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IRA Contribution Limits for 2006

If you have an IRA, then good for you! If you don't, then you should reconsider. If you are a participant in your employer's plan, then consider a ROTH.

The maximum contribution one can make to their IRA in 2006 will remain the same as 2005, $4000. However, the catch-up amount allowed for those of us past the 50-year mark is increaseing from $500 to $1000.

You are eligible to make the additional catch-up contributions beginning the year in which you turn 50 years old. In other words, anyone born in 1956 or earlier make take advantage of this extra contribution limit.

Back to the ROTH topic -- if you are covered by a retirement program then you may be limited as to deductible contributions you can make to your IRA. In years past, if your income reached that level, your recourse was to make non-deductible contributions to your IRA. But now you can choose a ROTH IRA instead, with considerable better tax benefits. There is separate information on this site to explain ROTH IRAs.

"Tax software is no substitute for tax knowledge."

Any views expressed herein are based on our best information. The content of this web site was written as general information without specific individual information and thus may not apply in all situations. This material was not written, and cannot be used by the taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.

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Janelle Ogg, EA
Richard Ogg, EA