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January 23, 2002 at 07:00 PM
As 401(k) plans become ever more important in retirement planning, it pays to know all the options available to maximize the money that will be available for longer and longer lifespans. Since surveys have shown so many people to be clueless about how much they’ll need to support themselves in those years after working, advisors must try to boost awareness–in themselves and their clients–of all the possibilities open for retirement planning.
According to Catherine Collinson, senior VP at Transamerica Retirement Services, advisors and their clients should be aware of the following breaks for 401(k)s provided by EGTRRA, the Economic Growth and Tax Relief Reconciliation Act of 2001.
1. Increased deferral, contribution, and benefit limits allow both employers and individuals to save more in 2002.
2. Catch-up provisions beginning this year allow employees who are 50-years-old and up to contribute extra amounts. Provisions increase by $1,000 per year until 2006.
