IRAs are a great way to invest for retirement as the earnings on your investment compound on a tax-deferred basis.

Any employed person can contribute to a traditional IRA whether or not they are an active participant in their employer-sponsored retirement plan.

Individuals who are not active participants can generally contribute and deduct from their current tax return up to $2,000 (see new schedule below for future years) or 100% of their income, whichever is less.

Those who are active participants in an employer-sponsored plan may also be eligible to take advantage of the $2,000 (see new schedule below for future years) deduction if their adjusted gross income is below the level established for that tax year.

A non-deductible traditional IRA occurs when an individual is actively participating in an employer sponsored retirement plan and still wishes to contribute to a traditional IRA. In many cases, due to income, they are not eligible to deduct their contributions from their current tax return. However, their earnings still accrue on a tax-deferred basis and the individual is not taxed until they begin withdrawing them or taking them out as income.

CONTRIBUTIONS TO IRAs WILL INCREASE IN FUTURE YEARS

· $4,000 - 2005, 2006 & 2007

· $5,000 - 2008.

CATCH-UP PROVISIONS

Catch up provisions increase for ages 50 and older by $500 beginning in 2002 and $1,000 beginning in 2006.

ADJUSTED GROSS INCOME (AGI)
To contribute the full allowable amount each year on a tax-deductible basis your AGI must be:

· Individual - $33,000 or less,
· Joint Filers - $53,000 or less

· Individual - between $33,000 & $43,000 annually
· Joint Filers - between $53,000 & $63,000 annually.

Disclosures
MEA Financial Services/Paradigm Equities, Inc. does not give tax or legal advice. The comments regarding the law and tax treatment simply reflect our understanding of current interpretations of such laws. Since laws are always subject to interpretation and possible changes, we recommend that you seek the counsel of an attorney, accountant or other qualified tax advisor regarding these matters as it applies to your particular situation.

MANY TAX PROVISIONS ARE SCHEDULED TO EXPIRE IN 2006 THROUGH 2010 UNLESS EXTENDED OR MADE PERMANENT BY CONGRESS.