Income Rules

Income Rules for Traditional IRAs

·         Contributions to Traditional IRAs are limited by age restrictions, not by income. See Contribution Rules.

·    Traditional IRA deductions are limited by income. If your income is too high, you cannot deduct your contributions.

2009 Traditional IRA income limits for claiming a deduction

 * All dollar amounts are calculated as Modified Adjusted Gross Income (MAGI).

The income limits for claiming a deduction apply only to Traditional IRA participants whose employers offer a qualified retirement savings plan, such as a 401(k). Even if you do not participate in the employer's retirement plan, the limits apply to you if your employer offers such a plan. If your employer does not offer a plan, the income limits for claiming a deduction are different.

Note that the deductibility limits for a spousal IRA apply to the nonworking spouse only. If you are a nonworking spouse, you can claim a full deduction if your working spouse's income is less than or equal to the full deduction range. At the same time, your working spouse can only deduct his or her contributions if the income range is less than or equal to the applicable limits (e.g., filing separately, as head of household, or married filing jointly). 

Income Rules for Roth IRAs

·         Roth IRA contributions are limited by age restrictions and income limits (See Contribution Rules for age limits).

·         Roth IRA deductions for contributions are never allowed.

2009 Roth IRA income limits for participating and contributing

  * All dollar amounts are calculated as Modified Adjusted Gross Income (MAGI).