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We're back at you this week with more some of the details of the Pension Protection Act 2006. This past weekend, we read through the 900-page bill several times and arrived at the following conclusions:
- Comic books are waaaaay more interesting.
- Pity the spouse of the individual who writes this stuff. (We can't bear to think of what dinner-table conversation is like.)
Anyway, there are some pretty cool provisions that can significantly improve the size of your retirement nest egg. For instance:
- The annual contribution limit on 401(k)s will remain at $15,000 plus annual cost-of-living adjustments.
- Workers over 50 can contribute up to $20,000 per year plus cost-of-living adjustments to their 401(k) accounts.
- Withdrawals from state-sponsored 529 college savings plans will continue to be tax free.
- Companies are encouraged to automatically enroll eligible employees in 401(k) plans and increase contributions every year. Employees can, of course, opt not to participate. (We'll share more on this in a future newsletter.)
Should you have any questions, please don't hesitate to contact
your CPA. (We're off to catch up on our overdue Wonder Twins reading.)
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