MODIFICATION OF IRA CONTRIBUTION LIMITS.

SEC. 601. MODIFICATION OF IRA CONTRIBUTION LIMITS. (a) Increase In Contribution Limit.— (1) In general.—Paragraph (1)(A) of section 219(b) (relating to maximum amount of deduction) is amended by striking “$2,000” and inserting “the deductible amount”. (2) Deductible amount.—Section 219(b) is amended by adding at the end the following new paragraph: “(5) Deductible amount.—For purposes of paragraph (1)(A)— “(A) In general.—The deductible amount shall be determined in accordance with the following table: “For taxable years beginning in: The deductible amount is: 2002 through 2004 $3,000 2005 through 2007 $4,000 2008 and thereafter $5,000. “(B) Catch-up contributions for individuals 50 or older.— “(i) In general.—In the case of an individual who has attained the age of 50 before the close of the taxable year, the deductible amount for such taxable year shall be increased by the applicable amount. “(ii) Applicable amount.—For purposes of clause (i), the applicable amount shall be the amount determined in accordance with the following table: “For taxable years beginning in: The applicable amount is: 2002 through 2005 $500 2006 and thereafter $1,000. “(C) Cost-of-living adjustment.— “(i) In general.—In the case of any taxable year beginning in a calendar year after 2008, the $5,000 amount under subparagraph (A) shall be increased by an amount equal to— “(I) such dollar amount, multiplied by “(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2007’ for ‘calendar year 1992’ in subparagraph (B) thereof. “(ii) Rounding rules.—If any amount after adjustment under clause (i) is not a multiple of $500, such 115 STAT. 95 amount shall be rounded to the next lower multiple of $500.”. (b) Conforming Amendments.— (1) Section 408(a)(1) is amended by striking “in excess of $2,000 on behalf of any individual” and inserting “on behalf of any individual in excess of the amount in effect for such taxable year under section 219(b)(1)(A)”. (2) Section 408(b)(2)(B) is amended by striking “$2,000” and inserting “the dollar amount in effect under section 219(b)(1)(A)”. (3) Section 408(b) is amended by striking “$2,000” in the matter following paragraph (4) and inserting “the dollar amount in effect under section 219(b)(1)(A)”. (4) Section 408( j) is amended by striking “$2,000”. (5) Section 408(p)(8) is amended by striking “$2,000” and inserting “the dollar amount in effect under section 219(b)(1)(A)” (c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2001.