Traditional/Roth IRA Contribution Limits
The contribution limit for both Traditional and Roth IRAs is $4,000 and will increase again, to $5,000 in 2008. After 2008, the contribution limit will be annually indexed in $500 increments, adjusted for the cost-of-living (COL). The chart below shows the contribution limits for both the Traditional and Roth IRA.
| Year | Traditional/Roth |
|---|---|
| 2006 | $4,000 |
| 2007 | $4,000 |
| 2008 | $5,000 |
| 2009 | $5,000 |
“Catch up” Contributions
Americans who have reached the age of 50 have the ability to contribute more to their retirement account under the “catch up” provisions of the 2002 legislation. The amount of the “catch up” for Traditional and Roth IRAs is capped at $1,000 for 2006. In order to qualify, an individual must have reached the age of 50 in the year in which they make the “catch up” contribution.
| Year | Traditional/Roth Catch UP |
|---|---|
| 2006 | $5,000 |
| 2007 | $5,000 |
| 2008 | $6,000 |
| 2009 | $6,000 |
SEP IRA Contribution Limits
A SEP IRA owner may contribute up to 25% of an employee’s compensation up to the annual compensation cap. The annual compensation cap in 2006 is $220,000 and $225,000 for 2007 and then subject to annual cost-of-living adjustments for later years. The maximum dollar amount that may be contributed in 2006 is $44,000 ($45,000 in 2007 and then subject to annual cost-of-living adjustments for later years).
It should also be noted that your spouse and children may also participate in the plan and open their own SEP IRAs – as long as they are employees of the company.
For more information on ROTH IRA’s Click Here
For more information on Traditional IRA Contributions Click Here
