My spouse and I now earn more than the dual-income limit specified by our IRAs. What will happen to our previous contributions?

The amounts that you contributed while your modified adjusted gross income (MAGI) was within the statutory limits will not be affected by any increase in your MAGI for future years.

For instance, assume you contributed $4,000 for tax year 2007 while your MAGI was below $166,000. If in 2008 your MAGI increases to $200,000, you will not be eligible to contribute to the Roth IRA for tax year 2008 (as the 2008 limit is $169,000 for a married couple filing a joint return). However, your new MAGI in 2008 does not affect the amounts you contributed for previous years.

To read more about IRAs, check out Traditional IRA Deductibility Limits, Roth Or Tradtional IRA … Which Is The Better Choice?, Roth IRA: Back To Basics and Making Spousal IRA Contributions.

This question was answered by Denise Appleby
(Contact Denise)