Americans could save as much as $39 billion this year in their IRA accounts, according to a report released by Fidelity Investments today. Thats nearly $8 billion more than they are expected to have put away for the 2001 tax year, the report said.
Fidelity said investors are increasingly taking advantage of new tax laws that went into effect in January. The new rules allow investors to put away more money for their retirement each year. "The new contribution limits have been in effect for just two months and already weve seen the average IRA contribution jump to $2,195 from $1,627, a 35% increase from last year at this time," said Dale Bearden, a senior VP at Fidelity Brokerage Company.
The new tax laws make it possible for those 49 and younger to put up to $3,000 into their IRAs, compared to the old limit of $2,000. In addition, those 50 and older can save as much as $3,500 using what has become known as a "catch-up" provision.
The report said that 70% of U.S. investors who use IRAs are likely to increase their contributions. And 79% of those under the age of 30 said they contribute regularly to their IRAs.
In addition, 64% of investors who are at least 50 years old said they would use the "catch-up" provision in their IRAs to increase their contributions and about half said they would put away the maximum amount.
The report was based on a survey of 1,210 adults.