Archive for the ‘Retirement Plan’ Category

Business Leaders Were Reading What?!

Monday, December 28th, 2015

2015′s Most Popular Blog Posts

Best Business Blog Posts 2015- Ohio CPA FirmIf you take a moment to scroll through the list of categories, authors and archives on the right-hand side of this page, it’s pretty clear to see just how active Rea’s team of experts are when it comes to providing leaders in the business community with accurate, timely and easy to digest content. We are fortunate to have so much experience and expertise on our staff, and their eagerness to serve you better has allowed us to maintain a bi-weekly electronic newsletter, a quarterly print newsletter, three blogs and a handful of electronic segment specific newsletters. That’s a lot of content – but we are not even thinking about slowing down! I hope you hang around my lily pad for awhile. I’m pretty sure you’ll find a lot of great little tidbits to read about in 2016 too. Until then, I want to invite you to take a look at some of our most popular blog posts and articles. And, if you haven’t already, take a moment to look through the newsletters we offer and sign up to have news, tips and valuable information delivered to your inbox all year long!

Top 5 Dear Drebit Posts In 2015

Dear Drebit is updated every few days with timely information and advice. In addition to covering current trends and issues, readers are also invited to ask financial and business questions on the page, which will be answered by one of Rea’s industry experts. Here are last year’s top posts:

  1. How Far Back Can The IRS Go For Auditing?
  2. Theft Safeguards To Cause Tax Return Delays In Ohio
  3. Six Things 401K Plan Sponsors Need To Do Now
  4. New Adjustments Will Affect Your 2015 Tax Return
  5. File Faster With This Tax Prep Checklist

5 Most Popular Posts On Brushing Up Blog

Brushing Up: The Dental Accounting Blog features a variety of finance and business advice specifically tailored to dental professionals. From purchasing a practice, knowing what to expect from a career in dentistry and hiring the best staff for your practice to general accounting advice, tips for cashing out at retirement and tax tips, this blog is a valuable tool for dental professionals who are looking for ways to secure long-term success in their career. The year’s most-read blog posts are:

  1. How Sales & Use Taxes Apply To Ohio Dental Practices
  2. 6 QuickBooks Tips Every Dentist Should Know
  3. Could A Crown Be A Tax Deduction?
  4. 10 Year-End Tax Planning Strategies For Dentists
  5. Buying An Established Dental Practice? Master The Changeover 

Cultivating Your Business Readers Choose Top 5 2015 Posts

The Cultivating Your Business blog is a resource provided to clients and visitors on the firm’s Know & Grow website. Updated a few times per month, business owners have access to advice, tips and general insight into how to grow their businesses and realize an optimal return on their investment upon retirement. Here are the top blog posts from last year:

  1. Bad Buy-Sell Agreement Claims Another Family Dinner
  2. Will Your Summer Reading List Make You A Better Business Owner?
  3. WARNING: Free Business Valuation Offer Is Unbelievable
  4. Uncover The Secrets To Cashing In On Your Business
  5. How To Communicate To Your Employees That You’re Selling Your Business

Top 10 Articles In Rea’s Library In 2015

In addition to our blogs, the Rea team publishes a lot of other valuable content in print and electronic newsletters. We make sure that all these articles are easily accessible in our article library. This is where you will find many of our niche pieces as well as a lot of general accounting tips and insights. Take a look at some of our most popular posts over the last year.

  1. What Is The Mid-Quarter Convention?
  2. Dangers Of Paying Under The Table
  3. Revenue Recognition Changes Are Coming
  4. Football Ticket Deductions
  5. 401K Loans And Keeping Your Plan In Compliance
  6. Take Control Of Your Vendor Master In Nine Steps
  7. Why Your Traditional Employee Management Method Is Failing
  8. The Birth Of The Taxpayer’s Estate
  9. Parting Is Such Sweet Sorrow: But What About Your 401K?
  10. Purchasing Cards Compromise Business Security
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Move Over Santa, This List Is What Business Leaders are Checking

Thursday, December 3rd, 2015

Top 5 Dear Drebit Post for the Month of November

November is over and the Holiday season is in full swing. But even though we are busy practicing our caroling and searching for the best online bargains, we still have time to share the latest in business and financial news.

