Numbers to Know for 2001

By Clifton Linton
Senior Writer, mPower

In This Story Key IRA Limits Deductible IRA Contributions Roth IRA Contributions and Conversions

If you hoped that Congress would raise IRA contribution limits last year so you could get a bigger tax break this year, you're out of luck.

While Congress hopes to pass laws raising contribution limits this year, such increases might not take effect until 2002. For the 2001 tax year, IRA contribution limits remain largely unchanged from 2000.

Technical Terms Individual retirement account (IRA) Modified adjusted gross income (MAGI) Roth IRA

Key IRA Limits

Here's a rundown of the key limits IRA holders need to know:

• The maximum individual pretax contribution to a traditional IRA is $2,000 a year (same as 2000).
• The maximum individual after-tax contribution to a traditional IRA is $2,000 a year (same as 2000).
• The maximum individual contribution to a Roth IRA is $2,000 a year (same as 2000).
• The maximum combined contribution limit for all IRAs is $2,000 a year (same as 2000).

Deductible IRA Contributions

If you participate in a defined contribution plan at work, such as a 401(k), 403(b) or 457 deferred-compensation plan, whether your traditional IRA contribution is deductible will depend on your modified adjusted gross income (all limits were raised $1,000 from the 2000 tax year).

If you participate in a defined contribution plan at work, your traditional IRA contribution will be fully deductible if you are:

• Single and earn less than $33,000;
• Married filing jointly and earn less than $53,000; or
• Married filing separately and have no earned income.

If you participate in a plan at work, your traditional IRA contribution will not be deductible at all if you are:

• Single and earn more than $43,000;
• Married filing jointly and earn more than $63,000; or
• Married filing separately and earn more than $10,000.

If you participate in a plan at work, your traditional IRA contribution will be partially deductible if you are:

• Single and earn between $33,000 and $43,000;
• Married filing jointly and earn between $53,000 and $63,000; or
• Married filing separately and earn between $0 and $10,000.

Remember, if you aren't eligible to make a tax-deductible contribution to a traditional IRA, you may make a post-tax contribution and still take advantage of tax-deferred growth on your contribution and its earnings. Or, if you are eligible, you could open a Roth IRA.

Roth IRA Contributions and Conversions

Roth IRA income eligibility limits are also based on modified adjusted gross income (same as 2000).

You won't be eligible to open a Roth IRA in 2001 if you are:

• Single and earn more than $110,000;
• Married filing jointly and earn more than $160,000; or
• Married filing separately and earn more than $10,000.

You will be able to fund a Roth IRA with an amount less than $2,000 in 2001 if you are:

• Single and earn between $95,000 and $110,000;
• Married filing jointly and earn between $150,000 and $160,000; or
• Married filing separately and earn between $0 and $10,000.

You will be able to fund a Roth IRA with the full $2,000 contribution if you are:

• Single and earn less than $95,000; or
• Married filing jointly and earn less than $150,000.

Related Reading Washington Power Shift Good News for 401(k) Contribution Limits? Stock Market Slump May Be a Good Time for a Roth Conversion

Roth IRA conversion eligibility (same as 2000):

• You will not be able to convert a traditional IRA to a Roth IRA if your modified adjusted gross income (MAGI) was more than $100,000. This applies to single tax return filers as well as married filing jointly filers. Tax filers who are married filing separately aren't permitted to make this conversion. 

The information provided here is intended to help you understand the general issue and does not constitute any tax, investment or legal advice. Consult your financial, tax or legal advisor regarding your own unique situation and your company's benefits representative for rules specific to your plan.

Numbers to Know for 2001

By Clifton Linton
Senior Writer, mPower

In This Story Key IRA Limits Deductible IRA Contributions Roth IRA Contributions and Conversions

If you hoped that Congress would raise IRA contribution limits last year so you could get a bigger tax break this year, you're out of luck.

While Congress hopes to pass laws raising contribution limits this year, such increases might not take effect until 2002. For the 2001 tax year, IRA contribution limits remain largely unchanged from 2000.

Technical Terms Individual retirement account (IRA) Modified adjusted gross income (MAGI) Roth IRA

Key IRA Limits

Here's a rundown of the key limits IRA holders need to know:

• The maximum individual pretax contribution to a traditional IRA is $2,000 a year (same as 2000).
• The maximum individual after-tax contribution to a traditional IRA is $2,000 a year (same as 2000).
• The maximum individual contribution to a Roth IRA is $2,000 a year (same as 2000).
• The maximum combined contribution limit for all IRAs is $2,000 a year (same as 2000).

Deductible IRA Contributions

If you participate in a defined contribution plan at work, such as a 401(k), 403(b) or 457 deferred-compensation plan, whether your traditional IRA contribution is deductible will depend on your modified adjusted gross income (all limits were raised $1,000 from the 2000 tax year).

If you participate in a defined contribution plan at work, your traditional IRA contribution will be fully deductible if you are:

• Single and earn less than $33,000;
• Married filing jointly and earn less than $53,000; or
• Married filing separately and have no earned income.

If you participate in a plan at work, your traditional IRA contribution will not be deductible at all if you are:

• Single and earn more than $43,000;
• Married filing jointly and earn more than $63,000; or
• Married filing separately and earn more than $10,000.

If you participate in a plan at work, your traditional IRA contribution will be partially deductible if you are:

• Single and earn between $33,000 and $43,000;
• Married filing jointly and earn between $53,000 and $63,000; or
• Married filing separately and earn between $0 and $10,000.

Remember, if you aren't eligible to make a tax-deductible contribution to a traditional IRA, you may make a post-tax contribution and still take advantage of tax-deferred growth on your contribution and its earnings. Or, if you are eligible, you could open a Roth IRA.

Roth IRA Contributions and Conversions

Roth IRA income eligibility limits are also based on modified adjusted gross income (same as 2000).

You won't be eligible to open a Roth IRA in 2001 if you are:

• Single and earn more than $110,000;
• Married filing jointly and earn more than $160,000; or
• Married filing separately and earn more than $10,000.

You will be able to fund a Roth IRA with an amount less than $2,000 in 2001 if you are:

• Single and earn between $95,000 and $110,000;
• Married filing jointly and earn between $150,000 and $160,000; or
• Married filing separately and earn between $0 and $10,000.

You will be able to fund a Roth IRA with the full $2,000 contribution if you are:

• Single and earn less than $95,000; or
• Married filing jointly and earn less than $150,000.

Related Reading Washington Power Shift Good News for 401(k) Contribution Limits? Stock Market Slump May Be a Good Time for a Roth Conversion

Roth IRA conversion eligibility (same as 2000):

• You will not be able to convert a traditional IRA to a Roth IRA if your modified adjusted gross income (MAGI) was more than $100,000. This applies to single tax return filers as well as married filing jointly filers. Tax filers who are married filing separately aren't permitted to make this conversion. 

The information provided here is intended to help you understand the general issue and does not constitute any tax, investment or legal advice. Consult your financial, tax or legal advisor regarding your own unique situation and your company's benefits representative for rules specific to your plan.