IRA contribution increase
expected to clear state panel

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By Lyn Danninger
ldanninger@starbulletin.com

A bill that would bring the state tax code into conformity with recent federal Internal Revenue Service changes for individual retirement accounts is scheduled to be heard by the House Finance Committee today.

The change would increase the maximum contribution for an IRA from $2,000 annually to $3,000 for an individual and $3,500 for people over 50 years old.

The change will apply to the 2002 tax year.

Such compliance bills are routinely submitted to the Legislature by the state Department of Taxation each year, said Grant Tanimoto, the department's deputy director.

With few exceptions, legislative approval to mirror federal changes is given, Tanimoto said.

Local tax specialist David Ramirez of accounting firm Tax Relief Services agrees.

"Historically, the state has always followed federal changes," he said.

"It's much simpler for everyone if they follow federal law, which they pretty much do."

After the House Finance Committee meeting today, the bill will likely proceed for a full vote, said Brian Takeshita, chief researcher for the Finance Committee.

"We expect the measure to pass without a problem," he said.

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