate in an employer-sponsored pension plan, you may still make contributions to an IRA. The amount you can deduct from your taxable income depends on your adjusted gross income.
The IRA deduction phaseout for married couples filing a joint return ranges from $83,000 to $103,000 AGI for the 2007 tax year.
For the 2008 tax year, the AGI ranges from $85,000 to $105,000.
For singles the IRA phaseout ranges from $52,000 to $62,000 AGI for the 2007 tax year and $53,000 to $63,000 for the 2008 tax year.
Remember, the interest earned on money placed in an IRA grows tax-deferred under current tax laws. You do not pay taxes on the funds until you withdraw them, usually at retirement when you are in a lower tax bracket. However, because an IRA isintended for retirement, you may incur tax penalties if you withdraw the money before age 59 1/2 except in special circumstances.
You can withdraw funds from your IRA and not incur a federal penalty if you are a first-time home buyer ($10,000 limit) or you are using the money to pay for a college education. Any withdrawals will be subject to income taxes. It’s important to check with your tax advisor first before withdrawing funds from your IRA.
Your local
Modern Woodmen
representative is:
Mary Simmons* FIC
1431 E. Main Cross St.
Findlay, OH 45840
419-422-9106
