Tax-advantaged retirement plans can help you lower your current tax bill and achieve a secure retirement. What’s more, recent legislation makes permanent higher IRA and 401(k) contribution limits. They are due to revert to their 2001 levels in 2010.

 

¨ Individual Retirement Accounts (IRAs)

           You may contribute up to $5,000 to fund a traditional or Roth IRA            in 2008. Those age 50 or older can make an additional catch-up            contribution of $1,000. Traditional IRA contributions may be            deductible depending on your AGI and whether you or your            spouse (if filing jointly) are covered by an employer’s pension            plan. Roth IRA contributions are not deductible, but the earnings            accumulate tax-deferred and may be withdrawn tax-free if you            meet the qualified distribution requirements. Eligibility to                      contribute to a Roth IRA is phased out as AGI rises from                       $101,000 to $116,000 for single filers, and $159,000 to                         $169,000 for joint filers. Married taxpayers who file                               separately cannot contribute to a Roth IRA if their income is                  above $10,000.

 

¨ Employer-Sponsored 401(k)s

           Pre-tax contributions to employer-sponsored retirement plans            reduce your taxable wages. Matching contributions and income            earned within your plan also are tax-deferred. The employee            contribution limit for 2008 is $15,500. Employees age 50 or older             by the end of  2008 may make an additional catch-up contribution            of $5,000 for 2008.

 

©2008, American Institute of Certified Public Accountants

Retirement Savings Tax Breaks

ROTH CPA & ASSOCIATES, LLC

10751 MONTGOMERY ROAD

CINCINNATI, OH 45242

          

          

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