From filling you in about some of the topics we have covered in our weekly podcast to providing you with information and updates about unclaimed funds in Ohio and the Affordable Care Act – we were providing you with posts designed to help protect your finances, your identity and so much more.

Take a look to find out what our top 5 blog posts were in November and read up on anything you may have missed.

  1. How Do I Avoid Obamacare Penalties? The Affordable Care Act (ACA) has put a lot of stress on business owners over the last couple years, and 2016 will be no exception. However, if you look closely, you might be able to uncover areas of opportunity. There are three points all business owners should know to avoid penalties, read on to find out what they are.
  2. WARNING: Tis The Season To Practice Safe Online Shopping Habits — While it may be the most wonderful time of the year, cyber criminals are looking for ways to stuff their own stockings – at your expense. The holiday season is also a busy time of the year for scammers because, in general, more money is being spent and more people are clicking through cyberspace for the best deals and tracking their purchases. KnowBe4 recently published a blog about the top five scams shoppers should be on the lookout for, and we wanted to pass these on to our readers. Consider the following information to be an early gift from us to you, and hopefully your bank account can welcome the New Year unscathed.
  3. File and Suspend Strategy Suspended Deciding when to claim your Social Security benefits is often one of the most significant financial decisions older Americans must make today because, for many, Social Security benefits make up a substantial portion of their retirement income. Unfortunately, Congress recently passed legislation that will put an end to two popular strategies being used to maximize benefits married couples receive in their golden years.
  4. Do You Need to Send an Annual Notice to Your 401k Participants?As we begin the last quarter of the year, if your company sponsors a calendar year 401k plan, don’t forget about participant notice requirements.  They must be furnished by December 1 and may impact the operation or qualification of your plan.  Here is a checklist that may be helpful, but check with us if you are not certain which of these requirements apply to your plan.
  5. New Payment Option Available To Ohio Pass Through Entities Do you currently enjoy the benefits associated with owning a pass through entity (PTE) in Ohio, including better tax treatment and limited liability protection? Well, earlier this month the Department of Taxation announced another little perk – online payments! According to the release, the Treasurer of Ohio is now accepting tax payments per its Electronic Funds Transfer (EFT) program on its website.

We hope you enjoy the top five posts from November. We are always updating this page, so be sure to subscribe to Dear Drebit – or you can subscribe to our bi-weekly electronic newsletter – and never miss the critical information we provide to readers. You are also welcome to ask us a specific question about, well … just about anything finance or business related and one of our subject matter experts will provide you with a response. Just scroll up to the top of the page and fill out the form on the top, right corner.

Finally, don’t forget, you that you can always email Rea & Associates to have an in depth conversation about your existing personal or professional challenges. Our CPAs and business advisors are always happy to speak with you.

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File and Suspend Strategy Suspended

Wednesday, November 18th, 2015
File Suspend Strategy - Ohio CPA Firm

President Barack Obama signed legislation on Nov. 2 to put an end to the file and suspend strategy. But, that doesn’t necessarily mean it’s too late to act. There is a six-month window of opportunity, as long as both spouses were born on or before April 30, 1950. Keep in mind that you are up against a May 1, 2016, deadline.

Deciding when to claim your Social Security benefits is often one of the most significant financial decisions older Americans must make today because, for many, Social Security benefits make up a substantial portion of their retirement income. Unfortunately, Congress recently passed legislation that will put an end to two popular strategies being used to maximize benefits married couples receive in their golden years.

Read Also: Retirement Is Knocking … Are You Ready To Answer The Door?

The strategies that are scheduled to be phased out are commonly known as “File and Suspend” and the Restricted Application for Spousal Benefits. These strategies have made it possible for couples to delay laying claim to their individual benefits based on their earnings while still claiming a spousal benefit based on the other’s earnings – as long as both are 66 or older.

How Does File And Suspend Work?

