HOW WOULD YOU LIKE TO BOOST YOUR RETIREMENT SAVINGS?

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

Or how about getting a 15 percent tax break? You may be in luck due to legislation passed in August 1996.

Spousal IRA contribution

The annual maximum IRA contribution for married couples with a nonworking spouse will increase from $2,250 to $4,000 (no more than $2,000 per individual) beginning Jan. 1, 1997.

Repeal of five-year income averaging

Who does this affect?

Eligible individuals who may need immediate income from their company retirement plan's lump-sum distributions. To be eligible for income averaging, you must be 59 1/2 years old and have been a plan participant for at least five years, excluding the year of distribution. You also must income average the entire distribution within one calendar year.

What is it?

Five-year income averaging is a special tax treatment that allows eligible individuals to calculate taxes on their lump sum as if it were distributed over five years. The taxes, however, are still paid in full for the year the distribution is received.

When will it take effect?

Jan. 1, 2000

What should I do?

Talk to your tax adviser and investment representative to determine if income averaging is appropriate for you. If you cannot or choose not to income average, you can keep the money from your distribution, but you will have to pay ordinary income taxes, and 20 percent will be withheld for federal income tax purposes. If you don't need the money now, you can roll it directly into an IRA.

Temporary repeal of excise distribution tax

Who does this affect?

Individuals who take large distributions from their IRAs or qualified retirement plans.

What is it?

A 15 percent tax on IRA distributions greater than $155,000 ($775,000 for lump-sum distributions).

When will it take effect?

Repealed for 1997, 1998 and 1999

What should I do?

Consult your tax professional to find out if you qualify.

What are the benefits?

You may need an alternate source of income to assist with the payment of medical or health expenses. Who does this affect?

Employees who work beyond age 70 1/2 and are not a 5 percent or more owner of their company.

How does it work?

Normally, you must take distributions by April 1 of the year following your 70 1/2 birthday. Under the new law, you are not required to take a distribution from a qualified retirement plan until April 1 of the year following the year of retirement. This deferral does not apply to IRAs.

When will it take effect?

Jan. 1, 1997

What should I do?

Consider keeping the money in your retirement plan for continued tax deferral.

What are the benefits?

If you don't need income, you may want to take advantage of another year of tax-deferred growth. Consult your tax professional or investment representative to determine what's best for your situation.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.