Does the new tax law change the income thresholds for deductible contributions to an IRA?
Taxpayers who are covered by a retirement plan at work can deduct the full amount of a $2,000 contribution to an individual retirement account in 2001 if they file a joint return with modified adjusted gross income (AGI) of less than $53,000 or file singly with a modified AGI of less than $33,000. For every $1,000 over the income limit, the deduction amount is reduced by $200. The Taxpayer Relief Act of 1997 provides for a $1,000 annual increase in the limit through the 2002 tax year and larger annual increases after that to $80,000 for joint filers and $50,000 for individuals. Does receiving Social Security affect my ability to make a deductible IRA contribution? Social Security payments you receive could restrict your ability to deduct contributions to your IRA. According to “Wealth Enhancement & Preservation” (The Institute Inc., Denver), “If you are covered by a qualified pension plan where you work, Social Security benefits can affect your deductible contribution to an IRA. Deduct
