Diverting Tax Refunds into Savings

A good sign:

More Refund Options: Hoping to encourage Americans to save more of their tax refunds, the Internal Revenue Service said it will change its rules to allow taxpayers who opt for direct deposit of their refunds to divide the money among up to three financial accounts.... The change will allows taxpayers to put some of their refunds into a checking account, and some into a saving or retirement account. "Split refunds should encourage saving, and we hope it will dampen demand for refund anticipation loans," said IRS Mark W. Everson. The program will take effect in January 2007.

The next step is to top-off refunds deposited in IRAs--10% for the first $1000, 5% for the second $1000, $3.3% for the third $1000--and see if that changes behavior...