To receive the spousal benefit, one individual would file for their Social Security benefits – then immediately suspend them. The other spouse would then file a restricted application to collect only the spousal benefit rather than the benefit they earned as an individual, even if their individual would have been higher. By employing this strategy, both could increase their earned benefits by taking advantage of the option to delay retirement credits, which would increase their earned benefit by up to 8 percent for each year the benefit is delayed until the individual reaches 70 years of age.

Is It Too Late To Take Advantage Of This Strategy?

President Barack Obama signed legislation on Nov. 2 to put an end to the file and suspend strategy. But, that doesn’t necessarily mean it’s too late to act. There is a six-month window of opportunity, as long as both spouses were born on or before April 30, 1950. Keep in mind that you are up against a May 1, 2016, deadline.

What About The Couples Who Are Already Receiving Benefits?

Fortunately, the couples already using these strategies will be grandfathered in under the new law and will not be asked to pay back any of the benefits they have received to date. Furthermore, they will continue to receive the benefits they have already been granted. The new law will not impact their current Social Security income, which is why it’s so important for eligible couples to take advantage of this 6-month window.

What Happens After The 6-Month Window Closes?

Moving forward, under the new law, individuals will still have the ability to suspend their benefits, but the Social Security Administration will not allow spousal or dependent child benefits based on the earnings of someone who has suspended their own benefits. In other words, to claim a spousal benefit, the earned benefits have to be paid out as well.

When filing for retirement benefits (other than with a restricted application), spouses will effectively claim their earned benefit and their spousal benefit. They will then receive the greater amount.

Fortunately, there are still opportunities to maximize your Social Security benefits. A financial advisor can you help navigate the terrain. There are also free tools available to help you find out how much you can expect to collect from Social Security when you finally decide to claim the benefit. The Social Security calculator is located here. You can also visit the Social Security website to view your Social Security Account Statement. To discover more retirement strategies, check out one of the articles below or email Rea & Associates and ask to speak with a retirement planning expert.

By David Shallenberger, CPA (Wooster office)

Check out these articles to learn more about the importance of planning for your retirement:

Planning For Uncertainty In Retirement

Five Financial Considerations For Every Age Group

How Can I Make The Most Of My Retirement?

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Why would I want to listen to a podcast from an accounting firm?

Wednesday, October 7th, 2015
Unsuitable Podcast - Ohio CPA Firm

Mark Van Benschoten (left) talks with Doug Feller, a principal and financial advisor with Investment Partners, talks about wealth enhancement and investment tactics for an upcoming episode of Unsuitable on Rea Radio, a new financial and business advisory podcast from Rea & Associates. Click here to learn more about Unsuitable on Rea Radio.

I know what you’re thinking – listening to a podcast from an accounting firm is probably about as entertaining and insightful as watching paint dry. But Unsuitable on Rea Radio isn’t your typical accounting podcast, and here’s why.

Real, Simple Solutions

Who doesn’t like a good story? What about one that leaves you with greater insight into the financial wellness of your own company? And if you had a better idea of how other successful entrepreneurs manage their wealth, wouldn’t you try to follow their lead?

The professionals at Rea have seen a lot over the last several decades and they are willing to open the curtain just enough to provide you with the information to forge your own success. And on Unsuitable, they do just that.

An Effective Kick In The Pants

Unsuitable offers a little something for everybody and I am confident that this is a show that will not only help provide you with more clarity, but will motivate you to take the next step as a professional and as a business leader.

Look at what has already been discussed in the first four episodes:

And this is just the beginning. Look for episodes highlighting investment strategies, Affordable Care Act compliance and retirement preparedness – just to name a few.

Accountants Like To Laugh Too

This may come as a surprise to many since those in the accounting profession tend to be thought of as dry, stuffy, number-crunching fanatics, but that’s just not true – well, most of the time. The Rea team consists of some pretty humorous, outgoing folks and I think that the diverse sense of humor of our team shines through. Mark Van Benschoten, the host of the show, helps a lot, of course. He does an excellent job addressing each guest and makes them feel comfortable … then the show gets really good.

