This document provides a summary of contribution limits for various retirement accounts in 2018, including Traditional and Roth IRAs, SEPs, SIMPLEs, Individual(k)s, HSAs, and Coverdell ESAs. The main points covered are:
- Traditional and Roth IRA contribution limits are $5,500 each ($6,500 if over age 50) and phase out at higher income levels
- SEP, SIMPLE, and Individual(k) plans allow for higher contribution limits up to $55,000 but have additional eligibility requirements
- HSAs allow contributions up to $3,450 individual/$6,900 family and grow tax-free if used for medical expenses
- Coverdell
Ira Optimized Skills 101 Pp Tam Inc Rev Slide ShareTara A
The document discusses different types of individual retirement accounts (IRAs) including traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, and Coverdell Education Savings Accounts. It provides information on contribution limits, tax treatment, eligibility, and key features of each type of IRA. The document is intended to help explain the different IRA options available for retirement savings.
Michael Silver & Company CPAs has recently published an article on the benefits of retirement plans. Whether you have a small, independent business or a large company, we describe the advantages and disadvantages of each possible plan for each possible business.
This document provides an overview and tips for 2017 individual tax planning. It summarizes key tax rates, deductions, credits, and strategies to consider for reducing tax liability for the year. Potential tax reform proposals could change rates and provisions for 2018, so the document recommends planning based on current tax law and taking advantage of opportunities before year-end 2017 to be effective in mitigating taxes. It includes charts outlining various tax rates, limits, phaseouts and considerations for married and unmarried filers.
The document summarizes the key points from a year-end tax planning seminar presented by Anthony J. Madonia on November 21, 2013. It discusses various federal and state income tax rates, exemptions, and deductions that may change in 2014, and provides strategies for individuals and businesses to accelerate deductions and postpone income into the next tax year.
Traditionally, this is the time at which we recommend you take stock of tax and finance for you, your family and your business. A strategic review before the end of the tax year on 5 April 2021 may suggest ways to structure your affairs more efficiently and make the most of your tax position. Some planning points this year reflect the impact of the pandemic.
lease be assured that we are always on hand to advise and keep you up to date with tax and finance measures as they unfold. Throughout this publication, the term spouse includes a registered civil partner. We have used the rates and allowances for 2020/21.
The document summarizes various types of retirement plans including traditional and Roth IRAs, 401(k)s, profit sharing plans, defined benefit plans, ESOPs, 403(b) plans, and 457 plans. It provides brief descriptions of each plan including eligibility, contributions, tax treatment, pros and cons. Traditional and Roth IRAs allow for tax deferred and tax free growth of retirement savings respectively. 401(k) plans offer tax deferred contributions from employees. Profit sharing plans provide ownership stakes in a company. Defined benefit plans guarantee fixed payouts. ESOPs use company stock to make employees owners. 403(b) and 457 plans are for non-profit and public sector employees.
investing for Long-Term Goals (Retirement-College)Barbara O'Neill
This document provides information on investing for long-term financial goals like retirement and college. It discusses factors to consider for retirement planning like current age, projected retirement age, life expectancy, sources of retirement income, expenses, and risk tolerance. It also covers retirement savings vehicles like IRAs, employer plans, and annuities as well as investing strategies for different stages of life. The document emphasizes starting to save early, maximizing employer matches, estimating expenses, and developing a retirement income plan.
This document discusses the benefits of Roth IRA conversions and strategies for utilizing them. Some key points covered include:
- Roth IRA conversions allow tax-free growth and qualified withdrawal of both contributions and earnings.
- Converting during periods of lower income or market declines can reduce taxes owed.
- The 2010 rule change eliminated income limits and allowed conversions to be paid over two years to reduce tax burden.
- Roth IRAs can provide tax-free income in retirement and be passed down to beneficiaries with no required minimum distributions.
Ira Optimized Skills 101 Pp Tam Inc Rev Slide ShareTara A
The document discusses different types of individual retirement accounts (IRAs) including traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, and Coverdell Education Savings Accounts. It provides information on contribution limits, tax treatment, eligibility, and key features of each type of IRA. The document is intended to help explain the different IRA options available for retirement savings.
Michael Silver & Company CPAs has recently published an article on the benefits of retirement plans. Whether you have a small, independent business or a large company, we describe the advantages and disadvantages of each possible plan for each possible business.
This document provides an overview and tips for 2017 individual tax planning. It summarizes key tax rates, deductions, credits, and strategies to consider for reducing tax liability for the year. Potential tax reform proposals could change rates and provisions for 2018, so the document recommends planning based on current tax law and taking advantage of opportunities before year-end 2017 to be effective in mitigating taxes. It includes charts outlining various tax rates, limits, phaseouts and considerations for married and unmarried filers.
The document summarizes the key points from a year-end tax planning seminar presented by Anthony J. Madonia on November 21, 2013. It discusses various federal and state income tax rates, exemptions, and deductions that may change in 2014, and provides strategies for individuals and businesses to accelerate deductions and postpone income into the next tax year.
Traditionally, this is the time at which we recommend you take stock of tax and finance for you, your family and your business. A strategic review before the end of the tax year on 5 April 2021 may suggest ways to structure your affairs more efficiently and make the most of your tax position. Some planning points this year reflect the impact of the pandemic.
lease be assured that we are always on hand to advise and keep you up to date with tax and finance measures as they unfold. Throughout this publication, the term spouse includes a registered civil partner. We have used the rates and allowances for 2020/21.
The document summarizes various types of retirement plans including traditional and Roth IRAs, 401(k)s, profit sharing plans, defined benefit plans, ESOPs, 403(b) plans, and 457 plans. It provides brief descriptions of each plan including eligibility, contributions, tax treatment, pros and cons. Traditional and Roth IRAs allow for tax deferred and tax free growth of retirement savings respectively. 401(k) plans offer tax deferred contributions from employees. Profit sharing plans provide ownership stakes in a company. Defined benefit plans guarantee fixed payouts. ESOPs use company stock to make employees owners. 403(b) and 457 plans are for non-profit and public sector employees.
investing for Long-Term Goals (Retirement-College)Barbara O'Neill
This document provides information on investing for long-term financial goals like retirement and college. It discusses factors to consider for retirement planning like current age, projected retirement age, life expectancy, sources of retirement income, expenses, and risk tolerance. It also covers retirement savings vehicles like IRAs, employer plans, and annuities as well as investing strategies for different stages of life. The document emphasizes starting to save early, maximizing employer matches, estimating expenses, and developing a retirement income plan.
