What The New Tax Law Means To You

Black Enterprise, Nov, 2001 by Jeffrey Mckinney

Giving Your Retirement A Boost

The new tax law will enable millions of investors to boost
their contribution to both employer-sponsored 401(k)'s
and their IRA's. Also, investors more than 50 years of age
get a chance to make "catch-up" contributions. Check out
the new contribution limits for such programs:

  Annual 401(k) Contributions

Year      Regular       Over 50

2001      $10,500       $10,500
2002       11,000        12,000
2003       12,000        14,000
2004       13,000        16,000
2005       14,000        18,000
2006       15,000        20,000

   Annual IRA Contributions

Year      Regular        Over 50

2001       $2,000         $2,000
2002        3,000          3,500
2003        3,000          3,500
2004        3,000          3,500
2005        4,000          4,500
2006        4,000          5,000
2007        4,000          5,000
2008        5,000          6,000

In fact, the Barefields, not fans of the tax package, are attracted to the retirement savings feature. With approximately $400,000 currently socked away in investment vehicles, they plan to make considerable donations to their retirement accounts.

In viewing the potential, Largie asserts: "We have a lot of clients--particularly affluent and wealthy individuals--who want to make a bigger contribution here but can't do it now. [On the flip side], this will be a big plus for African Americans because, in general, we need to save more for things like retirement."

The new law should make such matters less taxing.