If you’re currently contributing to an IRA, or hope to do so in the near future, then you should be aware of the following IRA-related legislative changes for 2008…
You can now roll assets directly from a 401(k) to a Roth IRA. In the past you had to roll the funds into a traditional IRA and then convert to a Roth from there. This doesn’t get you out of paying any applicable taxes on the conversion, but it makes the process much simpler. In 2008 and 2009 you’ll most likely be eligible for this sort of direct conversion if you make less than $100,000. Starting in 2010, the income limit for Roth conversions goes away (but be careful).
IRA contribution limits are going up. In 2008, the maximum IRA contribution is $5,000 (or $6,000 if you’re 50 or older). And from 2008 onward, IRA contribution limits will be indexed to inflation (in $500 increments).
The income limits for deductible IRA contributions are going up. For tax year 2008, your entire IRA contribution will be tax deductible if your modified adjusted gross income (MAGI) doesn’t exceed $53,000 (for single filers) or $83,000 (for joint filers).
The income limits for Roth IRA contributions are going up. For tax year 2008, you can make the maximum Roth IRA contribution if your modified adjusted gross income (MAGI) doesn’t exceed $101,000 (for single filers) or $156,000 (for joint filers).
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