Just The Right Length

Our firm has 11 offices throughout Ohio, which means I do a lot of driving. When I’m on the road I like to listen to podcasts – and there are a lot of them out there! What I really like about Unsuitable, is that it’s long enough to be really informative and wraps up nicely before it reaches the point where I am wishing it would end. In fact, when it does end I find myself wanting to start the next one. Mark and his guests get right to the point of the show, provide examples and offer hard-hitting advice in a concise, enjoyable format – all while having a great time and avoiding stuffy accounting jargon.

Go to www.reacpa.com/podcast now and start listening or subscribe to Unsuitable on Rea Radio on iTunes or SoundCloud. I also want to encourage you to use #ReaRadio to join the conversation on Twitter and Facebook.

By Lee Beall, CPA (Dublin office)

Click here and start listening to Unsuitable on Rea Radio now!

 

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Don’t Like Your Retirement Plan Design?

Friday, August 28th, 2015

Time’s Running Out to Establish, Alter Your Plan

Time's Running Out to Establish, Alter Your Retirement Plan Design - Rea & Associates - Ohio CPA Firm

If you haven’t made time to speak with a retirement plan specialist recently to make sure that your retirement plan still addresses your company’s unique needs, there’s a chance you are missing out on a more cost-effective solution. Your retirement plan team can quickly run some illustrative numbers to compare your SEP against a 401(k) plan to reveal whether a better option exists for your business.

Your SIMPLE IRA or Safe Harbor 401(k) plan isn’t going to establish or change itself and if you want yours to be effective in 2015, you need to know that an Oct. 1 deadline is looming – as though you really needed something else to worry about. Fortunately, a retirement plan expert will not only help you meet your deadline, they can make sure your plan is optimized to ensure maximum results.

If you’ve never taken the time to really understand how valuable your retirement plan can be for your business, this is your chance. Read on to learn six other reasons why you might want to pick up the phone and schedule a meeting with a retirement plan expert today.

Read: Why You Should Review Your Retirement Plan Documents Now

Six Reasons To Call Your Retirement Plan Administrator

  1. You have no retirement plan at all. Offering your employees a retirement plan is more than just a great recruitment tool; it’s an excellent way to make your company’s profits go further. Read Retirement Plan Design: One Size Does Not Fit All to learn more about how a retirement plan might help bolster your business’s growth strategy.
  2. You have a SEP Plan with more than two employees. If you haven’t made time to speak with a retirement plan specialist recently to make sure that your retirement plan still addresses your company’s unique needs, there’s a chance you are missing out on a more cost-effective solution. Your retirement plan team can quickly run some illustrative numbers to compare your SEP against a 401(k) plan to reveal whether a better option exists for your business.
  3. You are a business owner who is able to maximize deferrals every year with a SIMPLE IRA. If so, it may be time to consider a Safe Harbor 401(k) plan in 2016 for additional tax deferral. For more insight into how this option can work for you, read Safe Harbor 401(k) Plans Provide Smooth Sailing.
  4. You have a 401(k) but receive corrective distributions every year. You may be missing out on a retirement plan design that can not only alleviate this problem, but can help you maximize the benefits your business receives for being active participants in your employees’ retirement strategy. Access Safe Harbor FAQ here.
  5. You maximize deferrals every year under your Safe Harbor 401(k) plan but offer no profit sharing option. A better plan design for business owners in this situation might be to maximize profit sharing contributions while limiting the amount that has to be provided to employees. For example, cross-tested profit sharing plans may save you money if your company’s staff consists primarily of younger employees. A retirement plan expert can help you identify a plan that helps address the uniqueness of your business.
  6. You are maxing out your profit sharing plan every year. It’s time to add a cash balance option to your existing retirement plan. This is a great option for business owners in this position, because it allows for much higher employer contribution deductibles for owners. Click here to learn more about how these plans can help your business.

Take control of your retirement plan today. Email a Rea & Associates retirement plan expert to find out what you have been missing.

By Steve Renner, QKA (New Philadelphia office)

Check out these articles for more helpful retirement plan advice specifically for small and midsize businesses.

Like Losing Your Wallet – Only Worse
Retirement Roulette
The ‘Van Halen’ Philosophy of Retirement Plan Compliance

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Like Losing Your Wallet – Only Worse

Friday, July 31st, 2015
Retirement Plan Returns- Ohio CPA Firm

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune.

