Taxpayers who are age 50 and above are permitted to contribute an additional $1,000 for the years 2008 and beyond.

Eligibility

Many taxpayers may not e eligible for a deduction to a traditional IRA.  A deductible contribution is dependent on whether you are covered by another retirement plan.  If your income is above $114,000 single or $166,000 married filing joint you are not eligible to make a Roth contribution.  Be careful when converting a traditional IRA to a Roth IRA.  If your modified adjusted gross incoe is over $100,000 a conversion to a Roth IRA is not allowed.

Roth 401(k)'s

Commencing in 2006 a new Roth 401(k) is available.  The Roth401(k) is where the employer allows employees to designate 401(k) contributions as Roth 401(k) contributions.  The designated contribution must meet three requirements to qualify.  First, the employee must irrevocably designate amounts as Roth 401(k) contributions when electing to defer compensation.  The taxpayer cannot decide later that tax savings are needed for the current yera and redesignate the contribution as having been made to a regular section 401(k) plan.  Changes can be made only for future deferrals.

Second, contributions must be included in income at the time the emloyee would have received the funds had he or she not elected to contribute to the qualified Roth 401(k) contribution program.  Finally, the deferred amounts must be maintanied by the plan in a separate, designated Roth account.

As with other Roth distrubions, the distributions from Roth 401(k) are are nontaxable.  To be nontaxable, distributions must occur after a five-year period, after the taxpayer reaches age 59 1/2, after the taxpayer's death or on account of the taxpayer's disablity.

The limits on the Roth 401(k) are $15,500 with an additional $5,000 contribution allowed for persons over 50 years old.  Also, all participants, regardless of income will be eligible to make designated Roth contributions.  Distributions will be required once an individual reaces age 70 1/2, but the assets can be rolled over into a Roth IRA, where distributions are not required.