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New roth IRA is open for business

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Q. I am self-employed and want to set up a Roth IRA. Do I need to have other employees to do this? I.G., Louisville, Ky.

A. No. A Roth IRA, like a traditional IRA, is available to individual taxpayers. Assuming you have earned income for the year, you can deduct contributions up to the lesser of the earned income or a specified annual amount ($4,000 for 2006, plus an extra $1,000 for taxpayers age 50 and older). The contributions may be made to your Roth IRA regardless of the number of employees in your business. (See the article starting on page 4 for other types of small business retirement plans.) Tip: Eligibility to contribute to a Roth IRA phases out for unmarried filers with an AGI between $95,000 and $110,000; $150,000 and $160,000 for joint filers.

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