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NEW YEAR TAX TIP: USE YOUR 401(k) OPPORTUNITIES

January 08, 2004

Only 51 weeks left for your 2004 tax planning!

Sure, you are just starting to get your 2003 1099s in the mail, but if you are serious about your income taxes, now is the time to take action.

For most taxpayers, the easiest way to reduce taxes is to increase their 401(k) deferral from each paycheck. Even so, about 20% of eligible employees have nothing in their 401(k) account, according to one recent report. Many employers match at least part of each employee's 401(k) deferral. If you don't at least defer what the employer will match, you both

-increase your taxes, while

-turning down free money from your boss.

Two poor choices in one!

Even if the boss doesn't match your 401(k) contribution, the IRS might. Lower-income taxpayers can get a credit for part of their 401(k) deferral.

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