Major changes were made in the way we invest last year, from increasing limits in 401(k)s and IRAs to expanding the benefits of the newly named Coverdell Education Savings Accounts.

        Still, legislators in Washington are eying more changes in 2002.

        As they look now, there's no guarantee they'll be as user-friendly as the new rules allowing greater flexibility on retirement account rollovers — or as head-spinningly confusing as eliminating the stepped-up cost basis on certain parts of inherited estates exceeding certain limits. A rundown:

        • Retirement Security Advice Act: If approved, it would lift restrictions on employers from helping their workers get financial advice.

        Hometown Congressman John Boehner sponsored the bill, which he said addresses potential conflicts of interest while still helping American workers.

        “I do think that both investment education and investment advice are sorely needed in the workplace,” the West Chester Republican said in this column in November. “What has happened over the last 18 months in the market has helped illustrate the problems.”

        The bill passed the House in November and was referred to the Senate finance committee.

        • Mutual fund shareholder tax relief: Rep. Jim Saxton, R-N.J., introduced legislation in January 2001 that would allow mutual fund investors to defer up to $3,000 in taxes — $6,000 for couples — if they automatically reinvest capital gains distributions directly back into their funds.

        Funds don't pay taxes on their gains, but distribute the gains equally among the shareholders, no matter how long they're in the fund. Mr. Saxton's law would defer mutual fund capital gains taxes until the fund shares are sold.

        “Many tens of millions of middle-class investors would benefit from such a tax change, which would end the tax bias against these mutual fund shareholders and treat their capital gains essentially the same as those of common stocks,” Mr. Saxton said in a recent statement.

        The bill still is in its House commitee.

        • Boxer-Corzine Pension Protection and Diversification Act: Introduced in the wake of Enron's collapse wiping out its employees' retirement funds, this Senate bill would force 401(k) holders to be more diversified in their accounts.

        Co-sponsored by Democratic Sens. Barbara Boxer of California, and Jon Corzine of New Jersey, the bill would limit to 20 percent the investment employees can have in any one stock in their individual account plans. Employees could sell their employers' matching stock contribution after 90 days at most.

        “We know from experience that it is dangerous to put all your assets in one basket, so to speak,” Mr. Corzine, the former co-chairman and co-chief executive officer of Goldman Sachs, said in a statement announcing the bill. “The key to any retirement plan should be diversification. Anything else is bad financial planning.”

        The bill was referred to Senate committees when introduced in December.

        Contact Amy Higgins at 768-8373; ahiggins@enquirer.com; or 312 Elm St., Cincinnati 45202. She regrets that she cannot reply to all individual questions.
       

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