Some 58% of respondents to a poll by CIGNA Retirement & Investment Services said they didn’t know about the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) tax benefit provisions and haven’t taken advantage of them. A scant 7% pronounced themselves “extremely” aware of EGTRRA’s raised limits for retirement savers.
And perhaps that isn’t a surprising result in view of another Cigna survey conducted last year. That survey found that while workers were viewed as unknowledgeable about the new laws – plan sponsors had done little in the way of promoting that awareness.
Same Time, Next Year?
Half of those responding to the more recent survey say they had no plans to make use of the EGTRRA provisions while about one in ten said they would do so in 2003.
Americans similarly haven’t flocked to EGTRRA’s “catch-up” provisions, which allow those older than 50 to set aside an additional $1,000 in 2002 into their retirement accounts. CIGNA found that a mere 10% of respondents said they had taken advantage of the catch-up provision. The measure was designed to let older workers, especially women, catch up with savings foregone during their younger and child-bearing years.
Future Tax Benefits
Some 8% said they were not eligible to participate in a retirement plan while 10% said they didn’t know what they would do.
One explanation for the tepid reaction to EGTRRA is that investors apparently aren’t familiar with it. Almost eight in 10 respondents or 78% said they don’t understand the changes.
Of the 78%, 42% don’t have a clue about the new law, 36% had some understanding, and a scant 12% said they knew the law “extremely well.
Finally, about 40% of those polled said they were concerned about the safety of their retirement assets in the wake of the Enron debacle and other business failures.
The ‘Tax Time Temperature Check’ survey was commissioned by CIGNA Retirement & Investment Services and carried out from March 25 through March 27, 2002. Respondents consisted of 1,000 consumers aged 18 and older.