Survey: Employers Slow To Adopt EGTRRA Changes

By Staff Writer

July 23, 2002 at 08:00 PM

Share & Print

NU Online News Service, July 23, 12:47 p.m. – Employers have been slow to take advantage of the new, generous retirement tax provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001, according to results of an informal survey conducted by Diversified Investment Advisors Inc., Purchase, N.Y.

The investment firm surveyed 200 employers with at least 100 employees and found that only 47% had changed their retirement savings plans to take advantage of the new EGTRRA rules.

EGTRRA, enacted in June 2001, creates a tax credit for lower-income participants, establishes special rules that help participants over age 50 "catch up" on contributions that they might have skipped in the past, and lets retirement plans accept asset "rollovers" from other types of retirement plans.

Seventy-one percent of the survey participants say the tax credit for low-income participants has had some effect on plan participation, and 18% say the tax credit has had a "major effect," Diversified reports.

Plan sponsors told Diversified an average of 34% of their workers are eligible for the tax credit.

Eighty-seven percent of the plans that have changed in response to EGTRRA have adopted the catch-up provisions for participants over age 50, and 83% have adopted provisions that permit plans to accept rollovers from other types of plans, Diversified says.

NOT FOR REPRINT