Roth IRA Eligibility
No age discrimination here! Those birthdays that just keep coming won't affect your eligibility to contribute to a Roth IRA, but your marital status and your AGI will. (Remember, contributions to a Roth IRA are not tax deductible because you will get the returns in retirement tax-free.)

Here are the basic eligibility rules for Roth IRAs in 2008:

If you are single …

• … and your AGI is less than $101,000, you can contribute fully to a Roth IRA.
• … and your AGI is between $101,000 and $116,000, you can contribute partially to a Roth IRA.
• … and your AGI is more than $116,000, you cannot contribute to a Roth IRA.

If you are married and file jointly …

• … and your combined AGI is less than $159,000, you can contribute fully to a Roth IRA.
• … and your combined AGI is between $159,000 and $169,000, you can contribute partially to a Roth IRA.
• … and your combined AGI is more than $169,000, you cannot contribute to a Roth IRA.

If you are married, file separately and have lived with your spouse for any part of the year …

• … and your AGI is $0, you can contribute fully to a Roth IRA.
• … and your AGI is between $0 and $10,000, you can contribute partially to a Roth IRA.
• … and your AGI is more than $10,000, you cannot contribute to a Roth IRA.

If you are married, file separately and have not lived with your spouse for any part of the year …

• … your eligibility is the same as for a single filer.

Traditional and Roth IRA Contribution Limits
The government limits on how much you can contribute are the same for Traditional and Roth IRAs. Individuals over the age of 50 are allowed to contribute a bit more than the young folks, for what we'll call "catch-up" reasons (the closer you are to retirement, the more you may need to put away).

In 2007, individuals 49-years-old and younger could contribute $4,000 annually to an IRA, and those 50 and over could contribute $5,000. In 2008, those numbers have risen to $5,000 and $6,000 respectively. These amounts will be adjusted each year based on inflation in $500 increments.

But you're thinking, "Just make it easy for me!" Even though we are going to arm you with more information so you can make the most educated decision about IRAs, we can still make it simple for you. Check out our IRA Contribution Calculator to find out how much you can personally put into an IRA and to learn what portion of those contributions will be deductible.

Next: Other IRA Plans

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