Is a traditional IRA right for you?
A traditional IRA can be a smart way to provide for the future. Just note, your ability to deduct your contributions depends on two factors:
- If neither the owner nor the owner’s spouse are covered by an employer retirement plan, contributions are 100% deductible at any income level.
- If either the owner or the owner’s spouse are covered by an employer retirement plan, and the amount of your adjusted gross income exceeds certain limits, your contributions will not be deductible. Click here to view the 2011 limits.
How much can you contribute to a traditional IRA?
A traditional IRA allows you to contribute up to $5,000 a year toward your retirement. And if you’re age 50 or older, your contribution limit jumps to $6,000 annually.
Are you eligible for a traditional IRA?
- If you have earned income from employment and are under age 70½, you may contribute to a traditional IRA.
- If you are married and filing a joint return, and your spouse’s taxable compensation is not enough to reach the maximum annual contribution for his/herself, you can contribute up to the maximum amount to an IRA (Traditional or Roth) for his/her behalf.
Choosing the right IRA can be tough. Your best bet? Talk to a financial professional to find out which kind of IRA is the best fit for your needs.
There is no additional tax deferral benefit for annuity contracts purchased in an IRA or other tax-qualified plan, since these are already afforded tax-deferred status. Thus, an annuity should only be purchased in an IRA or qualified plan if you value some other features of the annuity and are willing to incur any additional costs associated with the annuity to receive such benefits.