Modified AGI Limit for Traditional IRAs
is required for section 403(b) contracts (generally tax-shel-
tered annuities) or for IRAs of owners who have died.
For 2003, if you are covered by a retirement plan at work,
your deduction for contributions to a traditional IRA will be
reduced (phased out) if your modified adjusted gross in-
come (AGI) is between:
4.
•
$60,000 and $70,000 for a married couple filing a
joint return or a qualifying widow(er),
Exempt Organizations
•
$40,000 and $50,000 for a single individual or head
of household, or
•
$ –0 – and $10,000 for a married individual filing a
2002 Changes
separate return.
For all filing statuses other than married filing separately,
the upper and lower limits of the phaseout range increase
Notice of Status — Form 8871
by $6,000. For more information, see How Much Can I
Deduct? in chapter 1 of Publication 590.
Form 8871, Political Organization Notice of Section 527
Status, is used by certain political organizations to notify
Election to Change IRA Distribution Method
the IRS that the organization is to be treated as a tax-ex-
empt section 527 organization. The following changes
If you are a designated beneficiary who has elected to take
have been made to the filing requirements of Form 8871.
the entire balance of an inherited IRA by the end of the fifth
•
year following the year of the owner’s death, you may now
Political committees for a state or local candidate,
and state or local committees of a political party are
be able to change your election. You may switch to receiv-
not required to file Form 8871.
ing the balance over your life expectancy. For more infor-
•
mation, see Switch from election to take balance by the
Organizations filing Form 8871 must disclose
end of the fifth year under Figuring the Required Minimum
whether they intend to claim exemptions from filing
Distribution in chapter 1 of Publication 590.
Form 8872, Political Organization Report of Contri-
butions and Expenditures, as a qualified state or
403(b) Plans
local political organization (QSLPO), or Form 990
(Form 990 –EZ) as a caucus or association of state
or local officials.
Increase in the limit on elective deferrals. For 2003, the
limit on elective deferrals is increased from $11,000 to
$12,000. The limit on elective deferrals will increase by
Amended Form 8871. An amended Form 8871 must be
$1,000 each year through 2006.
filed within 30 days of a material change in any of the
information reported on Form 8871.
For more information about 403(b) plans, see Publica-
tion 571.
For material changes that occurred between No-
DUE
vember 2, 2002 and December 2, 2002, the
Simplified Rules for Required
amended return should have been filed by the
Minimum Distributions
later of:
•
30 days after the material change, or
There are new rules for determining the amount of a
•
December 17, 2002.
required minimum distribution for a year beginning after
2002. The new rules, including new life expectancy tables,
Failure to file an amended Form 8871 will cause the
have been incorporated into chapter 1 and appendix C of
organization not to be treated as a tax-exempt section 527
Publication 590.
organization. If an organization is not treated as a tax-ex-
empt section 527 organization, the taxable income of the
Statement of Required Minimum
organization will be determined by including any exempt
Distribution
function income minus any deductions directly related to
earning the taxable income, during the period beginning on
If a minimum distribution is required from your IRA for
the date of the material change and ending on the date that
2003, the trustee, custodian, or issuer that held the IRA at
the amended Form 8871 is filed. Exempt function income
the end of 2002 must either report the amount of the
includes contributions received, membership dues, and
required minimum distribution to you, or offer to calculate it
political fundraising receipts whether or not in a segregated
for you. The report or offer must include the date by which
fund.
the amount must be distributed. The report is due January
31, 2003. It can be provided with the year-end fair market
Public inspection of Form 8871. The IRS will make all
value statement that you normally get each year. No report
filed Forms 8871 available for public inspection on the IRS
Page 24
Chapter 4 Exempt Organizations