You may be aware that if you filed a 2000 tax return this past April, the federal government late this summer will send you a rebate check equivalent to five percent of your 2000 taxable income, up to $300 for an individual and $600 for a couple filing jointly.

But these rebate checks are just the beginning. The tax relief act of 2001 includes provisions that could impact your financial security, from college savings to retirement planning.

The act provides many tax benefits to individuals, including:
• Education savings incentives
• Tax rate reductions
• Increased IRA contribution limits
• Increased contribution limits on 401(k)s and

other employer -sponsored retirement plans
• Increased child tax credit
• Marriage penalty relief
• Reduced estate tax rates

Retirement Planning

For the first time since 1981, the contribution limit for an Individual Retirement Account (IRA) is changing. Beginning in 2002, you can make a $3,000 contribution (up from $2,000) to your Roth or traditional IRA. That figure will increase incrementally until 2008, when the annual IRA contribution will be $5,000. After 2008, IRA contributions will be adjusted in $500 increments annually for inflation.

And, if you are 50 years old or older, you may be able to catch up contributions to your IRA. Increasing contributions now means more security during retirement. An eligible married couple could contribute $7,000 in 2002.

The new legislation will also increase the contributions limits on your 401(k) and other employer-sponsored retirement plans.

College Savings

Education IRAs have a new name — Coverdell education savings accounts — and a new annual contribution limit of $2,000, up from $500. By maximizing your annual contribution, you’ll make that college savings fund grow faster.

Qualified state tuition plans, or 529 plans, have become very popular, and that popularity just may grow. They offer tax deferred growth and significant contribution amounts. And, as a result of this new legislation, earnings that were previously taxed can be withdrawn tax-free to pay for higher education expenses beginning in 2002.

Small Business Owners

Another provision in this sweeping legislation is the incentives given to small business owners looking to start retirement plans for their employees. Business owners with 100 or fewer employees or less can receive a tax credit of up to $500 — during each of the plans first three years — when establishing a new, qualified retirement plan.

Additionally, the $1.35 billion tax cut plan offers an increase in the child credit, provides marriage penalty relief, eliminates the death tax by 2010, and provides for both short-and long-term economic growth.

To briefly recap, this new legislation helps Americans plan better for today and tomorrow. So remember to take advantage of all the available tax advantages this new plan offers.