This document discusses the benefits of Roth IRA conversions and strategies for utilizing them. Some key points covered include:
- Roth IRA conversions allow tax-free growth and qualified withdrawal of both contributions and earnings.
- Converting during periods of lower income or market declines can reduce taxes owed.
- The 2010 rule change eliminated income limits and allowed conversions to be paid over two years to reduce tax burden.
- Roth IRAs can provide tax-free income in retirement and be passed down to beneficiaries with no required minimum distributions.
IRS Releases 2021 Filing Season Tax BracketsTodd Mardis
The president of Capital Preservation Services, LLC, in Mississippi, Todd Mardis oversees daily operations at the tax planning company and maintains relationships with potential and current clients. At his company, Todd Mardis and colleagues provide a range of services, including estate planning, asset protection planning, and advanced tax planning. In October 2020, the Internal Revenue Service (IRS) released updated tax brackets for the 2021 filing season that reflect inflation.
This document provides a quick reference guide comparing features of various retirement plans including IRAs, SEP/SAR-SEP IRAs, SIMPLE IRAs, SIMPLE 401(k)s, profit sharing/money purchase 401(k)s, and defined benefit plans. It outlines details such as annual contribution limits, eligibility requirements, deadlines, vesting schedules, and taxation of distributions for each type of plan. The guide is intended to help individuals and employers understand their options for tax-qualified retirement savings plans.
Horner Downey & Co Year End Strategies NewsletterJenny Ferguson
The document discusses strategies for business owners to reduce taxes in the current tax year before the deadline of April 5th, 2018. It focuses on reviewing company car policies given rising tax percentages, and considering paying employees for business miles instead of providing a company car. It also discusses extracting profit from a business in a tax-efficient manner through dividends versus salary/bonuses given changes to dividend tax rates, and other options like incorporation or pension contributions.
The document summarizes a presentation given to Georgia Power employees about Roth 401(k) retirement plans. It discusses what a Roth 401(k) is, contribution limits, factors to consider when deciding between pre-tax and Roth contributions, how distributions are taxed, employer matching, and converting traditional retirement funds to Roth status. The presentation was given by The Signature Financial Group, an independent financial advisory firm, and notes that Raymond James is both their employer and partner.
This document provides a summary of various tax planning strategies that taxpayers should consider before the end of 2011. It discusses opportunities for reducing tax obligations through increasing retirement contributions, making charitable donations from IRAs, taking advantage of business tax credits, and accelerating capital expenditures. It also highlights estate planning strategies and the need to disclose any offshore assets before certain disclosure deadlines. The overall message is that 2011 provides some unique tax benefits that may disappear at the end of the year.
The document outlines topics to be covered in a wealth management meeting, including estate and succession planning, maximizing retirement accounts, investments, and insurance considerations. Estate attorneys offer package deals for living trusts. Consolidating investment accounts to a single custodian like Charles Schwab can help manage finances. Health savings accounts are recommended for healthcare, and long-term care insurance may be a deductible expense.
Traditionally, this is the time at which we recommend you take stock of tax and-finance for you, your family, and your business. A strategic review before the end of the tax year on 5 April 2021 may suggest ways to structure your affairs more efficiently and make the most of your tax position.
Some planning points this year-reflect the impact of the pandemic.
Here is a detailed guide for year-end tax planning.
Year-End Tax and Financial Planning by myStockOptions.comBruce Brumberg
This presentation provides a timely overview of year-end financial-planning and tax topics for stock compensation, including points of importance for employee education and for financial advisors. Special attention is given to issues involving tax-rate increases. While each annual edition features planning concerns specific to that year-end, the general ideas presented here are perennially useful.
Horner Downey & Co Year End 2017-18 NewsletterJenny Ferguson
This document provides information and advice about ways to reduce taxes before the end of the 2017/18 tax year on April 5th, including maximizing personal tax allowances, reviewing company car arrangements, taking business profits tax-efficiently, considering retirement planning options, and utilizing savings vehicles like ISAs. It also notes upcoming tax changes in 2018/19 such as reductions to the dividend allowance and increases to tax rates on company cars.
Another tax year has started and, as always in the world of tax, nothing stays the same. There are a number of methods of
extracting funds from your own limited company and in this Briefing we consider the main options for extracting profit.
The document discusses the benefits and considerations of converting a traditional IRA to a Roth IRA. It notes that lower account values currently make conversions attractive. Converting now allows one to lock in today's low tax rates and take advantage of special tax treatment in 2010 and 2011 when income limits on Roth IRA conversions are eliminated. Key benefits of converting include tax-free withdrawals in retirement, allowing heirs to stretch out required minimum distributions, and diversifying retirement income sources for tax purposes.
Pre-tax retirement annuity contributions - the tax benefit that very few bene...Annemie Nieman CFP®
1) The document provides an overview of beneficiary nominations on various financial products like life policies, retirement funds, and living annuities. It explains that valid beneficiary nominations must be made in writing according to each product's contract terms.
2) For retirement funds, trustees must first pay out any dependents as defined in law, and then nominated beneficiaries. For life policies, the nominated beneficiary receives payouts directly, while ceding ownership passes control of the policy.
3) The document also discusses the tax benefits of pre-tax retirement annuity contributions, which can enable savings without additional income. It provides examples showing how pre-tax contributions increase savings and retirement values significantly.
John Smith, a financial advisor, provides information about converting traditional IRAs to Roth IRAs. Key points include: everyone is now eligible to convert regardless of income; converted amounts can be reported over two years to reduce taxes; Roth IRAs offer tax-free growth and withdrawals in retirement. An example shows how converting $60,000 for a 28% taxpayer could provide tax-free growth over decades. Strategies discussed include converting small amounts over multiple years or using recharacterization if taxes are too high.
This document discusses Roth 401(k) plans, which allow employees to make after-tax contributions to their 401(k) plans. Key details include:
- Roth 401(k) contributions do not provide an up-front tax benefit but qualified distributions are entirely tax-free. Qualified distributions must occur after age 59.5 or disability and after a 5-year holding period.
- Contribution limits of $16,500 in 2010 apply to both pre-tax and Roth 401(k) contributions combined. Those over 50 can contribute an extra $5,500. Income limits do not apply unlike Roth IRAs.
