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Traditional and Roth IRA Contributions

To contribute to an IRA, you must first be eligible to do so. Following is a chart which outlines the basic eligibility rules.

IRA Eligibility
Roth IRA Traditional IRA
Investors with compensation meeting income limits
OR
Non-income earning spouses who file a joint return with a working spouse who meets the income limits
Investors under age 70 1/2 with compensation
OR
Non-income earning spouses who file a joint return with a working spouse

If eligible to contribute, your annual contribution to traditional and Roth IRAs is limited to the lesser of:
   1) your total taxable compensation, or
   2) the annual contribution limit.

For IRA contribution purposes, compensation includes wages, salaries, fees, tips, bonuses, commissions, taxable alimony, and separate maintenance payments. Starting in 2002, persons who are 50 or older can make an additional catch-up contribution. These annual limits, shown in the following table, do not include rollover or conversion (traditional IRA $ converted to a Roth) amounts.

Maximum Traditional and Roth IRA Annual Contribution Limits
(For Roth IRAs, the following limits apply if MAGI* for Single Taxpayer is under $101,000 or $159,000 if married filing jointly; Partial contributions to Roth IRAs can be made if single and MAGI* is between $101,000 and $116,000 or Married filing jointly and income is between $159,000 and $169,000)
Year Normal Contribution Limit for Persons Under 50 Additional Catch-up Amount for Persons Age 50+
2001 $2,000 Not Available
2002 $3,000 $500
2003 $3,000 $500
2004 $3,000 $500
2005 $4,000 $500
2006 $4,000 $1,000
2007 $4,000 $1,000
2008+ **$5,000 $1,000

*Modified adjusted gross income (MAGI) your adjusted gross income from your IRS federal Form 1040 or 1040A tax return, with the following added back: any traditional IRA deduction, foreign earned income exclusion, foreign housing deduction or exclusion, U.S. Savings Bond interest exclusion, student loan interest deduction, or employer-paid adoption expenses exclusion. For Roth IRA purposes, MAGI excludes the income reported from the conversion of a traditional IRA to a Roth IRA.

**Normal contribution limits will be indexed annually in $500 increments for inflation in years 2009+. There is no inflation indexing for age 50+ catch-up contributions in years 2009+.

IRA contributions are not required and there is no minimum amount that must be contributed. All earnings on the IRA are not taxed until withdrawn. Withdrawals from a Roth IRA may even be tax-free provided certain minimum rules are met.

Contributions for non-working spouses
Husbands and wives may each have an IRA, even if only one person in that marriage is working. Separate IRAs must be established and the annual amount that may be contributed to each is the lesser of the total taxable compensation (of the working spouse) or the normal annual contribution limits and catch-up amounts shown in the above table. For example, in a marriage where only one spouse works, both are under age 50 and the taxable compensation of the working spouse is $50,000 for 2002, up to $3,000 may be contributed to each spouse's IRA. If the taxable compensation was $5,000, then only a total of $5,000 could be contributed to their IRAs (maximum of $3,000 in either).

Income Tax Deductions For IRA Contributions Made
Roth IRAs. Roth IRA contributions are never tax-deductible.
Traditional IRAs. Depending on the IRA owner's income tax filing status, modified adjusted gross income (MAGI), and eligibility to participate in a tax-qualified retirement plan through employment , contributions to a traditional IRA may or may not be deductible in the tax year made. If the traditional IRA owner participates in an employer's qualified retirement plan on any day in the tax year, the deductibility of contributions is reduced for certain AGI ranges as shown in the following table.

MAGI* Phase-Out Limits for Deductible Traditional IRA Contributions
Year Single Filer Joint-Filer
2007 $52,000 $62,000 $83,000 - $103,000
**2008+ $53,000 $63,000 $85,000 - $105,000

*Modified adjusted gross income (MAGI) your adjusted gross income from your IRS federal Form 1040 or 1040A tax return, with the following added back: any traditional IRA deduction, foreign earned income exclusion, foreign housing deduction or exclusion, U.S. Savings Bond interest exclusion, student loan interest deduction, or employer-paid adoption expenses exclusion. For Roth IRA purposes, MAGI excludes the income reported from the conversion of a traditional IRA to a Roth IRA.

**2008 and later
A working spouse not covered by an employer-provided retirement plan may make a contribution within the normal limits to an IRA even if the other spouse is covered by an employer-provided retirement plan. Deductibility for these contributions is reduced when the couple's MAGI reaches $159,000 and continues until zero at a joint MAGI of $169,000.


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Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (800) 369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. The Representative may also be a credit union employee that accepts deposits on behalf of the financial institution.


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