IRA’s:
The maximum amount that can be contributed to deductible,
non-deductible and Roth IRAs each year will increase to $3,000 for 2002 through
2004, to $4,000 for 2005 through 2007, and $5,000 for 2008 and thereafter. The contribution limit will be adjusted in
increments of $500 for inflation after 2008.
Catch-Up Contributions:
Maximum permissible yearly contributions to 401(k) plans,
403(b) and Section 457 plans have also been raised. For 2002, the limit is $11,000.
Those aged 50 or over will be allowed to make additional “catch-up”
contributions over and above the general contribution limits as follows:
|
2002
|
$1,000
|
|
2003
|
$2,000
|
|
2004
|
$3,000
|
|
2005
|
$4,000
|
|
2006
|
$5,000
|
|
|
|
The $5,000 catch-up limit after 2006 will be adjusted for
inflation. The law also makes a general
overhaul of retirement of retirement plan provisions, including providing for
faster investing.
Education IRA’s:
The contribution limit for education IRA’s is increased to
$2,000 (from $500) in 2002. The law
also makes several other education-related changes that are beneficial to the
taxpayer.
Limitation on Multiple Plan Contribution Limits are
Repealed:
Under the old tax law, if you worked for more than one
employer and were able to contribute both to a 401(k) plan and a Section 457
plan you were only eligible to contribute the maximum on one plan. Beginning in 2002, you are eligible to contribute
the maximum amounts on both plans.
For further information, contact Diane M. Pearson, CFP™ at (412) 635-9210
or mailto:legend@legend-financial.com