For those who annually contribute to their IRA account and wish they could contribute more, there is good news. The old $2,000 per year limit is being slowly increased to $5,000 and then inflation-adjusted in subsequent years. Taxpayers 50 and older are allowed larger contributions through so-called "make-up" provisions (see table below).

For 2002, the contribution limit for traditional IRA accounts has been increased to $3,000 ($3,500 for taxpayers 50 and older) for taxpayers that do not have a qualified plan with their employer.

However, if a taxpayer is an active participant in an employer's pension plan or a self-employed pension plan, the deductible amount will be ratably phased out if their income for the year (AGI) is within the phase out range and not allowed at all if the AGI exceeds the phase out range (see the table below).

Special rule for a nonactive participant spouse - The limits for deductible IRA contributions do not apply to the spouse of an active participant. Rather, the maximum deductible IRA contribution for an individual who is not an active participant but whose spouse is an active participant, is phased out for the non-active participant if their combined AGI is between $150,000 and $160,000.

Feel free to call me with questions at 608-250-9926 or email me at charlie@libertyprofessionalservices.com.