Tax Law Changes for Qualified Retirement Plans and IRAs - 401k Plans

Major tax law changes were enacted in 2001 and 2003 (and later extended) affecting tax rates on capital gains and dividends as well as to regulations governing employer-sponsored retirement plans. Those include 401(k), 403(b), profit-sharing, money purchase, defined benefit, SEP and SIMPLE plans and IRAs.

Highlights

Reduced tax rates on long-term capital gains and qualified dividend income through 2010
Increased annual contribution limits and "catch up" provisions for qualified retirement plans
Tax credits for some small employers who set up qualified retirement plans
Limited relief from early withdrawal penalties from qualified retirement plans

IRA Rollovers
Consult our list of answers to frequently asked questions about IRA rollovers to help clients organize their retirement planning.

Stay Tuned

Both the 2001 and 2003 tax acts include "sunset" provisions that technically make the current rates temporary in nature. Congress is likely to address those "sunset" rules in the future, but it is impossible to predict how and when that will happen. No matter what the future holds, though, the potential for further changes in the law should not deter you from taking advantage of benefits currently available.

Circular 230 Notice: The information contained in this communication (including any attachments) is not intended to (and cannot) be used by anyone to avoid penalties under the Internal Revenue Code. This communication supports the promotion and marketing of the products or matters discussed. Individuals should seek independent tax advice based on their own circumstances.

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