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

By Denise Appleby AAA
A:

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)

RELATED FAQS

  1. How does a defined benefit pension plan differ from a defined contribution plan?

    Learn the differences between defined benefit plans and defined contribution plans when reviewing employer-sponsored qualified ...
  2. What are the best ways to pay off my mortgage quickly?

    Learn how mortgage payments may be reduced and how to save thousands on mortgage loans by lowering the interest and principle ...
  3. How do deferred tax assets help in meeting retirement goals?

    Learn how tax deferred assets can help individuals achieve long-term financial goals such as retirement and how they differ ...
  4. What are the best ways to pay less income tax?

    Learn about reducing your income tax burden by contributing to an employer-sponsored retirement plan or IRA, and see what ...
RELATED TERMS
  1. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  2. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  3. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  4. Gold IRA

    Definition of Gold IRA
  5. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  6. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...

You May Also Like

Related Articles
  1. Professionals

    Are Longevity Annuities in 401(k)s a ...

  2. Professionals

    Why Retirement Advice Is Better But ...

  3. Professionals

    Coming Soon: Private Equity In 401(k) ...

  4. Professionals

    Ways To Cut 401(k) Expenses

  5. Professionals

    Tread Carefully With Retirement Plan ...

Trading Center