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It sure has been a tough couple of months for anyone trying to save for their retirement.  Saying that we're in a bear market is an understatement.

Did you have the courage to look at your most recent retirement account statements? If so, now's a good time to recalculate what your retirement accounts will REALLY be worth when you retire using our On-line Retirement Calculator.  Our calculator lets you figure out how much income your retirement accounts will provide to you, in today's dollars, when you ultimately stop working. 

So what's the next step now that the markets are at their four year lows?  Whether you're a contrarian by nature, optimistic about the long-term benefit of owning stocks and mutual funds, or interest in taking full advantage of the tax benefits of investing within your retirement accounts, then maximizing your retirement plan contributions, even during a bear market, is a must.  Below are your retirement saving options for 2002:


Individual Retirement Accounts (IRAs) are the most basic of all available retirement savings options.  This year, if you're single and earn at least $3,000, you can contribute up to $3,000 into an IRA.  If you're married, and together you and your spouse earn at least $6,000, then you can each contribute up to $3,000 into an IRA. Anyone who will be 50 or older by the end of the year is allowed to contribute an additional $500 into their IRA. 

Don't forget that even if you're covered under a retirement plan at work, you're still eligible to contribute money into an IRA that year. 

Currently, there are two types of IRAs:

  • TRADITIONAL IRAs:  Amounts contributed to a traditional IRA may or may not be tax deductible, depending on whether you or your spouse is covered under a retirement plan at work, but always grow tax-deferred.

  • ROTH IRAs:  Amounts contributed to a Roth IRA are never tax deductible, but grow tax-free.  However, if you're single and your adjusted gross income (AGI) exceeds $110,000, or married and your AGI exceeds $160,000, you aren't eligible to contribute to a Roth IRA that year.

401(k) and 403(b) Plans:

During your working years, there are two ways for you to save for your retirement. You can participate in a retirement plan offered by your employer and/or you can contribute to an IRA. 

The most popular type of retirement plan offered by employers these days is a Salary Reduction Plan such as a 401(k) plan or a 403(b) plan.  These plans allow you to contribute up to $11,000 this year (increased to $12,000 if you'll be age 50 or older by the end of the year.).  Amounts contributed reduce your taxable earnings and grow tax-deferred.  If you're not currently contributing to a 401(k) plan or 403(b) plan, contact your employer's benefits office to see whether either plan is available to you, and how you can sign to take advantage of this important retirement savings opportunity.

Options For Self-Employed Individuals:

If you're self-employed, you can save for your retirement using Keogh Plans, SEP/IRAs, or SIMPLE IRAs.  Amounts contributed to these plans are tax deductible, even if you're covered under a retirement plan sponsored by another employer.

Retirement plans for self-employed individuals

Type of Retirement Plan

Due Date for Establishing Plan

Maximum Annual Contribution

Keogh Plan

December 31st

20% of net income


Due date of tax return, including extensions

20% of net income


October 1st

$7,000 + 3% of net income

  • Keogh Plans:  The maximum contribution to Keogh Plans is the lesser of 20% of your net self-employment earnings or $40,000.  Keogh plans need to be set up prior to December 31st of the year for which the contribution will be made.

  • SEP/IRAs:  The maximum contribution to a SEP/IRA is the lesser of 20% of net your self-employment earnings or $40,000.  SEP/IRA's can be set up as late as the due date of the tax return, including extensions, of the year for which the contribution will be made.

  • SIMPLE IRAs:  The maximum contribution to a SIMPLE is limited to $7,000 plus 3% of net self-employment earnings. That means that an individual who has net self-employment earnings of $7,000 can contribute (and deduct) $7,210 to a SIMPLE.  The due date for setting up a SIMPLE is October 1st of the year for which the contribution will be made. Contributions may be reduced if you participate in a 401(k) plan or a 403(b) plan during the year.



Income Taxes

Saving and Investing



  • Returns on extension are due 8/15/02

  • Requests for 2nd extension, Form 2688, due 8/15/02

  • Self-employed individuals who went on extension need to fund retirement plans by 8/15/02 or should file Form 2688


Check out our Directory of Affiliated Offices to find a CPA near you who specializes in the tax planning and preparation for young health care professionals.



If you're married, and you and your spouse are ready for some basic financial planning, check out


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2000 & 2001 TAX FACTS

  • For 2001, the standard deduction for a single individual is $4,550 and for a married couple is $7,600. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes, real estate taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses. For 2002, the standard deduction has increased to $4,700 for single individuals and to $7,850 for married couples.

  • For 2001, the personal exemption is $2,900. Individuals will claim a personal deduction for themselves, their spouse, and their dependents.  For 2002, the personal exemption has increased to $3,000.
  • The maximum earnings subject to social security taxes has been increased to $84,900 in 2002 from $80,400 in 2001.
  • The standard mileage rate has been increased to $.365 per mile in 2002 from $.345 per mile during 2001.
  • The maximum annual contribution to a 401(k) plan or a 403(b) plan has been increased to $11,000 for 2002 from $10,500 in 2001.  And if you'll be 50 or older by December 31, 2002, you can contribute an extra $1,000 into your 401(k) or 403(b) account this year.

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