For most of us, misplacing our keys, losing sight of our shoes and occasionally forgetting to pay the phone bill on time is not a catastrophic phenomenon. It happens; and most likely we will freak out for a minute, find what we were looking for and move on – only to repeat our dysfunctional routine countless times over the course of a lifetime. Forgetting to file your retirement plan returns on the other hand … well, let’s just say that’s typically not a stress-free event.

Read Also: Do You Know What Your Retirement Plan Is Costing You?

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns (Form 5500-EZ) are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune. To be more precise, in years past, those who failed to meet their filing obligation could face a penalty totaling up to $15,000 per return. Fortunately, the IRS recently announced that instead of facing such an extreme late fee, eligible business owners can take advantage of a “low-cost penalty relief program.”

How Much Would You Pay?

The relief initiative, which started as a one-year pilot program in 2014, was tremendously successful, resulting in the collection of about 12,000 late returns. Because of this success, the program secured it’s permanency in May of this year. According to the news release, the program allows eligible business owners and their spouses to file late returns and only pay a $500 penalty for each return submitted with a maximum of $1,500 per plan. Because the IRS caps the maximum penalty at $1,500, applicants are encouraged to include multiple late returns in a single submission.

Eligibility

The IRS says that businesses with plans that cover the owner or the business’s partners (depending on how the business is set up) and their spouses are eligible to take advantage of this low-cost plan. Complete information about the program can be found by clicking here.

Learn More

Remember, your return must be filed annually no later than the end of the seventh month following the close of your plan year. So, for example, if your plan is governed by the calendar-year, as most are, your 2014 return was due today (Friday, July 31, 2015). Did you fail to file your small business’s annual retirement plan returns? Would you like to find out if you qualify for this program? Email a retirement plan expert at Rea & Associates and take control of your IRS debt now.

By Andrea McLane, QKA (Dublin office)

Want to read more about the importance of Retirement Plan Compliance?
Check out these articles:

401(k) Loans and Keeping Your Plan In Compliance
Retirement Roulette
The ‘Van Halen Philosophy’ of Retirement Plan Compliance

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Retirement Plan Design: One Size Does Not Fit All

Monday, May 11th, 2015
Planning Ahead for Retirement Makes All The Difference - Rea & Associates - Ohio CPA Firm

When it comes to your retirement plan, planning ahead can mean the difference between sipping tropical drinks on a beach to taking on a part-time job at 75 to make ends meet. Is your retirement plan advisor working in your best interest?

Do your employees dream of spending their golden years on a sun-drenched beach, sipping tropical drinks from a coconut shell? Or do you think they’re looking forward to taking on a part-time job at age 70 to pay medical bills and their mortgage? Like you, they’re probably expecting an R&R-fueled retirement – but they need your help getting there.

Read Retirement Roulette

An employer-sponsored retirement plan is a great tool for business owners. Not only do retirement plans provide businesses with leverage when it comes to attracting and retaining a skilled workforce, employers that make contributions to their employee’s accounts are entitled to tax incentives – which gives you more control over your company’s cash flow.

From Business Strategy To Retirement Planning

Whether your company presently offers a retirement plan or is planning to beef up its benefits package, work with a retirement plan advisor who can review your options and identify the plan that best addresses your company’s unique challenges. You’ll need to:

  1. Identify The Primary Purpose Of Your Retirement Plan
    Will your retirement plan be used as a recruitment tool or as a tax shelter? While all plans accomplish a little of both, make sure your plan design meets your needs. For example, when a closely held business offers a retirement plan, its primary goal is to provide maximum retirement benefits and income tax deferral to the owners, while minimizing the cost of benefits to the employees. Incorporating a retirement plan into your existing benefit package is also an opportunity to diversify your assets away from the reach of creditors – making you less dependent on the value of your company to provide an income stream in retirement.
  2. Get To Know Your Team
    Does your company hire younger workers? Do you have an established workforce that will retire from your company? Do you have high turnover? What does your projected workforce growth look like? Your plan design should consider your demographic information – and promote the short- and long-term financial wellness of your employees and your business.
  3. Put Your Own Retirement Goals In Perspective
    Your employees aren’t the only ones looking at your employer-sponsored retirement plan as a dependable source of retirement income. You and other key employees will likely use the plan as well. That’s why, during the design phase, your advisor will take a look at the current and projected profitability of your company alongside the ratio of key employees and the company’s other employees.

