Are You Eligible for a Roth IRA?

Roth IRAs offer unique benefits as retirement savings vehicles for many individuals. In contrast to traditional IRAs, contributions made to Roth IRAs are non-deductible; however, earnings accumulate tax free and qualified distributions are tax free, provided you are over age 59½ and have owned the account for at least 5 years. The following provisions also apply to Roth IRAs:

• In order to qualify, you must receive earned income as an employee or a self-employed person, or you must receive alimony.
• You can make a full, nondeductible contribution of $5,000 in 2008 if your adjusted gross income (AGI) is less than $101,000 for single taxpayers or $159,000 for married couples filing jointly.
• The contribution phases out for single filers with AGIs between $101,000 and $116,000, and for joint filers with AGIs between $159,000 and $169,000.
• Contributions to a traditional IRA may affect your eligibility for contributing to a Roth IRA. The total amount contributed in 2008 to any IRA or combination of IRAs cannot exceed the $5,000 maximum ($6,000 for those age 50 and older).
• Participants in 401(k) plans or other qualified retirement plans may also contribute to a Roth IRA.
• Married individuals may make contributions for nonworking spouses under certain conditions.

If you would like to take a closer look at what type of IRA fits your objectives and needs, consult a qualified financial professional.

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