IRAs in the Spotlight

Thanks for sharing this!

Individual Retirement Accounts hit the stage in 1974. After edits by six government acts over the ensuing years, these troupers are still going strong today. Here’s a look at the playbill.

SCENE 1 opened the show with the passage of the Employee Retirement Income Security Act, and starred the traditional IRA. Workers could contribute up to $1,500 per year and claim a tax deduction for the contribution. Only employees without a retirement plan could participate.

SCENE 2 presented the Economic Recovery Tax Act of 1981, which upped the maximum annual contribution and allowed an additional contribution of $250 for nonworking spouses. All taxpayers under the age of 70-1/2 could fund an IRA whether they had an employer retirement plan or not.

SCENE 3 introduced the Tax Reform Act of 1986. At this point, the curtain came down on IRA deductions for highly paid workers, if they or their employed spouses were covered by an employer based retirement plan.

SCENE 4 headlined the Small Business Job Protection Act of 1996, which increased the nonworking spousal contribution limit to $2,000.

SCENE 5 featured the Taxpayer Relief Act of 1997 and the Roth IRA. Employees could make contributions to the new Roth accounts from already-taxed income, foregoing a current tax deduction in exchange for later, tax-free withdrawals. Income limits on traditional and Roth IRAs went up.

SCENE 6 highlighted the Economic Growth and Tax Relief Reconciliation Act of 2001 and added a catch-up provision for those over age 50, plus a nonrefundable federal income credit for certain contributions.

SCENE 7 gained applause with the Tax Increase Prevention and Reconciliation Act of 2005. This star jacked up contribution limits and allowed high income owners of traditional IRAs to convert to Roth accounts, starting in 2010.

You might also like these posts

Article – Preparing for Hurricane Season Image source: By Nilfanion , via Wikimedia Commons. The map shows the tracks of all tropical cyclones which formed worldwide from 1985 to 2005.The Atlantic hurricane season begins June 1. While the 2014 season is expected to be a mild one, mild doesn’t mean storm-free. Getting ready early is a good idea—and early preparati...
Article — Locked Out Image source: UK, public domain, via Wikimedia Commons What’s on your computer? Your manuscripts? Work? Photos? What would you do if you were denied access to those files—if you were locked out by rogue hackers? If you’re shaking your head because you think nothing on your computer is of value to hackers, consider th...
Article — Tax Identity Theft Awareness Week Image source: ftc.gov Taxes are scary enough, without adding tax identity theft to the mix. The costs—$3.6 billion a year according to an estimate by the US Treasury Inspector General for Tax Administration—are scary, too. Unfortunately, both tax ID theft and the costs are on the rise. The US Federal Trade Commission...
Article — Your 2013 Federal Income Tax Return Image source: IRS.gov Whether you’re a part- or full-time freelancer, receiving income means filing a tax return. Here are three things to keep in mind as you look back at your 2013 business activity. Dates: The IRS will begin accepting 2013 business returns on Monday, January 13, 2014. For individual returns, the da...

We write. Visit us in Carpenter Country, a magical place that, like our stories, is unreal but not untrue.

Posted in Articles Tagged with: ,