IRS Examinations of 401(k) Plans

Every American knows the instant anxiety associated with receiving a letter from the Internal Revenue Service (“IRS”). That anxiety might be overwhelming if the letter is a notification that your company’s employee benefit plan has been chosen for examination. The IRS understands this and has provided an online resource guide specifically geared to educating employers …

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Mid-Year Tax Planning Tips

Summer is the perfect time to begin your year-end tax planning so that you have time to identify the strategy (or strategies) that work for you and implement them well before year end. Try to avoid the new 3.8% net investment income tax (NIIT). It only affects higher-income individuals, but that can include anyone who …

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Unused ITINs to Expire after Five Years

The IRS announced on Monday, June 30 that unused Individual Taxpayer Identification Numbers (ITINs) will expire if they have not been used on a federal income tax return for five consecutive years. ITINs are issued to United States taxpayers who are not eligible for a Social Security Number, such as resident or non-resident aliens. If …

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Have Lost Participants in Your 401(k) Plan?

Lost participants are those participants who have balances in the plan (unclaimed benefits) or have been distributed an amount from the plan (uncashed benefit checks) and cannot be located. The participant either doesn’t know or forgot they have a balance since their employment was terminated or have relocated with no forwarding address. The participant’s account …

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How Can a Change in Income Have Unexpected Consequences?

Do you feel like you are unique? Don’t follow the crowd? Go your own way? Well, if you went against your norm and followed the pack and were one of the 7.1 million people who signed up for health insurance by the March 31, 2014 deadline, then keep reading. If you receive advance payment of …

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Key Dates & Milestones: Social Security, Pensions, IRAs, Medicare

There are many age-related financial and planning milestones that you need to be aware of in your sixties. Keep this list in mind. 59 ½ – Penalty Goes Away This is the age at which one can withdraw money from traditional IRAs, 401(k)s or similar retirement plans without restrictions and without an added 10% tax …

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How is Compensation Defined?

Compensation in its simplest form is pay in exchange for services rendered, although gross pay includes additional forms of compensation aside from the hourly rate paid to employees. In reference to 401(k) plans, the term “pay” becomes more complex. Under the statutory safe harbor regulations an employer is required to include additional forms of compensation …

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Timing Rules for SEPs and SIMPLE-IRAs Part II

For the most part, SEPs (Simplified Employee Pensions) and SIMPLE (Savings Incentive Match Plan for Employees)-IRAs live up to their billing as easy ways to set aside tax-favored retirement funds for employees and employers. However, contribution rules for these plans are not necessarily straight-forward. To read part I of this post dealing with SEPs, click …

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Timing Rules for SEPs and SIMPLE-IRAs Part I

For the most part, SEPs (Simplified Employee Pensions) and SIMPLE (Savings Incentive Match Plan for Employees)-IRAs live up to their billing as easy ways to set aside tax-favored retirement funds for employees and employers. However, contribution rules for these plans are not necessarily straight-forward. SEP plans: Business owners can set up and fund their SEP …

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Supreme Court Decides Severance Pay is Subject to FICA Tax

In a unanimous decision (with Justice Kagan recused), the Supreme Court, reversing the Sixth Circuit Court of Appeals, has held that severance payments that were made to involuntarily terminated employees and that weren’t tied to the receipt of State unemployment insurance, are subject to tax under the Federal Insurance Contributions Act (FICA). The Court easily …

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