If you are considering a traditional IRA plan you may want to know something about the pre-qualifiers that are spelled out in the IRA rules. First of all you have to be less than 70 1/2 years old in order to qualify for opening an IRA account. The second rule of eligibility is compensation, as you must have some form of compensation such as wages and salary and or bonuses to qualify for this type of retirement plan. There are certain incomes that cannot be applied to this rule and they are items such as dividend checks from stock you might have received in the last twelve months were interest payments on another financial investment plan.

As of 2009, a traditional IRA or AGI deduction limits that are applied in this case only to a retirement plan while working for a employer. In the full deduction column single or head of household can take a full deduction of 55,000 or less per year, when they reach the phase-out limit their deduction raises to $55,000-$65,000 per year, and in the final or no deduction phase at 65,000 or more. If you are married and filing jointly the full deduction amount is $89,000 or less, phase out being $89,000-$109,000, and 109,000 or more for the deduction category.

In 2010, the limits were lifted for single and married filing jointly, as full deduction, phase out, and no deductions were wiped clean. The compensation limits go into effect for married filing jointly and $167,000 or less, the phase-out amount is $167,000-$177,000, and no deduction category is $177,000 or more. Married filing separately with the spouse covered takes effect on phase-out at less than $10,000, and the new deduction column is the same but $10,000 or more in this case.

The IRA contribution schedule set forth in the rules for 2009 and 2010 for the standard contribution is five thousand dollars, there is a catch-up contribution that you can make if you’ve reached the age of fifty or older, and in 2011 and beyond those limits will be adjusted for inflation. Standard contributions will move up in one thousand dollar increments while catch-up contributions will move up only five hundred dollars in incremental steps for future years.

Withdrawals and distributions for your IRA account can take place after the age of fifty-nine and one half years old. This is considered a qualified distribution and no penalty will be imposed. If you are less than that age and make an early withdrawal, unless you qualify for an exception clause, this will open you up to liability of a 10% tax penalty from the Internal Revenue Service. You also owe additional income tax on the amounts that you made the distribution with, and any money you put into your account via a tax-deferred plan, as traditional IRAs will allow deposits on after-tax contributions.