Tradition IRA and Roth IRA
The Tradition IRA and Roth IRA are other after-tax savings options, with an annual maximum contribution of $3,000 per year ($3,500 if over 50) for single taxpayers and $6,000 ($7,000 if over 50) for couples filing jointly. Early withdrawals can be made from these IRAs for education expenses for the taxpayer, their spouse, children, and grandchildren. Taxpayers making withdrawals from traditional before-tax or rollover IRAs would have to pay income tax on the full amounts withdrawn but no penalty tax.
Married couples filing
jointly or qualifying widow(er) with a modified adjusted gross income
(MAGI) under $150,000 and single taxpayers with a MAGI under $95,000 can
contribute the maximum to a Roth IRA. At higher income limits, the amount
that can be contributed to a Roth IRA phases down gradually until married
taxpayers filing jointly or qualifying widow(er) with a MAGI over $160,000
and single taxpayers with a MAGI over $110,000 cannot contribute.
If covered by a retirement plan at work, the taxpayers deduction for contributions
to a Traditional IRA may be reduced according to the MAGI. Married couples
filing jointly or qualifying widow(er) with a MAGI under $60,000 and single
taxpayers with a MAGI under $40,000 can contribute the maximum to a Traditional
IRA. The contribution limits will be reduced until married taxpayers filing
jointly or qualifying widow(er) with a MAGI over $70,000 or single taxpayers
with a MAGI over $50,000 cannot contribute.
FOR MORE INFORMATION ON EDUCATIONAL TAX AND SAVINGS OPTIONS, VISIT THE
FOLLOWING WEB SITES:
- Internal Revenue Service, Publication 970, Tax Benefits for Higher Education www.irs.gov/pub/irs-pdf/p970.pdf
- TCRS Tax Credit Reporting Service http://tcrs.com
- For general information on TRA97 or to view/print a copy of your 1098-T go to www.1098T.com