2006 IRA Tax Information

IRA Tax Information for 2006

The following summarizes the IRA contribution limits that you'll need for your 2006 taxes.

For those who were 50 or older in 2006, both the Traditional IRA contribution limit is the smaller of your taxable compensation for the year or $5,000.

If you were 50 or older in 2006 and contributions on your behalf are made only to Roth IRAs, then your contribution limit for 2006 will usually be the smaller of $5,000 or your taxable compensation for the year. However, your contribution limit might be reduced if your modified adjusted gross income was above a certain amount.

For a married couple filing a joint return, modified adjusted gross income limit for traditional IRA contributions increased. For 2006, if you are covered by a retirement plan at your employment, your deduction for contributions to a traditional IRA will be phased out if your modified adjusted gross income is between $75,000 and $85,000 for a married couple filing a joint return or a qualifying widow(er), between $50,000 and $60,000 for a single individual or head of household, or less than $10,000 for a married individual filing a separate return.

Additional salary reduction contributions can be made to your SIMPLE IRA in 2006 if you were 50 or older in 2006, and no other salary reduction contributions could be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. The additional amount for 2006 was the smaller of $2,500 or your compensation for the year reduced by your other elective deferrals for the year.

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