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Q. I am an active participant in a traditional company pension plan. Can I also contribute to a traditional IRA account? Is any of my contribution deductible?

A. Since you are an active participant in a qualified plan, you are affected by certain income restrictions that apply to the traditional IRA plans. See the second paragraph below for the different rules for Roth IRA plans..

Anyone, regardless of Adjusted Gross Income (AGI), who is less than 70 1/2, and has earned taxable compensation, may contribute to a traditional IRA. However the amount of the contribution that is deductible is calculated based on your Adjusted Gross Income. As of December 2000, if you are single, you start losing your ability to deduct IRA contributions at $32,000, and at $42,000 AGI your deduction is completely phased out. For married people filing jointly the combined income limit starts at $52,000 and ends at $62,000 AGI

You can contribute to a Roth IRA if you are single and your AGI is less than $95,000. The amount youíre allowed to contribute is decreased if your AGI is between $95,000 and $110,000. If your AGI is above $110,000, you are not eligible to contribute. For married couples filing a joint return, the allowed contribution is reduced starting at $150,000, and above $160,000 AGI they become ineligible. For married people filing separately, the phase-out begins at $0 and the maximum contribution to a Roth IRA is completely phased out at $10,000 AGI. Unlike traditional IRAís, individuals are allowed to make contributions to a Roth IRA even after the age of 70 Ĺ.

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