IRA Rules and Guidelines
This table summarizes the specific laws and guidelines applied to Roth and Traditional Individual Retirement Accounts, including Vantagepoint IRAs.
| 2008 Provisions | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Traditional and Roth IRA Contribution Limit | $5000 After 2008 the limit will be indexed to inflation in $500 increments. |
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| IRA Catch-Up Contributions | If you are age 50 or older, you may make annual catch-up contributions to your IRA each year, limited to this amount: | ||||||||||||||||
| $1000 | |||||||||||||||||
| Coverdell Education Savings Account Contributions | The annual limit is $2,000 and is not related to the limit for Roth and Traditional IRAs. | ||||||||||||||||
| Portability— Rollovers Between Various Types of Plans | Retirement plan participants and IRA investors may move their retirement plan assets between retirement plans in the public, private, education and nonprofit sectors as they move between employment in those sectors. Monies may be moved between (to and from) 401, 403(b) and governmental 457 plans as well as Traditional IRAs. | ||||||||||||||||
| Tax Credit for Moderate Income Savers |
A tax credit of as much as $1,000 is provided to low- and middle-income savers who make contributions to a Traditional or Roth IRA. The credit is based on the first $2,000 of contributions to the IRA, reduced by taxable distributions received by the individual or his/her spouse in that year or the two prior years. The amount of the credit depends on the adjusted gross income (AGI) of the individual. For example, in 2008 a joint filer with AGI of up to $32,000 could take a 50% credit on his/her contribution. (If he/she contributes $2,000 to an IRA, the credit would be $1,000.) Please refer to the tables below for annual limits. The amount of the contribution eligible for the credit would be reduced by any taxable distributions received by the individual or his/her spouse from other retirement plans (401(k), 403(b), governmental 457, SIMPLE, SEP, Traditional IRA, Roth IRA, or qualified retirement plan) during the year for which the credit is claimed, the two years prior to that year, and during the period between the end of the year and the time when the individual files his/her tax return. (If the distribution is from a Roth IRA, the entire distribution must reduce the contribution amount, even though it is not taxable.) The credit cannot lower the individual’s tax liability (regular plus alternative minimum tax) below zero. The credit was made permanent by the passage of the Pension Protection Act of 2006.
The amount of the contribution eligible for the credit would be reduced by any taxable distributions received by the individual or his/her spouse from other retirement plans (401(k), 403(b), governmental 457, SIMPLE, SEP, Traditional IRA, Roth IRA, or qualified retirement plan) during the year for which the credit is claimed, the two years prior to that year, and during the period between the end of the year and the time when the individual files his/her tax return. (If the distribution is from a Roth IRA, the entire distribution must reduce the contribution amount, even though it is not taxable.) The credit cannot lower the individual’s tax liability (regular plus alternative minimum tax) below zero. The credit was made permanent by the passage of the Pension Protection Act of 2006. |
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