IRA Eligibility & Deductibility
Determine your eligibility based on age, income, marital status and participation in an employer plan
Eligible contributions vary for Traditional and Roth IRAs. Review the guidelines below to help determine what the eligibility is for your specific situation.
Eligibility Requirements
Traditional IRA
Everyone under age 70½, with earned income, is eligible to contribute to a Traditional IRA — there's no income limit.
However, you must earn at least as much as you are contributing; or, if you are a non-wage earning spouse, your household income must be at least the total amount that both spouses are contributing.
Roth IRA
By contrast, the Roth IRA allows contributions at any age, if you have earned income. But, whether or not you can contribute and your contribution limit, depends on your marital status and whether your compensation falls within modified adjusted gross income (MAGI) requirements.
| Year | Contribution Limit | Married, filing jointly Modified Adjusted Gross Income | Single taxpayer Modified Adjusted Gross Income |
| 2008 | Full | Less than $159,000 | Less than $101,000 |
| 2008 | Partial | $159,000 - $169,000 | $101,000 - $116,000 |
Contribution limits
IRA contributions to a Traditional or Roth IRA can also be made for a spouse without earned income. Regulations allow this spouse to contribute up to $5,000 for Tax Year 2008 ($6,000 if age 50 or older). However, the couple must file a joint return.
The following contribution limits are indicated per person. Any investor earning less than these limits in annual compensation may contribute up to as much as they earn.
| Tax year | Maximum IRA contribution for a taxpayer under age 50 | Maximum IRA contribution for a taxpayer age 50 or older |
| 2008 | $5,000 | $6,000 |
| 2009 | $5,000 | $6,000 |
Tax deductible contributions
Depending on your income, filing status and other factors, you may be able to deduct all or part of your Traditional IRA contributions. And, the non-wage-earning spouse's ability to deduct their contribution may differ from their partner's ability to deduct.
For example, if the working spouse participates in an employer retirement plan:
- The working spouse's ability to deduct is phased out beginning at MAGI of $85,000 for tax year 2008
- However, the non-wage-earning spouse's ability to deduct the contribution is phased out starting at MAGI of $159,000 for tax year 2008
See the chart below for various spousal scenarios regarding the deduction of contributions to a Traditional IRA.
(Remember, with a Roth IRA, contributions are made with after-tax dollars, so there is no deduction allowed. However, once you meet Roth eligibility rules, your withdrawals will be tax-free.)
Deductibility of Traditional IRA contributions for 2008 IRA
| Non-wage-earning spouse may deduct: | ||
| Year | Contribution Limit | Married, filing jointly Modified Adjusted Gross Income |
| 2008 | Full |
Less than $159,000
|
| 2008 | Partial |
$159,000 - $169,000
|
| Active Participants in an Employer-sponsored retirement plan | |||
| Year | Contribution Limit | Married, filing jointly Modified Adjusted Gross Income | Single Taxpayer Modified Adjusted Gross Income |
| 2008 | Full |
Less than $85,000
|
Less than $53,000
|
| 2008 | Partial |
$85,000 - $105,00
|
$53,000 - $63,000
|
Next Steps
- Determine if you are eligible to take a tax deduction for your own IRA contribution
- Determine if your spouse is eligible to take a tax deduction for his/her IRA contribution
- Open and fund the IRAs right for you
- Don’t miss the 4/15/09 deadline for making your contribution