Due date for contributions and withdrawals. Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. Because Emancipation Day, April 16, 2007, is a legal holiday in the District of Columbia, the due date for making contributions for 2006 is April 17, 2007. See When Can Contributions Be Made? in chapter 1. There is a 6% excise tax on excess contributions not withdrawn by the due date (including extensions) for your return. You will not have to pay the 6% tax if any 2006 excess contributions are withdrawn by April 17, 2007 (including extensions). See Excess Contributions under What Acts Result in Penalties or Additional Taxes? in chapter 1.

Traditional IRA contribution and deduction limit. If you were age 50 or older before 2007, the most that could be contributed to your traditional IRA for 2006 is the smaller of the following amounts:

For more information, see How Much Can Be Contributed? in chapter 1.

Roth IRA contribution limit. If you were age 50 or older before 2007 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2006 is generally the lesser of:

However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2.

Modified AGI limit for traditional IRA contributions increased. For 2006, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:

See How Much Can You Deduct? in chapter 1.

Additional salary reduction contributions to SIMPLE IRAs for persons age 50 and older. For 2006, additional salary reduction contributions could be made to your SIMPLE IRA if:

For 2006, the additional amount is the lesser of the following two amounts.

For more information, see How Much Can Be Contributed on Your Behalf? in chapter 3.

Qualified Roth contribution programs. For tax years beginning after 2005, a qualified cash or deferred arrangement (section 401(k) plan) or a tax-sheltered annuity plan (section 403(b) plan) can create a qualified Roth contribution program so that participants can elect to have part or all of their elective deferrals to the plan designated as after-tax Roth contributions. For more information about 401(k) plans, see Publication 560, Retirement Plans for Small Business. For more information about 403(b) plans, see Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans).

Rollovers from designated Roth accounts. If any part of an eligible rollover distribution is from a designated Roth account set up under an employee's qualified plan, you can roll over, tax free, that part of the distribution to another designated Roth account or to a Roth IRA.

Nontaxable combat pay. Beginning in 2004, you can treat nontaxable combat pay as compensation for purposes of the limits on contributions and the deduction of contributions to IRAs. You may be able to make additional contributions for 2004 or 2005. For more information, see Nontaxable combat pay under What Is Compensation? in chapter 1.

Qualified charitable distributions. If you were at least age 70½ and you had a distribution made by the trustee of your IRA directly to a charitable organization, it may be nontaxable. See Qualified charitable distributions under Are Distributions Taxable? in chapter 1.

Qualified reservist distributions. If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may not have to pay the 10% tax on early distributions you received on or after the day you were ordered or called to active duty. See Qualified reservist distributions under Early Distributions in chapter 1.

Qualified reservist repayments. If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to repay certain early distributions even if the repayment would cause your total contributions to be more than the limit on contributions. See Qualified reservist repayments under How Much Can Be Contributed? in chapter 1.

Modified AGI limit for traditional IRA contributions increased. For 2007, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified adjusted gross income (AGI) is:

For 2007, if you are not covered by a retirement plan at work, your deduction for contributions to a traditional IRA may be reduced (phased out) if you either live with your spouse at any time during 2007 or file a joint return for 2007. If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your AGI is more than $156,000 but less than $166,000. If your AGI is $166,000 or more, you cannot take a deduction for contributions to a traditional IRA. See How Much Can You Deduct? in chapter 1.

Modified AGI limit for Roth IRA contributions increased. For 2007, your Roth IRA contribution limit is reduced (phased out) in the following situations.

See Can You Contribute to a Roth IRA? in chapter 2.

Modified AGI limit for retirement savings contribution credit increased. For 2007, you may be able to claim the retirement savings contribution credit if your modified adjusted gross income (AGI) is not more than:

See Can you claim the credit? in chapter 5.

Rollover by nonspouse beneficiary. Beginning in 2007, a direct transfer from a deceased employee's IRA, qualified pension, profit-sharing or stock bonus plan, annuity plan, tax-sheltered annuity (section 403(b)) plan, or governmental deferred compensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. The IRA is treated as an inherited IRA. For more information about rollovers, see Rollovers under Can You Move Retirement Plan Assets? in chapter 1.

Qualified health savings account (HSA) funding distribution. Beginning in 2007, if you are covered by a high deductible health plan (HDHP), you may be able to make a nontaxable HSA funding distribution from your IRA (other than a SEP or SIMPLE IRA) that would otherwise be included in income. The distribution must be a direct trustee-to-trustee transfer to an HSA. The distribution will be nontaxable to the extent it is not more than the limit on your annual HSA contributions. Generally, you can make only one nontaxable HSA funding distribution during your lifetime. However, if you change your HDHP coverage from self-only to family, you may be able to make an additional distribution during the same year. For more information, see Publication 553. For more information about HSAs, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Catch-up contributions in certain employer bankruptcies. For 2007, 2008, and 2009, you may be able to deduct catch-up contributions of up to $3,000 each year to your IRA. These contributions would be deductible only if you participated in a qualified cash or deferred arrangement (section 401(k) plan) of an employer who was a debtor in bankruptcy proceedings. See Catch-up contributions in certain employer bankruptcies under How Much Can Be Contributed? in chapter 1.

Simplified employee pension (SEP). SEP IRAs are not covered in this publication. They are covered in Publication 560, Retirement Plans for Small Business.

Deemed IRAs. A qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. An employee's account can be treated as a traditional IRA or a Roth IRA. For this purpose, a “qualified employer plan” includes:

Statement of required minimum distribution. If a minimum distribution is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to calculate it for you. The report or offer must include the date by which the amount must be distributed. The report is due January 31 of the year in which the minimum distribution is required. It can be provided with the year-end fair market value statement that you normally get each year. No report is required for section 403(b) contracts (generally tax-sheltered annuities) or for IRAs of owners who have died.

IRA interest. Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Do not report this interest on your return as tax-exempt interest.

Hurricane tax relief. Special rules apply to the use of retirement funds (including IRAs) by qualified individuals who suffered an economic loss as a result of Hurricane Katrina, Rita, or Wilma. See Hurricane-Related Relief in chapter 4 for information on these special rules.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

This publication discusses individual retirement arrangements (IRAs). An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement.