In the latter part of 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act, known as EGTRRA. This act allowed your employer to improve the benefits in your 401k plan. The major changes that affect your plan are as follows:

Increase in Contribution Limits - The annual limit for contributions to your 401k plan will increase to $11,000 in 2002, and continuing increasing in $1,000 increments each year until reaching $15,000. Once the $15,000 level has been achieved, the limit will be adjusted for inflation in $500 increments.

Tax Year	401k Contribution Limits
	Under Age 50	Age 50 and Over
2001 (existing limits)	$10,500	$10,500
2002 (new limits)	$11,000	$12,000
2003	$12,000	$14,000
2004	$13,000	$16,000
2005	$14,000	$18,000
2006	$15,000	$20,000

Employee Catch-up Contributions - The intent of the catch-up contribution is to allow older employees to accelerate their retirement plan contribution levels as they become closer to retirement age. The maximum amount of employee elective deferrals you may contribute to the 401k plan for the year 2002 is $11,000. However, if you will attain age 50 before the close of the plan year, you will also be eligible to defer an additional $1,000 as a catch-up contribution. Similar to the above mentioned increases in contribution limits, the catch-up contribution limit will increase at $1,000 a year until reaching $5,000. Thereafter, the limit will adjust for inflation in increments of $500.

In order to take advantage of the catch-up contribution election, you must first defer and contribute the full $11,000 of your pay during the plan year. You should then supply a written request to the payroll department indicating you would like to have the additional $1,000 deducted from your pay and deposited into your 401k account. You will not receive a matching contribution on your catch-up contribution.

Tax Credit for Low and Middle Income Savers - For 2002, the new tax law provides a nonrefundable tax credit (a direct offset against tax owed by you) for a portion of contributions made to a 401k plan. This credit is not available to full-time students or dependents claimed on another's return.

The maximum annual contribution eligible for the credit is $2,000. The credit is allowed against your Adjusted Gross Income (AGI) and is in addition to any deduction or exclusion that otherwise applies to the contribution. The credit percentage rate ranges from 0% to 50% (see table below):

Credit Rate	Joint Filer AGI	Head of Household AGI	Single/Other AGI
50%	$0-30,000	$0-22,500	$0-15,000
20%	$30,001-32,500	$22,501-24,375	$15,001-16,250
10%	$32,501-50,000	$24,376-37,500	$16,251-25,000
0%	Over $50,000	Over $37,500	Over $25,000

Here is an example to illustrate the above chart: John is married, files a joint return, and has a joint AGI of $32,000 for 2002. In 2002, he defers $1,500 of his income to the Company's 401k plan. The $1,500 is excluded from his gross income for 2002. Under the new law, he can also take a tax credit against his federal tax for 20% of his contribution or $300.

You need to remember, however, the credit is reduced in certain situations. The tax credit is reduced by the amount of taxable distributions from a qualified plan received by the participant or his/her spouse:

• During the current tax year;
• During the two years before the credit is being claimed; or
• During the period from the end of the current tax year and before the due date of the taxpayer's return for the year.

You should consult your tax advisor about how this could impact you personally.

If you are not participating in the 401k plan, this is another reason you should consider doing so. You can substantially increase your savings for retirement and save on the taxes you currently owe.