2001 Changes

Traditional IRA Income Limits Increased

For 2001, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA will be reduced (phased out) if your modified adjusted gross income (AGI) is between:

• $53,000 and $63,000 for a married couple filing a joint return or a qualifying widow(er),
• $33,000 and $43,000 for a single individual or head of household, or
• $-0- and $10,000 for a married individual filing a separate return.

For all filers other than married filing a separate return, the upper and lower limits of the phaseout range increased by $1,000. The range limits did not change for married individuals filing a separate return. See Publication 590, Individual Retirement Arrangements (IRAs), for more information on IRA deductions.

Annual Additions Limit for 403(b) Plan Increased

Effective January 1, 2001, the maximum amount of contributions allowed under the general rule for the limit on annual additions for 403(b) plan participants has increased from $30,000 to $35,000.

Publication 571 Revised

Publication 571,Tax Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations, is undergoing a major revision this year and will not be available until early March 2001.

In the past, Publication 571 provided information for both the plan participant and the plan administrator. It will now focus on helping the participant compute his or her contribution limits by assisting the participant in determining contribution limits for the current year and the previous year. Changes to Publication 571 include:

• Worksheets that have been revised to assist the participant in computing his or her contribution limits,
• Instruction to participants both on preventing excess contributions and determining if they contributed too much in the previous year, and
• More information for participants who contribute to both a 403(b) plan and 457 plan.

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