New Tax Law Helps 457 Plan Participants Sacramento Bee (09/16/01) Vol. 10, No. 9 p.E3; Hanson, Scott
The Sacramento Bee reports that the Economic Growth and Tax Reconciliation Act, signed by President Bush in June, brings significant changes to retirement savings. Namely, contributions to 457 plans no longer limit the contributions that can be made to such programs as 401(k)s. So, starting in 2002, a state employee will be able to contribute the maximum amount to both the 457 and the 401(k). For workers age 50 and older, additional contributions up to $1,000 can be made under a new catch-up provision. Because contributions to both 457s and 401(k)s reduce one's taxable wages, writes the Sacramento Bee's Scott Hanson, participation in both plans may provide a worker with the opportunity to make a tax-deductible IRA contribution.