Let’s take a look at a beneficial change enacted by Congress as a part of the 2001 Tax Relief Act, taking effect in the 2002 tax year.

The change addresses the fact that most folks are not saving at an adequate rate and duration to provide for a comfortable retirement. The message is loud and clear. Given that traditional company pension plans are quickly going the way of the horse and buggy and Social Security benefits are likely to continue to become more restrictive for future retirees, most of us must now take the responsibility to fund the major portion of our retirements.

In an attempt to help, Congress dramatically boosted the regular contribution limits to employer retirement plans and individual retirement accounts (IRAs), including Roth IRAs. Additionally, Congress threw in a bonus for those age 50 and over, letting us put away even more money through a so-called "catch-up" provision.

Yet few are taking advantage of the opportunities. Mutual funds and research groups report that most workers are failing to take advantage of even the old limits, let alone the new ones.

Several reasons, beyond a lack of means, may account for such shortfalls in saving for retirement:

• not realizing how much is needed for retirement
• thinking Social Security is enough
• thinking "I don’t have the money" while considerable dollars seem to "evaporate" by not developing and using a disciplined household budgeting process
• living beyond one’s means, getting caught in a downward credit-card-debt spiral
• muddling through alone, rather than seeking out and partnering with a trusted financial planner

These issues are not focused on any one income bracket. People across all economic strata are dealing with the same challenges.

For those who are or should be contributing to retirement accounts - particularly those age 50 and over - here’s a refresher on the new contribution limits:

The regular contribution limit for IRAs, both Roth and traditional, is now $3,000 ~~ up from $2,000 in 2001. The limit climbs to $4,000 in 2005, $5,000 in 2008.

On top of these higher limits, workers age 50 and over by the end of the tax year can kick in an extra $500. This "catch-up" amount doubles to $1,000 starting in 2006.

Workers who participate in a 401(k), 403(b), or salary reduction simplified employee pension (SARSEP) plan can contribute $12,000 in 2003, with a qualified additional "catch-up" amount of $2,000.

The maximum regular contribution limit for the employer-sponsored 401(k), 403(b) and SARSEP plans then increases $1,000 a year, topping out at $15,000 in 2006. The "catch-up" limit also rises $1,000 a year to a maximum of $5,000 in 2006. That means a worker age 50 or over could put away up to $20,000 per year starting in 2006!

Participants in a savings incentive match plan for employees (SIMPLE), which includes those who are self-employed, will also see their contribution limits rise, from $8,000 in 2003 to $9,000 in 2004 to $10,000 in 2005. The "catch-up" limits are $1,000 for 2003 and increase in $500 increments annually to reach $2,500 by 2006.

Note that contributions to all of the above plans, with the exception of the Roth IRA, are generally tax-deductible in the tax year associated with the contribution. That provides a nice upfront tax deduction plus tax-deferred earnings and growth for the time the money remains in the plan - which can be for dozens of years when saving for retirement, or even longer if inherited by a beneficiary.

And, even though the Roth IRA does not offer the upfront deduction for contributions, all qualified distributions from the Roth are completely tax-free.

Note also that contributions can only be made to these plans based on earned (from employment) income. Non-working or low-income spouses can make IRA contributions, however, based on the earned income of the higher-income working spouse.

A number of other rules apply to contributions. For example, deductible IRA contributions are phased out at particular income levels if one or both spouses are active participants in an employer retirement plan. Roth IRA contributions are phased out at higher income levels, regardless of any such participation.