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Taxmap/pubs/p590-001.htm#TXMP79cd055e Chapter 1 Traditional IRAs

Traditional IRA

Taxmap/pubs/p590-001.htm#TXMP2bb92b82 What's New for 2004

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Modified AGI limit for traditional IRA contributions increased.

For 2004, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified adjusted gross income (AGI) is:

• More than $65,000 but less than $75,000 for a married couple filing a joint return or a qualifying widow(er),
• More than $45,000 but less than $55,000 for a single individual or head of household, or
• Less than $10,000 for a married individual filing a separate return.

For all filing statuses other than married filing separately, the upper and lower limits of the phaseout range increased by $5,000. See How Much Can You Deduct? in this chapter.

Taxmap/pubs/p590-001.htm#TXMP36cfbac7
New method for figuring net income on returned or recharacterized IRA contributions.

There is a new method for figuring the net income on IRA contributions made after 2003 that are returned to you or recharacterized. For more information, see How Do You Recharacterize a Contribution? or Contributions Returned Before Due Date of Return in this chapter.

Taxmap/pubs/p590-001.htm#TXMP5cb82dc3 What's New for 2005

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Traditional IRA contribution and deduction limit.

The contribution limit to your traditional IRA for 2005 will be increased to the smaller of the following amounts:

• $4,000, or
• Your taxable compensation for the year.

If you reach age 50 before 2006, the most that can be contributed to your traditional IRA for 2005 will be the smaller of the following amounts:

• $4,500, or
• Your taxable compensation for the year.

For more information, see How Much Can Be Contributed? in chapter 1.

Taxmap/pubs/p590-001.htm#TXMP6d31f3ad
Modified AGI limit for traditional IRA contributions increased.

For 2005, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA will be reduced (phased out) if your modified adjusted gross income (AGI) is:

• More than $70,000 but less than $80,000 for a married couple filing a joint return or a qualifying widow(er),
• More than $50,000 but less than $60,000 for a single individual or head of household, or
• Less than $10,000 for a married individual filing a separate return.

For all filing statuses other than married filing separately, the upper and lower limits of the phaseout range will increase by $5,000. See How Much Can You Deduct? in chapter 1.

Introduction

This chapter discusses the original IRA. In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a "traditional IRA." The following are two advantages of a traditional IRA:

• You may be able to deduct some or all of your contributions to it, depending on your circumstances.
• Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed.

Taxmap/pubs/p590-001.htm#TXMP1fdc50e6 What Is a Traditional IRA?

Traditional IRA

A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA.

Previous Page:  Publication 590 - Individual Retirement Arrangements (IRAs)(Including Roth IRAs and Education IRAs) - Individual Retirement Arrangements (IRAs) Next Page:  Publication 590 - Individual Retirement Arrangements (IRAs)(Including Roth IRAs and Education IRAs) - Who Can Set Up a Traditional IRA? Use     to find additional instances of index items.