New Funding Limits for IRAs?

[Guest predaina]

I just caught a CFP on CNBC who had stated that the funding limits for IRAs had been increased to $5,000. I was under the impression that legislation had not yet been passed to increase the funding limit from $2,000.

Please let me know if the funding limits for a traditional IRA and a Roth IRA have really been changed, or if this person is out to lunch.

Thanks.

Bob Predaina

[Michael Devault]

I believe the commentator is a bit too eager. The increased funding limit was approved by the House, but never got out of the Senate.

Keep your fingers crossed. The new Congress may take the issue up again. If so, it's likely that President Bush will sign it into law.

[John G]

More info: Senator Roth lost his re-election bid, so it is not clear who might champion changes. Proposal to increase the contribution limits may come up again, but Bush admin has suggested that the inheritance tax and marriage penalties are their first priorities.

The 2K limit has not budged for a couple of decades. You may want to consider writing your congressional reps and let them know about your interests.

At one time there was a proposal to raise the limit to 5K but only for some age groups, I think it was the almost retired - empty nesters if my memory is correct.

I think a good case can be made for raising it to 5K and building in some kind of escalation clause. The problem is that very few people talk about this issue so there is not much political momentum.

Bottom line: for this year 2k is the max for each IRA if you meet the other qualifications