November 2, 2001
Due to a new tax law, faculty and staff will be able to contribute more to the University's 403(b) retirement plan beginning Jan. 1.
The new bill is officially known as the Economic Growth and Tax Relief Reconciliation Act of 2001. This law includes the following improvements in employee contribution limits for calendar year 2002:
¥ All employees will be able to contribute 100 percent of their compensation up to $11,000 on a pre-tax basis.
¥ All employees age 50 and older will be able to contribute 100 percent of their compensation up to $12,000 on a pre-tax basis.
¥ Certain employees who have worked for the University for at least 15 years may be able to contribute an additional $3,000 over the above limits on a pre-tax basis. (Letters will be sent to those employees who qualify for this special catch-up contribution in February.)
Other key highlights of this law are:
¥ Employees will be able to consolidate retirement savings from different types of plans into the University's retirement plan as soon as the plan is amended to allow these rollovers. For example, if employees have savings from a previous employer in a 401(k) plan, they can transfer them to the University's 403(b) plan in 2002.
¥ Employees and couples with up to $25,000 and $50,000, respectively, in adjusted gross income, may be eligible for a valuable tax credit of up to $1,000 for contributing to the University's retirement plan.
¥ The employee contribution limits for years after 2002 will provide an additional catch-up advantage, as illustrated below:
"The new tax law not only provides the ability to contribute at an increased pace to the University's retirement plan beginning in 2002, it also includes several provisions that will make planning your retirement a little easier," said Tom Lauman, director of benefits.
"Contributing to the retirement plan helps you save on taxes while building additional income for a more secure financial future. The new tax law even offers a tax credit to encourage individuals within a certain income range to begin saving for retirement. If you are not contributing to the plan or if you wish to increase your contribution level, now is the time to take a closer look."
Employees recently should have received a personalized letter indicating their individual contribution limit for calendar year 2002 and a pamphlet discussing employee information meetings hosted by TIAA-CREF and Vanguard consultants on Nov. 13-16. The meetings will be an overview and discussion of the details of the new tax bill. The scheduled times and places for these sessions are included in the personalized letter and posted on human resources' Web site, https: //hr.wustl.edu.
For more information, please call your human resources benefits department.
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