Maximize your IRA Contribution for 2008
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There are two types or IRAs, Roth and traditional. Roth IRAs are great for new investments since the money grows tax free. Of course if you exceed the income limitations then a traditional IRA is the next best option. The traditional IRA is used when rolling a 401K or 403b plan from your employer. I recommend setting up automatic monthly withdrawals from your checking account for discipline. The table below details the difference between the Roth and traditional IRA and the contribution limits.
| 2008 |
Roth IRA |
Traditional IRA |
| Maximum contribution |
$5000 $416.66 / month ($6000 if over 50) |
$5000 $416.66 / month ($6000 if over 50) |
| “Phase-out” income |
Single AGI $101,000 to $116,000. Married AGI $159,000 to $169,000. |
No income limits to (Tax deductability is |
| Tax Consequences |
After tax money used. |
Pre-tax money used. |
| Comment |
Recommended for new |
Practical account to |
The contribution limit for IRAs increased to $5000 in 2008 ($6000 if you are 50 years old). In future years the contribution limit will be indexed to inflation.
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