New Limits: Retirement Accounts
(Most Baby Boomers are still contributing to retirement accounts. For those who are no longer working, the distributions may be their primary source of money to live. The source of money impacts their housing and lifestyle goals.)
Roth IRAs and traditional IRAs 2007: $ 4,000 2008: $ 5,000
Roth IRA Basics:
-Contributions are made with after-tax dollars
-Contributions are not deductible
-Can contribute even after the age of 70 -1/2
-Money can stay in a Roth IRA for your lifetime
-No tax penalty if you withdraw early
-Qualified distributions are tax free
-No income restrictions
-No income tax on withdrawals during retirement
Roth IRA income limits increase in 2007:
-Single people: A full contribution is allowed if income is $99,000 or less. A partial contribution is allowed if income is up to $114,000.
-Married couples: Contribution limits range from $156,000 to $166,000.
-To convert from a traditional to a Roth IRA, income cannot exceed $100,000, regardless of marital status.
Individuals age 50 and older can make "catch-up" contributions to their retirement plans.
-Regular IRAs: Limits for 2007: $5,000; Limits for 2008: $6,000
-SEP IRAs, 401K, 403(b) and 457 plans: Limits for 2007: $5,000
-SIMPLE plans: Catch-up contributions equal 50% of whatever the current limit is for 401k, SEP, and 457 plans.
Qualified retirement plans: The current contribution limit allowed to be considered when determining contribution amounts and benefits is $250,000.
Defined benefit plans:
-2007 cap on annual benefits is the lesser of $180,000 or 100% of the average compensation for the last three years.
-Annual additions are limited to the lesser of $45,000 or 100% of compensation.
401K, SEP, 403 B, Elective Deferrals:
The 2007 limit is $15,500 for elective deferrals for 401k plans, tax sheltered annuities, and salary deduction simplified employee pension plans.
Annual elective deferrals to a SIMPLE plan: The 2007 limit is $10,500.
Annual deferrals under section 457 plans (such as deferred compensation plans or state or local governments or tax-exempt organizations): The 2007 limit is $15,500.
SENIOR ADVANTAGE REAL ESTATE COUNCIL® - www.seniorsrealestate.com - Posted Feb. 2007
A professional on this topic should always be consulted.