When all is said and done, your plan design could be the thing that stands between your employees and a comfortable retirement – or it could be what lets them reap the benefits of all their years of hard work.

This is a great time of year to explore your options. Email Rea & Associates to learn more.

By Paul McEwan, CPA, MT, AIFA (New Philadelphia office)

 

Related Articles: 

Retirement Is Knocking … Are You Ready To Answer The Door?

What Are Ways You Can Ensure You’re Ready For Retirement? 

Will You Be Ready For Retirement? 

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Retirement Roulette

Wednesday, April 22nd, 2015
Retirement Roulette - Rea & Associates - Ohio CPA Firm

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

It’s difficult to paint a picture that adequately portrays the retirement readiness of the American people. How prepared the average person is for this phase of their life greatly depends on which report you are reading today. As a whole, however, credible sources indicate that as a population we are simply not prepared to take on the financial responsibility of supporting ourselves later in life, which is a problem that has received a lot of attention from our nation’s leaders.

Last year marked the introduction of myRA, a retirement account program that encourages individuals without access to an employer-sponsored retirement plan to save for their retirement. Developed by the United States Department of the Treasury, myRA seeks to offer a solution to those who “face barriers to saving for retirement.” But that’s not the only chatter heard on Capitol Hill these days, with regard to the retirement savings habits of Americans. Members of Congress have proposed other solutions that they hope will make the retirement picture a little bit brighter.

Read:  Retirement Is Knocking … Are You Ready To Answer The Door?

2016 Budget Proposal Addresses Retirement Savings

The U.S. government’s 2016 Budget Proposal includes provisions that target the promotion of retirement goals.

“Millions of working Americans lack access to a retirement savings plan at work. Fewer than 10 percent of those without plans at work save in a retirement account on their own. In 2015, retirement security will be one of the key topics of the White House Conference on Aging. The Budget would make it easy and automatic for workers to save for retirement through their employer – giving 30 million more workers access to a workplace savings opportunity. The Budget also ensures that long-term part-time employees can participate in their employers’ retirement plans and provides tax incentives to offset administrative expenses for small businesses that adopt retirement plans.”

What is important to note is that, in addition to retirement security, the Proposal focuses on generating government revenue, which would (in part) go toward the creation of new tax benefit programs. The impact, according to the Whitehouse, would result in savings for as many as 30 million American taxpayers.

Today, nearly 78 million working Americans are unable to save for retirement simply because they are not eligible to enroll or because their employer doesn’t offer the opportunity to save for retirement. This Proposal introduces a solution for those who would like to begin saving for their golden years.

For example, one possible scenario outlined within the budget calls for all part time workers (those who have worked for their current employer at least 3 consecutive years and who have worked at least 500 hours during each year of their employment), who are not currently contributing to a retirement plan, to be allowed to contribute to the company’s existing retirement plan without requiring the plan sponsor to add matching contributions for such individuals.

Another is for those who do not have access to an employer-based retirement plan, however, would be automatically enrolled in a separate IRA program, which would be funded by payroll withholdings. Of course, the taxpayer would have the option to opt out of the program.

What’s In It for the Employer?

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

This provision would also include an additional credit for small businesses that currently offer retirement plans to include an automatic enrollment feature within their plans.

Employees who are still unable to save for retirement will have a third option available. The Budget Proposal calls for the allocation of $6.5 million to the Department of Labor, which would allow a limited number of states to implement state-based auto enroll IRAs or 401(K)-type programs.

Mind the Cap

President Barack Obama’s 2016 Budget Proposal, while ambitious in its initiative to strengthen Social Security and incentivize retirement savings programs for Americans, also includes a provision that had been proposed (and rejected) before. The additional provision seeks to cap (prohibit additional contributions) on IRAs and other tax-preferred retirement plans once they reach a balance of $3.4 million.