- Employer matches are always pre-tax even if they match Roth 401
2017 TORONTO Fall Event - Proposed Tax Reform: What You Need to Know (October...Nicola Wealth Management
On October 1, 2017, NWM hosted a group of clients at the Four Seasons Hotel Toronto to discuss Finance Minister Bill Morneau and the Canadian government's proposal for tax reform impacting the majority of Canadian business owners.
NWM President, David Sung, opened the evening with an overview of the proposed tax changes. He provided some context and asked the audience to consider the political undertone of the Liberal government's tax proposal and the way in which they have handled the public push-back.
John Nicola, Chairman & CEO, an overview of what the government is proposing exactly and the impact it will have. He went on to discuss some planning options available to Canadian business owners.
On October 5, 2017, NWM hosted a group of over 500 people at the Fairmont Hotel Vancouver to discuss the Finance Minister Bill Morneau and the Canadian government's proposal for tax reform impacting the majority of Canadian business owners.
NWM President, David Sung, opened the evening with an overview of the proposed tax changes. He provided some context and asked the audience to consider the political undertone of the Liberal government's tax proposal and the way in which they have handled the public push-back.
John Nicola, Chairman & CEO, an overview of what the government is proposing exactly and the impact it will have. He went on to discuss some planning options available to Canadian business owners.
The right tax strategy stays current with your environment.
The political landscape isn’t the only thing changing in
2016. Estate planning opportunities are also shifting. This
supplement incorporates estate planning updates and other
considerations into tips designed to decrease your 2016 tax
bill. Charts throughout the supplement, including tax rates,
qualified retirement plan limitations and FICA/Medicare
taxes further help with your tax planning.
Michael Silver & Company CPAs recently published an article on retirement plans for businesses. Whether you have a small, independent business or a large company, we discuss the advantages and disadvantages for each plan available.
IntroductionComment by Exploring Series This is listed as a Head.docxvrickens
Introduction Comment by Exploring Series: This is listed as a Heading 2, but it should be Heading 1. Please change this heading to a Heading 1 style.
It is never too early to save for your retirement. For a start, you can estimate the amount that you need to have before you can retire comfortably using financial calculators found on sites such as CNN Money, Kiplinger, Motley Fool, and TIAA-CREF financial services. The good part is, there are many different types of retirement plans that you can participate, individually or with your employers. To help you save for retirement, there are many government-regulated and government-approved retirement accounts that you can contribute a certain amount to annually. Why should you enroll in a retirement plan NOWnow? Did you know that your retirement can last for 30 years or more? A common rule to follow is that a retiree will need up to 80% of his/her annual income today to retire comfortably. Unfortunately, the average benefit amount paid monthly by the Social Security Administration is only $1,177.
Below are many advantages why you should start saving NOWnow:
· Tax on employee and employer contributions is deferred until distributed.
· Investment gains in the plan are not taxed until distributed.
· Retirement assets can be carried from one employer to another.
· Contributions can be made easily through payroll deduction.
· Saver’s Credit is available.
· Flexible plan options are available.
· Better financial security at retirement.
Future Retirement Savings Value - Assuming 6% annual return Comment by Exploring Series: You need to insert a caption for this table and the next table.
Monthly Savings
5 years
15 years
20 years
$50
$3,506
$14,614
$23,218
$200
$14,024
$58,456
$92,870
$500
$35,059
$146,136
$232,176
Source: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Benefits-of-Saving-Now
A contribution is defined as the amount that an employee and an employer can put into a retirement plan. There are, however, varying limits on how much we (including both employers and employees) can contribute to any of the retirement plan. Each plan has its own rules and criteria, and must specifically state that contributions or benefits cannot exceed certain limits. Employees can participate in contributions via salary reduction. Employers can match employees’ contributions or contribute outright a certain amount into the employees’ retirement account.
Traditional Individual Retirement Arrangements (IRAs) Comment by Exploring Series: Please change all headings formatted with Heading 3 to Heading 2 style.
There are two major kinds of IRAs – traditional and Roth. A traditional IRA is a way to save for retirement that gives you tax advantages. It allows you to make tax-deferred investments to provide financial security when you retire. Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement pla ...
This document provides an overview of retirement planning issues and types of retirement plans. It discusses challenges in retirement planning such as higher health costs, longevity, balancing risk and return, and enjoying retirement. It then describes several types of individual retirement plans (IRAs, Roth IRAs, 401(k)s, 403(b)s, 457 plans, SIMPLE IRAs, SEP IRAs) and employer-sponsored plans (profit sharing, stock bonus, money purchase, combination, savings, and ESOP). The document provides details on contribution limits, eligibility, taxation, and withdrawals for each type of retirement plan.
Horner downey and company ltd year end strategiesJenny Ferguson
The document discusses strategies for business owners to reduce taxes in the current tax year before the deadline of April 5th, 2018. It focuses on reviewing company car policies given rising tax percentages, and considering paying employees for business miles instead of providing a company car. It also discusses extracting profit from a business in a tax-efficient manner through dividends versus salary/bonuses given changes to dividend tax rates, and other options like incorporation or pension contributions.
Horner Downey & Co Year End Strategies NewsletterJenny Ferguson
The document discusses various tax planning strategies that can be implemented before 5 April 2018 to reduce tax liabilities. It recommends reviewing business motoring strategies as company cars may not always be the most tax-efficient option. It also suggests maximizing the use of personal allowances across a family, utilizing tax advantaged savings schemes like ISAs and pensions, and considering different methods of extracting profit from a business in a tax efficient manner like dividends. The document is aimed at helping clients identify areas to improve their financial planning and tax position before the end of the tax year.
IRS Releases 2021 Filing Season Tax BracketsTodd Mardis
The president of Capital Preservation Services, LLC, in Mississippi, Todd Mardis oversees daily operations at the tax planning company and maintains relationships with potential and current clients. At his company, Todd Mardis and colleagues provide a range of services, including estate planning, asset protection planning, and advanced tax planning. In October 2020, the Internal Revenue Service (IRS) released updated tax brackets for the 2021 filing season that reflect inflation.
This document provides a quick reference guide comparing features of various retirement plans including IRAs, SEP/SAR-SEP IRAs, SIMPLE IRAs, SIMPLE 401(k)s, profit sharing/money purchase 401(k)s, and defined benefit plans. It outlines details such as annual contribution limits, eligibility requirements, deadlines, vesting schedules, and taxation of distributions for each type of plan. The guide is intended to help individuals and employers understand their options for tax-qualified retirement savings plans.
