If you are not covered by an employer-sponsored retirement plan, you can make a fully-deductible Traditional IRA contribution up to the annual limit, provided your AGI is less than the allowed maximum.
For those of you who do participate in an employer-sponsored retirement plan, there is some good news. The income limits used to determine whether or not you qualify for a deductible IRA contribution have been increased and will continue to increase over the next several years.
You cannot begin withdrawing money from a Traditional IRA until you reach age 59½ without incurring a 10 percent tax penalty. However, there are some distributions that are not subject to this penalty, such as:
Death or disability of the account owner
Qualified higher education expenses
Qualified first-time home buyer's expenses
Certain medical expenses
Substantially equal periodic payments
Distributions from a Traditional IRA must begin by age 70½. Traditional IRA Contribution Limits
The following chart summarizes contribution limits for Traditional IRAs as well as catch-up contributions for those age 50 or older.
Contribution Limits
(Traditional IRAs)
Year
Limit
2006-2007
$4,000
2008
$5,000
Catch-Up Contributions
(Must be age 50 or older as of the end of the year)
Year
Limit
2006 & after
$1,000
Contribution Deadline: The 2006 contribution deadline is the same as your tax filing deadline, not including extensions.
