Six Ways to Boost Your Savings by Making the Most of New Tax Law

I ususally don't read very carefully the newsletter Fidelity sends to me as I see it as an advertisement. But an article in today's E-News got my attention. It's about how to take advantage of the new tax law passed in August to boost savings. Below is the summary of the article, click here for details.

• Workplace Roth 401(k) and Roth 403(b) features become permanent: If your employer offers Roth 401(k) or Roth 403(b) feature in your plan, you can after-tax contributions to the plan directly with your paycheck deduction.
• Automatic enrollment eliminates savings inertia: Starting 2007, the new tax law allows employers to automatically enroll their employees in retirement plans, unless you opt out the program.
• Qualified plan rollovers to Roth IRAs simplified: Beginning in 2008, if you're eligible to make a Roth IRA conversion, the new law will allow you directly rollover your retirement plan, such as 401(k), 403(b), and governmental 457(b), into a Roth IRA.
• Income limits for Roth rollovers gone in 2010: For couples with more than $100,000 in modified adjusted gross income, they can wait till 2010 to convert an assets to Roth as starting in 2010, the income limit for Roth conversions will be eliminated.
• Guidelines for giving investment advice: Starting in 2007, you can seek professional investment advice for your retirement plans.
• Contribute more to your IRA: Starting from 2008, the annual IRA contribution limit increases to $5,000. After 2008, the $5,000 limit is indexed for inflation, which means your IRA contributions will be increased for cost of living changes.

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