Individual retirement accounts (IRAs) are an excellent way to save
for retirement and reduce your tax bill. Two rules on IRAs change this
year, and that could be very good news for you.
Change #1:
The maximum amount you can contribute to an IRA for 2005 increases to
$4,000, up from the 2004 limit of $3,000. If you're 50 years old or
older, you can put up to $4,500 in an IRA this year, up from $3,500 for
2004.
Change #2:
This change will make it easier for those over age 70 to convert
their regular IRAs to a Roth IRA. As you may know, to qualify to convert
a regular IRA to a Roth IRA, your adjusted gross income cannot exceed
$100,000, and this limit applies whether you are single or married.
Effective January 1, 2005, the required annual minimum distribution from
your IRAs won't be included when determining whether your income exceeds
the $100,000 threshold. That's good news if you've wanted to switch to a
Roth but haven't been able to because of the income limit.
For details or help with your tax planning, contact our office.
Return to 2005 Tax Tips
