Contributions to 98 & 99

[Kathy]

Maybe. The total amount an individual may contribute to IRAs for a year is the lesser of earned income or $2,000. Anyone who is under 70 1/2 and has earned income may contribute to a traditional IRA. Anyone who meets the income restrictions (MAGI under $150,000 for a married couple filing a joint return or $95,000 for a single individual) may contribute to a Roth IRA. You may contribute $1,000 to one and $1,000 to another or any combination which falls within the limits mentioned above as long as the total does not exceed the lesser of your earned income or $2,000.

Some people who are covered by a qualified plan at work and whose income falls with in the phase out range for deductibiltiy contribute up to the deductible amount to their traditional IRA and the rest of the $2,000 to a Roth. Some people who are in the phase out range for a Roth (between $150,000 and $160,000 for a married couple filing a joint return) contribute the maximum allowed to the Roth and the rest of the $2,000 limit to their traditional.

Again I say, aren't all the options great!?!?!?!?!

[Guest Georgia Phillips]

I made no contributions to my traditional IRA in 98 and am considering starting a Roth in 99. Can I make a contribution to both this year?

[John G]

Good info from Kathy. I would just add this: if you have not filed your 1998 taxes, you are still able to open an IRA for last year. Of course, you can also contribute to 1999 at the same time...assuming that you will meet all of the requirements this year. Funding an IRA at the begining of the year gives you a full year of tax sheltered earnings and is a good idea if you have the funds.