The tax reform grinches have taken a lot of the fun out of the individual retirement account.

For couples with taxable incomes of more than $50,000 -- and single people with incomes of more than $35,000 -- and who have access to a pension plan at work, that lovely $2,000 deduction is gone, gone, gone.

So if you are among those Congress regarded as too well-fixed to deserve that tax break, should you forget about an IRA?

Not necessarily, many financial planners and pension experts say.

The new law does make the IRA unsuitable for many people, "but it is impossible to generalize," said planner Marvin Burt of Burt Associates Inc. of Bethesda. "I have a sizable number of clients for whom it doesn't make sense, but for most of them it does."

Even for people who cannot deduct their annual contribution, IRAs still retain one very important tax benefit: earnings on money invested in an IRA are not taxed until they are withdrawn. Thus, if you put $2,000 into an IRA at a bank and that $2,000 earned 8 percent ($160) for a year, the $160 would not be taxed until you took it out, which in most cases would not be until retirement.

Likewise, as the $160 itself earned interest, that interest would not be taxed.

"When you look at the inside buildup {of earnings in an IRA}, it's considerable. The after-tax accumulation at the end of the road compares pretty favorably to what one would want for retirement," said Frank B. McArdle of the Employee Benefit Research Institute (EBRI) here.

But new record-keeping requirements and the penalty that an IRA account holder faces if he or she needs to make early withdrawals "mean that the deductible IRA is not being recommended as often" as it was under the old law, he added.

Also, depending on an investor's age and tax bracket, other investments, such as tax-exempt bonds or growth stocks, may do better over the years.

Asked to name the most important factors a person should consider when deciding to start or continue an IRA when the contribution is not deductible, local financial planners and pension experts gave this list:

Are you eligible for other pension or savings arrangements that might provide similar tax breaks but with other benefits? If your employer offers a thrift plan, such as a 401(k) plan (so-called after a section of the tax code), check to see that you are taking full advantage of it. Often these plans involve an additional contribution by the employer that you won't get on an IRA.

How many years do you expect to have before you start withdrawing the money? As a quick look at the accompanying chart indicates, the earnings inside an IRA accelerate over time -- assuming a constant rate of return -- so that the longer the money remains invested the better the account looks. In addition, if you begin withdrawals before age 59 1/2, you must pay not only the taxes but also a 10 percent penalty. So, if because of your age or any other reason you think you may need the money sooner rather than later, a more liquid investment may make more sense.

What other investment needs do you have that might affect your decision? Planner Bernie Wolfe of Bernard R. Wolfe & Associates of Rockville notes that for a person in need of additional insurance there are products that combine risk-protection with a tax-deferred investment feature, allowing the investor to kill two birds with one stone.

"Insurance can be an excellent alternative," he said, "but there has to be some insurance need because you're paying something for the insurance."

What is your tax bracket now and what do you think it will be when you retire? An underlying assumption of the original IRA law was that retirees would be in lower tax brackets after retirement than when they were working. Not only is that far less likely under the new tax law, but many people believe it likely that Congress will be pushing up rates again before long.

"I am convinced this is the lowest-tax year we'll ever have," said Alexandra Armstrong of Alexandra Armstrong & Associates, a financial planning firm here.

Her view is widespread in the financial planning industry. A survey by EBRI shortly after the Tax Reform Act of 1986 passed showed that only 4 percent of planners believed that the top bracket would not be raised by 1995. Some 76 percent believed it would be 35 percent or more.

Under such a scenario, an IRA makes much less sense.

"If you anticipate higher tax rates, some people question the wisdom of deferring taxes now to pay at a higher rate later on," said EBRI's McArdle.

In addition to the penalty on early withdrawals, another major negative for nondeductible IRAs is the record-keeping requirement.

Not only do you have to file a separate form with your tax return -- Form 8606 for 1987 -- if you make a nondeductible contribution, but you have to keep track of your contributions until you retire since you have already paid taxes on them and want to be able to prove that to the IRS.

If you already have a deductible IRA, planners recommend keeping it separate from the nondeductible one so that the records will be clear.

Someone with both types of IRAs must either "maintain completely separate accounts, or keep a very good set of books," said Burt. " ... It is an issue he's got to address, and he'd better be able to keep the accounts separate or he's going to be in serious trouble downstream."

Said Wolf, "This is definitely not a simple law. There are a lot of confused people out there."

Added Armstrong: The record-keeping "is a real pain. We've been encouraging people to set up separate accounts -- otherwise the whole thing gets crazy."

One thing that remains fairly straightforward, however, is the situation for those who can still deduct their contributions. For these folks, planners generally agree, the IRA almost always makes sense.

The EBRI survey found that three-quarters of planners recommended an IRA for people in the upper tax brackets, and more than 60 percent advocated one for people in the 15 percent bracket.

If you are unsure whether you can deduct, here are the rules in brief:

If neither you nor your spouse is eligible for a "qualified" pension plan at work -- "qualified" plans are those that meet a complex set of legal requirements -- you may contribute up to $2,000 each (if you both worked and both earned at least $2,000) and deduct the full amount, no matter how high your income.

Single individuals may contribute and deduct $2,000; one-earner couples may contribute and deduct up to $2,250.

If you are single and eligible for a qualified plan, you may still deduct the full $2,000 if your adjusted gross income is less than $25,000. Between $25,000 and $35,000 income, the deduction phases out; above $35,000 adjusted gross income, single individuals lose their deduction completely.

If you are married and filing jointly, you retain the full deduction ($4,000 for working couples and $2,250 for one-earner couples) until your adjusted gross income reaches $40,000.

The deduction phases out between $40,000 and $50,000, disappearing at $50,000. You lose the deduction even if only one of you is covered by a qualified pension plan.