Who can contribute and how much? Anyone that is under age 70½ and has earned income from employment, may set-up a Traditional IRA. Here are a few details about annual contributions.
$4,000 in 2005 ($5,000 in 2008) for the individual taxpayer
$8,000 in 2005 ($10,000 in 2008) for married couples filing jointly
Any individual who is 50 years of age or older by the end of the current year, will be able to make an additional catch-up contribution of $500 per year. In 2006, the additional catch-up amount will increase to $1,000.
In addition to any tax deductions that may apply, individuals earning no more than $50,000, who contribute to an IRA, will receive a non-refundable tax credit. This tax credit is a percentage of your qualified retirement savings contribution, not exceeding $2,000 (This is only available for taxable years 2002 through 2006)
