In 2002, working Americans can contribute up to $3,000 to an IRA. For one-income couples, the non-working spouse also can make a $3,000 contribution. If you’re 50 or older this year you can contribute an extra $500 to an IRA for 2002. In certain situations, those IRA contributions may be deductible.
All but high-income taxpayers can contribute $3,000 or $3,500 to a Roth IRA instead. Those contributions are not deductible but subsequent withdrawals may be tax-free.
Your gross income must be under $95,000 (single return) or $150,000 (joint return) to make full Roth IRA contributions. At slightly higher income levels, partial contributions are permitted.
Many people will wait until April 15, 2003, when they file their 2002 tax returns, to contribute to an IRA or Roth IRA, but there is no need to wait. If you’re going to make an IRA or Roth IRA contribution for 2002 you might as well do so now, while the stock market is down.
By next April, a $3,000 or $3,500 stock market investment might buy a lot less than it does now. After you make your contribution, you’ll enjoy tax-free appreciation, inside the account, if stocks move up.