Horner Downey & Co Year End Strategies NewsletterJenny Ferguson
The document discusses strategies for business owners to reduce taxes in the current tax year before the deadline of April 5th, 2018. It focuses on reviewing company car policies given rising tax percentages, and considering paying employees for business miles instead of providing a company car. It also discusses extracting profit from a business in a tax-efficient manner through dividends versus salary/bonuses given changes to dividend tax rates, and other options like incorporation or pension contributions.
The document summarizes a presentation given to Georgia Power employees about Roth 401(k) retirement plans. It discusses what a Roth 401(k) is, contribution limits, factors to consider when deciding between pre-tax and Roth contributions, how distributions are taxed, employer matching, and converting traditional retirement funds to Roth status. The presentation was given by The Signature Financial Group, an independent financial advisory firm, and notes that Raymond James is both their employer and partner.
This document provides a summary of various tax planning strategies that taxpayers should consider before the end of 2011. It discusses opportunities for reducing tax obligations through increasing retirement contributions, making charitable donations from IRAs, taking advantage of business tax credits, and accelerating capital expenditures. It also highlights estate planning strategies and the need to disclose any offshore assets before certain disclosure deadlines. The overall message is that 2011 provides some unique tax benefits that may disappear at the end of the year.
The document outlines topics to be covered in a wealth management meeting, including estate and succession planning, maximizing retirement accounts, investments, and insurance considerations. Estate attorneys offer package deals for living trusts. Consolidating investment accounts to a single custodian like Charles Schwab can help manage finances. Health savings accounts are recommended for healthcare, and long-term care insurance may be a deductible expense.
Traditionally, this is the time at which we recommend you take stock of tax and-finance for you, your family, and your business. A strategic review before the end of the tax year on 5 April 2021 may suggest ways to structure your affairs more efficiently and make the most of your tax position.
Some planning points this year-reflect the impact of the pandemic.
Here is a detailed guide for year-end tax planning.
Year-End Tax and Financial Planning by myStockOptions.comBruce Brumberg
This presentation provides a timely overview of year-end financial-planning and tax topics for stock compensation, including points of importance for employee education and for financial advisors. Special attention is given to issues involving tax-rate increases. While each annual edition features planning concerns specific to that year-end, the general ideas presented here are perennially useful.
Horner Downey & Co Year End 2017-18 NewsletterJenny Ferguson
This document provides information and advice about ways to reduce taxes before the end of the 2017/18 tax year on April 5th, including maximizing personal tax allowances, reviewing company car arrangements, taking business profits tax-efficiently, considering retirement planning options, and utilizing savings vehicles like ISAs. It also notes upcoming tax changes in 2018/19 such as reductions to the dividend allowance and increases to tax rates on company cars.
Another tax year has started and, as always in the world of tax, nothing stays the same. There are a number of methods of
extracting funds from your own limited company and in this Briefing we consider the main options for extracting profit.
The document discusses the benefits and considerations of converting a traditional IRA to a Roth IRA. It notes that lower account values currently make conversions attractive. Converting now allows one to lock in today's low tax rates and take advantage of special tax treatment in 2010 and 2011 when income limits on Roth IRA conversions are eliminated. Key benefits of converting include tax-free withdrawals in retirement, allowing heirs to stretch out required minimum distributions, and diversifying retirement income sources for tax purposes.
Pre-tax retirement annuity contributions - the tax benefit that very few bene...Annemie Nieman CFP®
1) The document provides an overview of beneficiary nominations on various financial products like life policies, retirement funds, and living annuities. It explains that valid beneficiary nominations must be made in writing according to each product's contract terms.
2) For retirement funds, trustees must first pay out any dependents as defined in law, and then nominated beneficiaries. For life policies, the nominated beneficiary receives payouts directly, while ceding ownership passes control of the policy.
3) The document also discusses the tax benefits of pre-tax retirement annuity contributions, which can enable savings without additional income. It provides examples showing how pre-tax contributions increase savings and retirement values significantly.
John Smith, a financial advisor, provides information about converting traditional IRAs to Roth IRAs. Key points include: everyone is now eligible to convert regardless of income; converted amounts can be reported over two years to reduce taxes; Roth IRAs offer tax-free growth and withdrawals in retirement. An example shows how converting $60,000 for a 28% taxpayer could provide tax-free growth over decades. Strategies discussed include converting small amounts over multiple years or using recharacterization if taxes are too high.
This document discusses Roth 401(k) plans, which allow employees to make after-tax contributions to their 401(k) plans. Key details include:
- Roth 401(k) contributions do not provide an up-front tax benefit but qualified distributions are entirely tax-free. Qualified distributions must occur after age 59.5 or disability and after a 5-year holding period.
- Contribution limits of $16,500 in 2010 apply to both pre-tax and Roth 401(k) contributions combined. Those over 50 can contribute an extra $5,500. Income limits do not apply unlike Roth IRAs.
- Employer matches are always pre-tax even if they match Roth 401
2017 TORONTO Fall Event - Proposed Tax Reform: What You Need to Know (October...Nicola Wealth Management
On October 1, 2017, NWM hosted a group of clients at the Four Seasons Hotel Toronto to discuss Finance Minister Bill Morneau and the Canadian government's proposal for tax reform impacting the majority of Canadian business owners.
NWM President, David Sung, opened the evening with an overview of the proposed tax changes. He provided some context and asked the audience to consider the political undertone of the Liberal government's tax proposal and the way in which they have handled the public push-back.
John Nicola, Chairman & CEO, an overview of what the government is proposing exactly and the impact it will have. He went on to discuss some planning options available to Canadian business owners.
On October 5, 2017, NWM hosted a group of over 500 people at the Fairmont Hotel Vancouver to discuss the Finance Minister Bill Morneau and the Canadian government's proposal for tax reform impacting the majority of Canadian business owners.
NWM President, David Sung, opened the evening with an overview of the proposed tax changes. He provided some context and asked the audience to consider the political undertone of the Liberal government's tax proposal and the way in which they have handled the public push-back.
John Nicola, Chairman & CEO, an overview of what the government is proposing exactly and the impact it will have. He went on to discuss some planning options available to Canadian business owners.
The right tax strategy stays current with your environment.
The political landscape isn’t the only thing changing in
2016. Estate planning opportunities are also shifting. This
supplement incorporates estate planning updates and other
considerations into tips designed to decrease your 2016 tax
bill. Charts throughout the supplement, including tax rates,
qualified retirement plan limitations and FICA/Medicare
taxes further help with your tax planning.