According to the president, this step ensures that the individual secures sufficient annual income in retirement while preventing the “overuse” of existing tax advantages by those who are able to contribute additional funds, creating higher balance accounts. The cap would also help the government generate additional revenue because the funds that exceed the $3.4 million cap would now be taxable under this provision.

As always, when it comes to the future of Social Security and the overall retirement readiness of the American people a lot can change in a short amount of time. The 2016 Budget Proposal still has a long way to go before any of the provisions outlined within become reality. It’s important for you to be aware of these provisions and how they could change our current retirement plan landscape.

In the meantime, don’t just wait for changes to happen. Take steps today that will maintain the flexibility of your existing benefit plan while optimizing your company’s current and future ROI. Email the Benefit Plan Audit team at Rea & Associates to learn more.

By Darlene Finzer, CPA, QKA, CSA (New Philadelphia office)

 

Related Articles

How Can I Make My Benefit Plan Audit A Smoother Process?

What Are The Responsibilities of a Fiduciary?

Why Is The Timeliness Of Employee Contributions Under Scrutiny?

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How To Avoid The Retirement Culture Shock

Tuesday, March 24th, 2015
Retirement Doesn't Have To Hurt Contact Rea & Associates To Learn More - Ohio CPA Firm

When many of us start thinking about the realities of retirement, it’s already too late. Don’t let the “retirement culture shock” sneak up on you, these three tips will help as you attempt to navigate the road to retirement.

If you’re a newly retired American, then you are embarking on a new, exciting phase of your life. For many of you, increased travel, spending more time with grandchildren or pursuing a new hobby may be ways to enjoy this new journey.

Read: How Can I Make The Most of My Retirement?

But before you pack up your things and hop that next plane to Florida, here are three tips to help you avoid the retirement culture shock.

1. Taxes Don’t Vanish At 65

When you were an employee, your taxes were likely withheld from your paycheck. Today, however, is a new day. As a retiree, you no longer have a paycheck from which taxes can be withheld. But there are a few things you can do to make sure you won’t get hit with a large tax bill in April. For example, if you receive a regular pension payment or an annuity, consider withholding your tax payments from those. You also have the option of simply making quarterly estimated tax payments if withholding is not an option.

2. Transfer Your Pension To Avoid Added Tax Cost

If you do have retirement income from a pension plan, make sure to structure the transfer of your pension into an IRA as a direct rollover to avoid an additional tax. Basically, you want to make sure that the check is made out to your IRA and not directly to you, which will ensure that the funds are deposited into your IRA instead of your personal bank account. If you don’t structure your pension plan to disperse your money in this way, the company responsible for your pension payments is required to withhold 20 percent of the funds for the Internal Revenue Service (IRS). When this happens, the IRS will likely see fit to assess a tax to this 20 percent, effectively shrinking your retirement nest egg.

3. Don’t Miss Exclusive Tax Benefits

Retirees are eligible to receive a few nice tax incentives – perhaps to offset your new responsibility of paying your own quarterly estimated taxes and transferring your pension plan payments. Either way, these tax breaks are nothing to grumble about. Here are three tax facts to get you started:

  • If you turned 65 during 2014, your standard deduction increased by $1,550. This means that you can claim $7,750 instead of the $6,200 standard deduction allowed for those younger than 65.
  • For the next three years, taxpayers older than 65 are eligible to receive a reduced phase out of their medical expenses. Those who are older than 65 can deduct qualifying medical expenses to that exceed 7.5 percent of their adjusted gross income. Those younger than 65 can deduct qualifying medical expenses that exceed 10 percent of their adjusted gross income.
  • Self-employed individuals who have Medicare Part B, Part D or supplemental Medicare policies are eligible to claim an above-the-line deduction for these costs.

You have spent so many years putting in long hours, stressing over money and putting your wants and needs second. Retirement is your time. Make sure you are in control of your finances – and your future. Email Rea & Associates to learn how to make your money go further in retirement.

By Dana Launder, CPA (Cambridge office)

 

Related Articles

What Are Ways You Can Ensure You’re Ready For Retirement?

Retirement Is Knocking … Are You Ready To Answer The Door?

Save More For Retirement in 2015

 

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