Archive | August, 2012

An assessment or audit can be a good thing

August 31, 2012

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CEFEX, the Centre for Fiduciary Excellence, was established in 2006 and has been doing fiduciary certifications for six years now. When it was established, there were several considerations that were ironed out so as to ensure CEFEX got off on…

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Employment-Seventh Circuit Upholds Employee’s Claim Of Sexual Harassment

August 30, 2012

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In Passananti v. Cook County, No. 11-1182 (7th Cir. 2012), the plaintiff, Kimberly Passananti ("Passananti"), was the deputy director of the Cook County Day Reporting Center ("DRC") from 2002 until 2007. For several years, her supervisor was DRC director John…

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Maximum Contributions for Roth IRA & 401k Plans

August 30, 2012

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Both the 401k and Roth IRA are common retirement savings accounts. Generally employers offer the 401k plans to employees. Roth IRA accounts can be set up by an individual. Both retirement savings accounts are subject to contribution limits an individual can commit to either account each year.

401k Employee Contribution Limit

This is a pre-tax contribution taken out of an employee paycheck. According to the IRS, 401k Auditemployee contributions to 401k plans are limited to $17,000 for 2012.  After 2012 this limit is subject to cost of living adjustments. Taxes for the 401k plans are due upon withdrawal.

401k Total Contribution Limit

This is the total contributions of an employee and matching employer contributions. The IRS states the total employee/ employer contribution limit in 2012, is $50,000.

Roth IRA Contribution Limit

Roth IRA contributions are made with “after-tax” dollars. Therefore, your money grows tax-free, upon retirement there will be no taxes due when you make a withdrawal.

Contribution limits generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs. According to the IRS chart:

You can contribute to a Roth IRA if you have taxable compensation and your modified AGI is less than:

Virtual CFOModified AGI limit for Roth IRA contributions increased.

$179,000 for married filing jointly or qualifying widow(er),

$122,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and

$10,000 for married filing separately and you lived with your spouse at any time during the year.

Catch-Up Contributions

Both 401k plans and Roth IRAs allow workers to make “catch-up” contributions. Catch-up contributions are designed to allow workers that are near retirement age to save more in retirement accounts. The IRS says that workers aged 50 and over can contribute an additional $5,500 to 401k plans for a maximum of $22,000. People aged 50 and over can contribute an extra $1,000 to Roth IRAs, for a maximum of $6,000 a year.

Employers are not required to provide for catch-up contributions in any of its plans. A plan may permit participants who are age 50 or over at the end of the calendar year to make additional elective deferral contributions. These additional contributions are not subject to the general limits that apply to 401(k) plans.

If your would like more information about retirement plans contact our office at (260) 497-9761. We specialize in 401k audits.

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Employment-New York Passes Law Which Prevents Employers From Requiring Employees To Disclose Their Social Security Number.

August 29, 2012

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New York State has passed a new law, which prevents most persons from requiring others to disclose their Social Security Numbers ("SSNs"). The law may be found at new section 399-ddd to the General Business Law, and becomes effective on…

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Be Ahead of the Game

August 28, 2012

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As noted in many of our previous blogs, changes are coming in the 401(k) world.  As a plan sponsor, you should be aware of these changes and be communicating them to the plan participants.  Over communicating is always better than … read more

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ERISA-Sixth Circuit Rules That Plaintiffs Have Stated A Valid Claim Under ERISA In A Stock Drop Case

August 28, 2012

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In Griffin v. Flagstar Bancorp, Inc., No. 11-1497 (6th Cir. 2012) (Unpublished Opinion), the plaintiffs were a class of participants and beneficiaries of the Flagstar Bank 401(k) Plan (the "Plan"). They alleged that Flagstar Bancorp, Inc. ("Flagstar") and certain officials…

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Do you need a 401k or a Roth IRA? Why Not Have Both?

August 28, 2012

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Contributing to both a Roth IRA and a 401k can boost your retirement savings and help you enjoy a more financially secure lifestyle after you stop working. You may already participate in an employer sponsored 401k so you may not think that you need a Roth IRA. But, there are solid reasons why you should consider both a Roth IRA and a 401k plan. Having both401k Audit specialist plans in place can provide you with additional flexibility when you start drawing on your nest egg.

Flexibility

A Roth IRA is tax-free income you can tap when you retire. This will give you additional flexibility to supplement money drawn from taxable sources like your 401k plan or personal savings. This may keep your taxes low while still giving you the money you need to enjoy your retirement years.

Tax Savings

Having both a Roth IRA and a 401k will provide significant tax savings. Any money contributed to your employer 401k plan is deducted before it is taxed. This lowers your taxable income, reducing the amount of taxes you pay. However, the Roth IRA requires that tax be deducted at the time any contributions are made. But, this allows you to withdraw those appreciated funds in your retirement with no tax liability at all. This is an important reason to contribute to both plans

Retirement Money

The Social Security Administration estimates that your Social Security check will replace only about 40 percent of your pre-retirement income, leaving the rest up to you to save the rest. Financial PlanningChances are you will need more money in retirement than you realize, and participating in both a 401k and a Roth IRA is one way to bulk up your retirement savings. The more you can contribute to a Roth IRA and 401k, the more you can accumulate for retirement.

Diversification

You can greatly increase your level of diversification by supplementing your 401k savings with a Roth IRA. A Roth IRA allows you to invest in a wide array of asset classes, from mutual funds and individual stocks to real estate investment trusts and precious metals. This diversification can reduce the risk in your portfolio as you prepare for retirement.

A 401k is a powerful tool for retirement, but the investment choices can be somewhat limited. Many 401k plans provide only a handful of funds, including perhaps a couple of stock and bond funds and a target date retirement fund.

For all of your financial needs contact our office at (260) 497-9761 to schedule a consultation appointment.

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Fiduciary Links: Preserving the fiduciary history and legislative intent of IAA and ERISA

August 27, 2012

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>>>>Back in June, 33 members of Congress wrote to Secretary of Labor Hilda Solis, urging the Department of Labor and the SEC to coordinate closely on their respective fiduciary rulemaking initiatives and arrive at a "workable, consistent set of rules."…

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Yale Study: A Few Extra Words Can Make a Major Difference for 401k Investors

August 27, 2012

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The education of your employees is the most important component of your company 401(k) plan. The right ‘words’ can mean the difference in a successful retirement outcome. In the end, the paper concludes “small numerical cues can influence decisions as economically significant and familiar as retirement savings plan contributions. Low cue decrease contribution rates by […]

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5 steps to accommodate major 401(k) compliance deadline looming August 30

August 27, 2012

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New regulations are becoming effective soon and there will be more coming. Please take the time to review your 401(k) plan periodically to protect yourself and your employees. To deal with these challenges: 1. If you haven’t done so already, get to work pronto on the fee disclosures due August 30. The first step is […]

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