Michael Silver & Company CPAs recently published an article on retirement plans for businesses. Whether you have a small, independent business or a large company, we discuss the advantages and disadvantages for each plan available.
IntroductionComment by Exploring Series This is listed as a Head.docxvrickens
Introduction Comment by Exploring Series: This is listed as a Heading 2, but it should be Heading 1. Please change this heading to a Heading 1 style.
It is never too early to save for your retirement. For a start, you can estimate the amount that you need to have before you can retire comfortably using financial calculators found on sites such as CNN Money, Kiplinger, Motley Fool, and TIAA-CREF financial services. The good part is, there are many different types of retirement plans that you can participate, individually or with your employers. To help you save for retirement, there are many government-regulated and government-approved retirement accounts that you can contribute a certain amount to annually. Why should you enroll in a retirement plan NOWnow? Did you know that your retirement can last for 30 years or more? A common rule to follow is that a retiree will need up to 80% of his/her annual income today to retire comfortably. Unfortunately, the average benefit amount paid monthly by the Social Security Administration is only $1,177.
Below are many advantages why you should start saving NOWnow:
· Tax on employee and employer contributions is deferred until distributed.
· Investment gains in the plan are not taxed until distributed.
· Retirement assets can be carried from one employer to another.
· Contributions can be made easily through payroll deduction.
· Saver’s Credit is available.
· Flexible plan options are available.
· Better financial security at retirement.
Future Retirement Savings Value - Assuming 6% annual return Comment by Exploring Series: You need to insert a caption for this table and the next table.
Monthly Savings
5 years
15 years
20 years
$50
$3,506
$14,614
$23,218
$200
$14,024
$58,456
$92,870
$500
$35,059
$146,136
$232,176
Source: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Benefits-of-Saving-Now
A contribution is defined as the amount that an employee and an employer can put into a retirement plan. There are, however, varying limits on how much we (including both employers and employees) can contribute to any of the retirement plan. Each plan has its own rules and criteria, and must specifically state that contributions or benefits cannot exceed certain limits. Employees can participate in contributions via salary reduction. Employers can match employees’ contributions or contribute outright a certain amount into the employees’ retirement account.
Traditional Individual Retirement Arrangements (IRAs) Comment by Exploring Series: Please change all headings formatted with Heading 3 to Heading 2 style.
There are two major kinds of IRAs – traditional and Roth. A traditional IRA is a way to save for retirement that gives you tax advantages. It allows you to make tax-deferred investments to provide financial security when you retire. Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement pla ...
This document provides an overview of retirement planning issues and types of retirement plans. It discusses challenges in retirement planning such as higher health costs, longevity, balancing risk and return, and enjoying retirement. It then describes several types of individual retirement plans (IRAs, Roth IRAs, 401(k)s, 403(b)s, 457 plans, SIMPLE IRAs, SEP IRAs) and employer-sponsored plans (profit sharing, stock bonus, money purchase, combination, savings, and ESOP). The document provides details on contribution limits, eligibility, taxation, and withdrawals for each type of retirement plan.
Horner downey and company ltd year end strategiesJenny Ferguson
The document discusses strategies for business owners to reduce taxes in the current tax year before the deadline of April 5th, 2018. It focuses on reviewing company car policies given rising tax percentages, and considering paying employees for business miles instead of providing a company car. It also discusses extracting profit from a business in a tax-efficient manner through dividends versus salary/bonuses given changes to dividend tax rates, and other options like incorporation or pension contributions.
Horner Downey & Co Year End Strategies NewsletterJenny Ferguson
The document discusses various tax planning strategies that can be implemented before 5 April 2018 to reduce tax liabilities. It recommends reviewing business motoring strategies as company cars may not always be the most tax-efficient option. It also suggests maximizing the use of personal allowances across a family, utilizing tax advantaged savings schemes like ISAs and pensions, and considering different methods of extracting profit from a business in a tax efficient manner like dividends. The document is aimed at helping clients identify areas to improve their financial planning and tax position before the end of the tax year.
Horner downey and company ltd ye 201718Sarah Davies
The document discusses various tax planning strategies that can be implemented before 5 April 2018 to reduce tax liabilities. It recommends reviewing business motoring strategies as company cars may not always be the most tax-efficient option. It also suggests maximizing the use of personal tax allowances across a family, extracting profits from a business in a tax-efficient manner such as through dividends, and contributing more to pension funds to benefit from tax relief. The document provides information on the annual ISA allowance and the new Lifetime ISA. It stresses the importance of ongoing tax planning throughout the year.
- Our goal is to help clients coordinate tax reduction with their investment portfolios by staying up to date on tax strategies.
- This report discusses 2015 year-end tax strategies, but your situation is unique so discuss strategies with your tax preparer.
- The document reviews various tax strategies for 2015 including reviewing your retirement savings options, capital gains and losses, and Roth IRA conversions.
Business Retirement Accounts - How To Choose One For Your CompanyFit Small Business
This document provides information on various types of retirement accounts available for small businesses, including SIMPLE IRAs, payroll deduction IRAs, SEPs, and 401(k)s. It summarizes the key details of each type of account, such as who can contribute (employer, employee, or both), contribution limits, reporting requirements, advantages and disadvantages. The accounts range from easier to set up, like SIMPLE IRAs and payroll deduction IRAs, to more complex plans like 401(k)s that require more administration but allow for higher contribution limits.
The document provides information about preparing for a comfortable retirement through participation in an employer-sponsored 401(k) plan. It discusses how the plan works, including eligibility, contribution types and limits, vesting schedules, and taking withdrawals. It emphasizes the importance of starting contributions as early as possible to benefit from compound growth over time. Sample asset allocation models are presented to illustrate how diversifying investments based on risk tolerance and target retirement date can help achieve retirement goals.
Choosing a retirement plan for your business 2013giannem1
Discusses various types of retirement plans you may wish to consider for your business. There are a variety of retirement plans available for small businesses, each with their own nuances.
Contact me to discuss which one makes sense for your business.
The document provides information and advice for newly married couples on managing finances together after marriage. It recommends that couples openly communicate to develop a shared financial plan and goals. It also suggests preparing a joint budget that accounts for all income and expenses to help stay on track financially. Additionally, the document discusses options for saving for retirement through employer-sponsored plans and spousal IRAs to maximize savings opportunities. Open communication and coordination between spouses is presented as key to building wealth over time through a unified retirement strategy.
