Friday Encore: 3 IRA Changes for 2008

Welcome to the Friday Encore where you'll get to read a past blog posting that I thought you might not want to miss. Okay, call it a repeat if you want. When necessary the post may be updated with new information or data to keep it relevant. The following was originally posted January 2008.


3 IRA Changes for 2008

1. Contribution Limits Increase

In 2008 IRA contribution limits rise to $5,000 ($6,000 for anyone 50 or older). This is a $1,000 increase over 2007. For the years after 2008 contribution limits are scheduled to be indexed with inflation in $500 increments.

2. Income Limits Increase

If your modified adjusted gross income (MAGI) doesn’t exceed $53,000 (for single filers) or $83,000 (for joint filers) your entire IRA contribution will be tax deductible.

You can make the maximum Roth IRA contribution if your modified adjusted gross income (MAGI) doesn’t exceed $101,000 (for single filers) or $156,000 (for joint filers).

3. Easier Rollovers
Previously to roll funds into an Roth IRA you first had to park them into a traditional IRA and then convert to a Roth. Now you can roll assets directly from a 401(k) to a Roth IRA. You’ll still have to pay applicable taxes, but the process is less complicated. However, there are income limits. In 2008 and 2009, you may be eligible for a direct conversion if you make less than $100,000. In 2010 income limits for Roth conversions go away.