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5 ways your retirement can benefit from the new tax laws by Daniel Deviney Manager/ Retirement Services |
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President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001 into
law on June 7, 2001. The law’s changes to individual retirement accounts (IRAs), employer-sponsored
retirement plans and education savings plans provide an even greater incentive for
investment and savings. Changes to contribution limits, distribution provisions and rollover
options are a few of the aspects of these plans that are improving.
It’s important to remember that passage of the law is just part of the equation. We as investors trying to save for retirement and our children’s education must do our part to take advantage of these changes. Five ways U.S. Global Investors can help you benefit from the new tax law: 1) Invest your tax rebate check Most taxpayers will be receiving a tax rebate check over the next few months. This is a great opportunity to use unanticipated funds to help fund your retirement by contributing the amount of the rebate check to your U.S. Global IRA. Or, consider funding your child’s U. S. Global Education IRA. 2) Increase the dollar amount of your automatic investment plan into your IRA Beginning in January 2002, you may be eligible to increase your traditional or Roth IRA ABC Investment Plan® contribution from $166 and change each month to $250 per month. This will help you take advantage of the increased traditional and Roth IRA contribution limits from the current $2,000 to $3,000 starting in 2002. 3) Rollover your former employer’s retirement plan to an IRA If you have after-tax contributions in your former employer’s retirement plan, starting in 2002 you can roll over these with the rest of the qualified retirement plan assets to a U.S. Global Investors Rollover IRA. This will allow you to consolidate your assets into an IRA and maintain the tax-deferred status of your retirement assets. 4) Establish a retirement plan through your business Whether you are self-employed or the owner of a small business, the new tax law creates an excellent opportunity for you to establish and fund a retirement plan. The contribution limit for the Simplified Employee Pension-IRA (SEP-IRA) is increasing from $25,500 for 2001 to 15% of the first $200,000 in compensation, or $30,000, for tax year 2002. The salary deferral contribution limits for the Savings Incentive Match Plan for Employees (SIMPLE) IRA through your small business will increase from $6,500 for 2001 to $7,000 for 2002 and will continue to increase in increments up to $10,000 by 2005. 5) Use tax savings from changes in tax brackets to increase contributions to your IRA If you are happy about the increased contribution limit to IRAs and small business retirement plans but are not sure your budget will allow you to increase your contributions, think again. The new tax law also makes changes to the income tax rates which, depending on your personal tax situation, may free up enough cash to help you fund your IRA up to the new $3,000 limit which begins in January 2002. In reviewing the new tax laws, the most important thing to remember is to TAKE ACTION…. it’s your retirement! See our website at www.usfunds.com or call 1-800-US-FUNDS for more details on changes to retirement and education savings enacted by the new tax law. |
| The information in this article merely provides a summary of our understanding of some of the tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation. Neither U.S. Global Investors nor any of its representatives may give legal or tax advice. |