1) Small businesses represent 99.7% of all employers in the US and are important to the economy. However, only 44% of small businesses offer retirement plans to employees.
2) Retirement plans can benefit both businesses and employees. Businesses may reduce taxes and attract/retain talent, while employees can save tax-efficiently for retirement.
3) There are two main types of retirement plans for small businesses - IRA-based plans like SEPs and SIMPLEs, and 401(k) plans. IRA-based plans have lower costs but less features, while 401(k)s have more options but higher administrative fees. Financial advisors can help business owners select the best fitting option.
Small businesses can start retirement plans to attract and retain quality employees. A 401k plan allows employees to save pre-tax dollars for retirement while also providing tax benefits to the business. Setting up a 401k is simple, requiring only basic decisions around employer matching contributions and investment options. Paychex makes starting and managing a 401k easy and affordable for small businesses.
Small businesses can start retirement plans to attract and retain quality employees. A 401(k) allows tax-deferred growth and annual tax savings of 30-40% on contributions. To start a 401(k), businesses need only make three decisions: whether to match employee contributions, set a vesting schedule, and choose investment options. Paychex handles all legal and administrative requirements and the IRS provides a $1,500 tax credit for new plans. Retirement plans help businesses compete for workers and improve employee loyalty through low-cost benefits.
This document provides an overview and comparison of traditional IRAs and Roth IRAs. It discusses key factors to consider when choosing between the two options such as eligibility for tax-deductible contributions, contribution and income limits, tax treatment of distributions, required minimum distributions, and bankruptcy protections. Hypothetical examples are presented to illustrate how the different accounts may perform over long time horizons under varied rate of return and tax assumptions. The document emphasizes the importance of saving for retirement early and maximizing tax-advantaged retirement accounts.
Strategic Retirement Plan Designs for Professional Practices 92011twosons
A discussion of how to rapidly accelerate your contributions and significantly reduce your tax liability via a retirement plan designed for your specific personal and corporate objectives.
This document provides an overview of SIMPLE IRAs. Key points include:
- SIMPLE IRAs allow tax-deferred contributions for small businesses with 100 or fewer employees. They provide minimal paperwork and tax filing.
- Employers must make either a dollar-for-dollar match up to 3% of pay or a 2% contribution for all eligible employees earning $5,000 or more in a year.
- The maximum annual contribution limit for employees is $10,500 in deferrals and $2,500 in matching contributions. Employer contributions are immediately vested.
The document provides an overview of helpful tax tips and savings opportunities for the 2016 tax season, presented by Monica Silwanowicz. It discusses limitations on itemized deductions, personal exemptions, and the alternative minimum tax. It also covers opportunities like donating appreciated assets to charity, qualified charitable distributions from IRAs, and potential impacts of tax reform proposals on businesses, individuals, itemized deductions, and estate taxes. The document aims to help taxpayers maximize deductions and plan effectively for the upcoming tax year.
Roth IRAs provide several benefits even for higher-income individuals. Contributions can be made regardless of income up to the annual limit, contributions can always be withdrawn tax and penalty-free, and qualified withdrawals in retirement are not taxed. The recent tax law changes have made Roth conversions more attractive by lowering most income tax rates through 2025. The summary discusses strategies like mega backdoor Roth contributions and backdoor Roth conversions to help maximize tax-free growth in Roth retirement accounts.
Roth IRA is an tax-advantaged scheme which is basically followed in United States and in India PPF and EPF policy is followed instead of IRA but i think knowledge should not be limited to a particular field or a country.
This document discusses the benefits of using a self-directed IRA to invest in real estate and other alternative assets. Key points:
- A self-directed IRA allows tax-free profits from investments and the power of tax-deferred compounding interest over many years.
- Both traditional and Roth IRAs are legal ways to invest retirement funds in real estate, private placements, and other non-traditional assets as long as IRS rules are followed.
- Choosing the right IRA (traditional vs Roth) depends on whether you want tax deductions now or tax-free withdrawals in retirement. A self-directed IRA maximizes the benefits of either option for alternative investments.
This document exposes 10 myths about checkbook IRAs that promoters don't want investors to know. It summarizes that checkbook IRAs are not IRS approved and give the IRA owner direct access to funds, increasing the risk of prohibited transactions. If a prohibited transaction occurs, the IRA owner's entire account could be distributed, taxed, and penalized. The document cautions that checkbook IRA promoters provide little oversight or legal protection, and using a checkbook IRA may cost more than a traditional self-directed IRA while exposing retirement funds to additional taxes and risks. It encourages investors to carefully research checkbook IRA promoters and structures before investing.
This document provides an overview of the rules and regulations for self-directed IRAs. It explains that self-directed IRAs allow for a wide variety of alternative investments beyond just stocks, bonds, and mutual funds. However, there are some prohibited transactions like using IRA property for personal use or engaging in transactions with disqualified individuals like the IRA owner or their family members. The document also outlines some of the core guidelines for self-directed IRAs like ensuring investments are made at arm's length and not providing any indirect benefits to the IRA owner.
Roth retirement accounts like Roth IRAs and Roth 401(k)s allow tax-free earnings on investments. They can be invested in real estate, which allows using profits from real estate deals to buy more properties without paying taxes. Roth accounts provide tax-free profits at retirement. While traditional IRAs offer tax deductions for contributions but require taxes on withdrawals, Roth accounts do not offer deductions but withdrawals are tax-free for qualified expenses. Roth accounts can be a better option than traditional IRAs as they avoid taxes on investment growth and qualified withdrawals.
This document discusses common types of investment scams and fraud schemes. It describes Ponzi schemes, pyramid schemes, advance fee schemes, affinity fraud, letter of credit fraud, and prime bank note fraud. The key points are that Ponzi schemes rely on money from new investors to pay earlier investors, pyramid schemes focus on recruiting new investors rather than actual products or services, and advance fee schemes ask victims to pay upfront fees for promised returns that never materialize. The document encourages seeking education on these schemes to better protect investments from financial loss or fraud.
The document provides tips for preventing fraud and scams related to self-directed investments in individual retirement accounts (IRAs). It outlines several red flags for fraudulent investments including guaranteed returns, high pressure sales tactics, missing documentation, and complex investment strategies that are hard to understand. The document encourages investors to perform due diligence by understanding investment goals and risks, checking with regulators and professional advisors, and asking questions about products, fees, and the backgrounds of those selling investments. Common fraud schemes are described such as Ponzi schemes, pyramid schemes, and prime bank note fraud. Resources for finding help with potential fraud are also listed.
