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Contribution Eligibility

An individual must have earned income, or compensation, on which to base their IRA contribution. A non-working spouse may contribute based on the working spouse's earned income when filing jointly. Compensation includes salaries, wages, tips, commissions, bonuses, alimony, royalties and "earned income" in the case of a self-employed individual. Eligible compensation MUST BE from personal servicescurrently rendered.

IRA Charitable Rollover Restored

Older Americans are once again able to contribute directly to public charities from their individual retirement accounts, thanks to a provision in the Emergency Economic Stabilization Act of 2008 (H.R.1424), signed into law on October 3, 2008. The IRA Charitable Rollover tax incentive, which is available through 2009, allows individuals aged 70½ and older to donate up to $100,000 from their Individual Retirement Accounts (IRAs) and Roth IRAs to public charities without having to count the distributions as taxable income.

Roth IRA Conversion Income Limits

In 2009, the income limits to convert to a Roth IRA is $100,000. In 2010, and for that year only, there are no income limits on converting your traditional IRA to a Roth IRA. (You can also convert a 401K from a previous employer.) This is a prime opportunity for high wage earners to have their retirement funds grow tax free.

RMDs suspended for 2009

Investors age 70½ or older will not have to take a required minimum distribution (RMD) from their tax-deferred retirement accounts in 2009, thanks to a new federal law. The measure is intended to help retirees conserve their resources after the last year's sharp stock market downturn. Normally, investors over age 70½ are required to take an annual withdrawal (based on their life expectancy and prior year's account balance) or pay a 50% penalty on the amount they should have withdrawn.