| Qualifications |
Must have earned income and not have reached age 70 1/2 by the end of the year. |
Must have earned income. There are no age restrictions. |
| Maximum Annual Contributions |
Taxable years beginning
In 2002 through 2004 - $3,000
In 2005 through 2007 - $4,000
In 2008 and after - $5,000* |
Taxable years beginning
In 2002 through 2004 - $3,000
In 2005 through 2007 - $4,000
In 2008 and after - $5,000* |
| Tax Status of Earnings |
Tax-deferred until withdrawal |
Not taxed. Earnings grow tax-free. |
| Contribution Restrictions |
Yes, if active participant in employer retirement plan.
CONTRIBUTION PHASEOUTS
| 2002 |
$34k-$44k |
$54k-$64k |
| 2003 |
$40k-$50k |
$60k-$70k |
| 2004 |
$45k-$55k |
$65k-$75k |
| 2005 |
$50k-$60k |
$70k-$80k |
| 2006 |
same as 2005 |
$75k-$85k |
| 2007 |
same as 2005 |
$80k-$100k |
|
Yes, contributions phaseout between $95,000-$110,000 for singles and $150,000-$160,000 for married couples. |
| Tax Deduction |
Yes.
Contributions up to the limit are fully tax deductible if you are not an active participant in a retirement plan. Otherwise phaseout rules apply. |
No. |
| Penalties for Early Withdrawal |
None if:
Over 59 1/2
Death or disability
Qualified medical expenses
Certain health insurance
Qualified college expenses
1st time home purchase (up to $10,000)
Due to IRS levy |
None if:
Over 59 1/2
Death or disability
Qualified medical expenses
Certain health insurance
Qualified college expenses
1st time home purchase (up to $10,000)
Due to IRS levy |
| Required Distributions |
Must begin by April following year participant turns 70 1/2. |
Only after death of the participant. |
| Contributions After Age 70 1/2 |
Not allowed. |
Allowed. |
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