Utilize this checklist from Equity Trust Company and the Retirement Industry Trust Association to help identify potential scams or fraudulent investments.
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"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
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1. 2018 IRA Contribution Limit Guide
Information to help you choose the retirement
or other savings account that’s best for you
2. 2
2018 IRA Contribution Limit Guide
Self-directed account annual contribution limits are a main consideration for prospective Equity Trust clients.
In fact, many clients choose accounts based on what they can contribute each year.
Equity Trust offers a variety of accounts with varying contribution limits. These accounts include Traditional
and Roth self-directed IRAs, small business retirement accounts, Health Savings Accounts and Coverdell
Education Savings Accounts.
In this report you’ll find helpful summaries of each plan available, including specifics on annual contribution
limits. If you have questions on any of the content presented, please don’t hesitate to contact an Equity Trust
Senior Account Executive at 855-673-4721.
15 Minutes Can Potentially
SaveYouThousands
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855-673-4721
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Senior Account Executive.
3. 3
The Roth IRA
The table below highlights the differences between the Roth and Traditional IRA. The main differences are:
• Roth IRA contributions are never tax deductible and can be removed at any time free of income tax and the
10-percent premature distribution penalty tax after they’ve been in the account for five years
• Roth IRA contribution eligibility is subject to modified adjusted gross income, or MAGI
• Individuals can contribute to a Roth IRA after reaching 70½
• Roth IRA owners are not subject to required minimum distribution (RMD) rules
• Contributions are considered distributed before earnings in a Roth IRA
Summary of Roth IRA and Traditional IRA
Roth Traditional
Description
Government savings plan that offers tax advantages for
individuals to set aside money for retirement. Contributions
are made with after-tax dollars.
Government savings plan that offers tax advantages for
individuals to set aside money for retirement. Contributions
are made with pre-tax dollars.
Tax Advantages
Account balances compound tax-deferred. BUT funds that
are withdrawn are tax-free if account is five years old and
account owner is over 59½.
Account balances compound tax-deferred until funds are
withdrawn.
Maximum Contributions
100 percent of earned income*, up to $5,500 in 2018.
Plus an additional $1,000, if age 50+.Total of $11,000 for
married couples in 2018. (Contribution limits are reduced by
any contributions to a traditional IRA.)
100 percent of earned income*, up to $5,500 in 2018.
Plus an additional $1,000, if age 50+.Total of $11,000 for
married couples in 2018. (Contribution limits are reduced by
any contributions made to a Roth IRA.)
Eligibility
Individuals must have earned income* and modified
adjusted gross income less than $135,000 for single,
$199,000 for married couple.
Individuals must be under 70½ and have earned income*.
Tax Deductions on Contributions No Yes
Penalties for Early Withdrawal
10 percent penalty for withdrawals before age 59½. (Note:
Roth contributions can be taken out at any time without
penalty.)
10 percent penalty for withdrawals before 59½.
Exceptions for 10 percent Penalty Yes Yes
Cut-off Age for Contributions No Limit 70½
Required Distributions No Limit Yes. Minimum withdrawals begin after the age of 70½.
*Earned income is defined as the salary or wages you receive as an employee. If you’re self-employed, earned income is your net income for personal services
performed. Passive income such as interest, dividends, and most rental income are not considered compensation for the purpose of funding an IRA. Consult
a financial professional to determine your earned income.
4. 4
Higher Contributions and Higher Deductions With Other Popular
Retirement Plans
In addition to the Traditional and Roth IRAs, there are a number of other plans for individuals and small business
owners interested in alternative assets, such as real estate.
You may also qualify for a SIMPLE, SEP, or Individual(k).
While some of the plans seem only appropriate for small
businesses, it’s important to note that investors, like
you, qualify for these plans in addition to a Traditional
or Roth IRA.
The advantages of these plans are larger contribution
limits and larger tax-deductions, plus your spouse, if
employed, is eligible to participate. The best part is that
you can still contribute to standard individual plans like
a Traditional or Roth IRA in addition to a small business
plan like a SIMPLE or SEP.
Here’s a quick overview of each:
SIMPLE
The Savings Incentive Match Plan for Employees (SIMPLE) is popular with investors who have 100 employees or
fewer. Participants can contribute up to $12,500 annually ($15,500 if you’re 50+) while the employer can match
1-3 percent of salary.
SEP
The Simplified Employee Pension Plan (SEP) allows for contribution amounts up to 25 percent of your salary,
with a maximum of $55,000. The maximum considered compensation is $275,000. The downside of the SEP is
that it requires the same contribution percentage for all employees. If you have employees, the SEP could be
cost-prohibitive.
Individual(k)
The Individual(k) is often the most attractive plan to investors, if they qualify, because it combines elements of
the SEP and SIMPLE. You can make a salary deferral contribution of $18,500 annually ($24,500 if you’re 50+), plus
an employer match and employer profit sharing. The total from both sources cannot exceed $55,000 ($61,000 if
you’re 50+).
Individual(k) with Roth Provision
The Individual(k) has an option for a Roth provision. It has the same benefits as the standard Individual(k)
(contribute $18,500 or $24,500 in catch-up through salary deferral), but with a similar tax treatment to the Roth
IRA (e.g., tax-free distributions). This plan benefits high-income individuals who can’t qualify for a Roth IRA
because of income limits.
5. 5
Summary of SEP, SIMPLE and Individual(k) Plans
SEP SIMPLE Individual(k)
Description
Specifically designed for self-
employed people and small business
owners who typically employ fewer
than 25 employees.
Designed for small businesses with 100 or
fewer employees.The plan is funded by
elective employee salary deferral and by
employer matching contributions.
The Individual(k) was created in 2002 to enable sole
proprietors to set up and contribute to a plan offering
the same benefits as the conventional 401(k). It’s only
appropriate for a sole proprietor or a business (either a
partnership or corporation) in which only the owner(s)
and spouse(s) are employees.
Employer
Contributions
Required uniform percent of each
employee’s pay (0-25 percent).
Maximum considered compensation
is $275,000.
Employer is required to make either an annual
matching contribution between
1 percent and 3 percent or an annual non-
elective contribution of 2 percent
of compensation.
Employer match and employer profit sharing.
Minimum
Coverage
Requirements
Plan must cover all employees who
earn at least $600, are at least 21
years of age and have worked for
employer in three of the last
five years.
Plan must cover all employees who earn at
least $5,000 in the current year and have
received at least $5,000 during any two
preceding years.
