Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.
Retirement Planning Topics for 2013
In order to be competitive and attract the best possible employees, many business owners invest in retirement plans for their staff. The rules governing these plans change from one year to the next, so business owners must stay up-to-date on all of the latest retirement planning news. Below is some important information to help business owners with retirement planning in 2013. New Contribution Limits
Most retirement plans offer certain tax benefits to employers and employees. Each year, the Internal Revenue Service publishes limits on the amount employers and their staff can contribute to various retirement plans without losing their tax benefits. For 2013, elective deferrals for 401(k) plans cannot exceed $17,500, while elective deferrals for SIMPLE IRAs cannot exceed $12,000. For SEP IRAs, employer and employee contribution totals cannot exceed $51,000. Social Security Changes
All employees must pay Social Security tax based on the amount of money they earn, and employers must pay their share as well. For 2013, the Social Security tax rate has increased to 6.2 percent. Previously, the rate was only 4.2 percent due to President Obama’s stimulus package. Unfortunately, that stimulus package recently expired, requiring employers and employees to pay more taxes on earned wages. Things to Remember
Employers should keep in mind that they can usually take tax deductions for the amount they contribute to employee retirement plans. Taking this deduction can reduce business tax liability. Employers should also remember to plan for their own retirement through investments, retirement plans and savings accounts. Finally, business owners must pay attention to the rules surrounding their retirement plans and Social Security tax obligations. Failing to make matching contributions to a 401(k) plan with automatic enrollment or failing to file quarterly payroll tax returns can result in serious penalties.
Most retirement plans offer certain tax benefits to employers and employees. Each year, the Internal Revenue Service publishes limits on the amount employers and their staff can contribute to various retirement plans without losing their tax benefits. For 2013, elective deferrals for 401(k) plans cannot exceed $17,500, while elective deferrals for SIMPLE IRAs cannot exceed $12,000. For SEP IRAs, employer and employee contribution totals cannot exceed $51,000. Social Security Changes
All employees must pay Social Security tax based on the amount of money they earn, and employers must pay their share as well. For 2013, the Social Security tax rate has increased to 6.2 percent. Previously, the rate was only 4.2 percent due to President Obama’s stimulus package. Unfortunately, that stimulus package recently expired, requiring employers and employees to pay more taxes on earned wages. Things to Remember
Employers should keep in mind that they can usually take tax deductions for the amount they contribute to employee retirement plans. Taking this deduction can reduce business tax liability. Employers should also remember to plan for their own retirement through investments, retirement plans and savings accounts. Finally, business owners must pay attention to the rules surrounding their retirement plans and Social Security tax obligations. Failing to make matching contributions to a 401(k) plan with automatic enrollment or failing to file quarterly payroll tax returns can result in serious penalties.
[View Article List]
TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.