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Traditional IRA

A traditional IRA is a retirement account into which the law permits you to make, in many cases, tax deductible contributions on an annual basis of as much as $3,000 a year for the years 2003 and 2004 ($500 more if you are over fifty). To qualify for a traditional IRA, you must have earned income and be under the age of 70½. If you are married and neither you nor your spouse has a retirement plan at work, your contributions will be fully deductible. Even if you have a retirement plan at work, you may be able to deduct some or even all of your IRA contribution if your taxable income meets certain guidelines.

For the year 2003, those guidelines are quite limited for married couples filing separately who are allowed to have no more than $10,000 of adjusted gross income; $40,000 to $50,000 for single or head of household filers; $60,000 to $70,000 for married joint filers; and $150,000 to $160,000 for joint filers when a spouse has a retirement plan at work, but the other spouse does not. Husbands and wives are each permitted to have individual IRA accounts even if only one spouse is working outside the home (after many years I have learned to avoid saying that a stay-at-home homemaker spouse is not working).


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