Plan can only cover owner(s) and spouse(s).
Employee
Contributions
Not Permitted Up to $12,500 in 2018. (If age 50+, $15,500.) $18,500 ($24,500 if 50+)
Maximum
Total Annual
Contributions
25 percent, up to a maximum of
$55,000 for 2018.
Maximum employee contribution of $12,500
in 2018 (If age 50+, $15,500.) Employer
matches up to 3 percent of salary.
$18,500 ($24,500 if 50+), up to a maximum of $55,000
for 2018 ($61,000 if 50+).
Deductions
Contributions are generally tax
deductible for the business.
Salary deferral contributions are generally
deductible for the employee, employer
contributions for the employer.
Salary deferral contributions may be deductible for the
employee, employer contributions for the employer.
Withdrawals /
Distributions
(Based on Plan
Document
Provisions)
Permitted subject to tax and, if
under 59½, potential 10 percent
penalty.
Permitted, however, if under age 59½,
potential 10 percent penalty. (25 percent
penalty if account is less than two years old.)
Permitted subject to tax and, if under 59½, potential 10
percent penalty.
Deadline for
Establishment
of Plan
Any time up to date of employer’s
tax-filing deadline (including
extensions).
Any time between Jan. 1 and Oct. 1 of the
calendar year. For a new employer beginning
after Oct. 1, as soon as administratively
feasible. Entries established during the year
have until Dec. 31.
The deadline for establishing an Individual(k) and making
a salary deferral election is Dec. 31.The deadline for the
individual and employer contribution is your business tax
return due date, including extensions.
6. 6
Summary of Individual(k) with and without Roth Provision
Individual(k) with
Roth Provision
Individual(k)
Description
Created in 2006 to enable
sole proprietors to set up and
contribute to a plan offering the
same benefits as a conventional
Individual(k), BUT with the
added bonus of tax-free
distributions like the Roth IRA.
The Individual(k) was created in
2002 to enable sole proprietors
to set up and contribute to a
plan offering the same benefits
as the conventional 401(k).
It’s only appropriate for a sole
proprietor or a business (either
a partnership or corporation)
in which only the owner(s) and
spouse(s) are employees.
Contribution
Two components comprise the maximum Individual(k) contribution:
1. An employee salary deferral contribution
2. An employer match and profit-sharing
Contribution
Limits
The employee under 50 years old is able to contribute up to $18,500
for 2018 through salary deferral, although this may not exceed 100
percent of pay. The employer match and employer profit-sharing
can be up to $36,500. Employees over 50 years old may contribute an
additional $6,000 as a catch-up contribution.
Deadline for
Establishment
The deadline for establishing a new plan and formally electing an
employee deferral is December 31. The actual contribution can be
made up to the business tax filing date, including extensions.
7. 7
Does the Rising Cost of Health Care and Education Worry You?
Relax, self-directed IRAs aren’t the only tax-advantaged plans that allow you to invest in real estate and
alternative assets. The two plans below allow you to take advantage of your real estate/non-traditional asset
knowledge to pay for health and education costs.
The Health Savings Account (HSA) may help you reduce your health insurance premiums by as much as
70 percent, and HSA contributions are tax-deductible (subject to limitations). Set aside funds in your HSA to
pay current and future medical expenses. An individual may contribute the lesser of his/her plan deductible
or $3,450, and a family may contribute the lesser of their plan deductible or $6,900 for 2018. Individuals age
55-65 can make $1,000 catch-up contributions.
The Coverdell Education Savings Account (CESA) is a trust or custodial account created for the purpose of
paying the qualified education expenses of the designated beneficiary of the account. When the account is
established, the designated beneficiary must be under age 18 or be a special-needs beneficiary. The annual
contribution limit is $2,000 for each beneficiary, no matter how many CESAs are set up for that beneficiary.
Contributions are not tax deductible, but amounts deposited in the account grow tax-free until distributed
to pay for qualified education expenses.
The table on page 8 provides information on the CESA and HSA accounts.
8. 8
Summary of CESA and HSA
CESA HSA
Description
An account created for the purpose of paying the qualified
education expenses of the account’s beneficiary.
Federal, tax-advantaged U.S. trust accounts that are used
in connection with high deductible health plans for the
payment of an individual’s current and future medical
expenses.
Minimum
Eligibility
Requirements
Beneficiary must be under 18 years of age, have no federal
or state drug convictions, and/or no qualified state tuition
programs.
Must have a high deductible health plan and not be
enrolled in any other medical plan; including Medicare
and cannot be claimed as a dependent by someone else.
Contributions
In 2018, there’s an annual contribution limit of $2,000.
Anyone can contribute to the account. The deadline for
contributions is April 15 for the previous year.
The contribution limit for individuals for 2018 is $3,450;
for families the limit is $6,900. Catch-up for those 55-65
years old is an extra $1,000 per year.
Contribution
Restrictions
Contributor is subject to Modified Adjusted Gross
Income limits:
If married, can make a full contribution if MAGI is under
$190,000, and can make a partial contribution if MAGI is
under $220,000.
If single, can make a full contribution if MAGI is under
$95,000, and can make a partial contribution if MAGI is
under $110,000.
There’s no Modified Adjusted Gross Income limit relating
to HSA contributions.
You can’t contribute after age 65 but the account can
continue to actively invest funds previously contributed.
Withdrawals
Withdrawals are tax-free ONLY if used for higher education
expenses. Beneficiary must withdraw before the age of 30
or name another beneficiary, if not, ordinary income tax
and penalties occur.
HSA distributions are tax-free if used for medical expenses.
Funds that are not used for qualified medical expenses are
subject to a 10 percent penalty and are taxed as ordinary
income for those under age 65. Those over age 65 are not
subject to the 10 percent penalty but the funds are taxed.
Other
Requirements
For more information, see IRS Publication 970.
The minimum deductible for individuals in 2018 is $1,350;
for families, the minimum is $2,700.
The annual out-of-pocket expense limit for individuals in
2018 is $6,650. For families, the limit is $13,300.
For more information, see IRS Publication 969.
EquityTrustisapassivecustodiananddoesnotprovidetax,legalorinvestmentadvice.AnyinformationcommunicatedbyEquityTrustisforeducationalpurposesonly,andshouldnotbeconstruedastax,legalor
investmentadvice.Whenevermakinganinvestmentdecision,pleaseconsultwithyourtaxattorneyorfinancialprofessional.