Category: Retirement Planning

If you’re looking for money to buy a new car or pay off some bills, your 401(k) plan may seem like a pot of untapped gold. The temptation to tap your retirement funds often comes when you switch jobs and must decide how to handle your account. But in most cases, breaking into a retirement plan early is a mistake that will just melt away your savings. Unfortunately, many people make the unfortunate decision to “cash out” their retirement accounts… Read more ›

If you own a successful small business with no employees, you might be ready to set up a retirement plan. Or you might want to upgrade from a more-basic SIMPLE IRA or Simplified Employee Pension (SEP) plan. Here are two options — solo 401(k)s and defined benefit pension plans — to consider if you have healthy self-employment income and want to contribute substantial amounts to your retirement nest egg. Important: This article is geared toward self-employed individuals. That includes sole proprietors,… Read more ›

Sooner or later, your firm will encounter the issue of buying out a partner. This may be due to the partner’s retirement, death or other reasons. The federal income tax rules for partnership payments to buy out an exiting partner’s interest are tricky, but they also open up tax planning opportunities. The Basic Tax Rules Payments made by a partnership to liquidate (or buy out) an exiting partner’s entire interest are covered by Section 736 of the Internal Revenue Code…. Read more ›

Revenue generated by 501(c)(3) organizations is generally exempt from federal income tax. But in some cases, your not-for-profit may incur unrelated business income tax (UBIT) on revenue. The good news is your annual tax return may offer some relief in the form of deductions. The list isn’t as long as the “ordinary and necessary business expenses” for-profit entities can deduct, but here are six common nonprofit deductions to know about: 1. Wages. Just as for-profit businesses, your nonprofit can deduct… Read more ›

When planning a trip, you probably focus on making the travel arrangements, ensuring you’ll have enough spending money and other practical issues, such as having someone cover you at the office and someone else keep an eye on your house or pets. The last thing on your mind may be putting your financial and other personal documents in order. However, if you expect to be away for any length of time — especially if your loved ones won’t be traveling… Read more ›

For 2022, the amount you can sock away into your 401(k), 403(b) and most 457 plans will rise another $1,000 to $20,500. If you’re at least 50 years of age, you can put away up to $27,000 thanks to catch-up contributions. The limit on “total additions” to those plans — that is your deferrals and employer contributions combined — rises to $61,000 in 2022 or $67,500 if you’re at least 50. While you’re contemplating how much to put into your… Read more ›

The 403(b) plan is often thought of as a 401(k) plan for nonprofits. It’s probably not the only option for your not-for-profit, but it can provide certain advantages over 401(k)s. Following is a brief rundown. Generous Contribution Limits A 403(b) plan is a tax-favored qualified retirement plan set up for employees of not-for-profit organizations, including charities, hospitals, schools and government entities. As with other qualified plans, pre-tax contributions grow tax-free until withdrawals are made. Normally, employee contributions are deducted from… Read more ›

Graduation can be one of the most exciting — and intimidating — times in your life. You’re officially an adult, and with that new-found independence comes financial responsibilities. No pressure, but the decisions you make today about spending and saving can mean the difference between struggling for the rest of your life and building a solid financial future. Here’s a list of important questions to ask yourself as you start your journey: 1. Where Should I Live? Depending on where… Read more ›

If you want a retirement plan for your small company or self-employed business — but you don’t want to be buried in paperwork — consider a simplified employee pension plan or SEP. Among the appealing advantages: SEPs are set up by simply filling out a brief form. Annual reports aren’t required to be filed with the IRS, although you must provide a copy of the SEP form to each covered employee. (Most retirement plans require detailed reports to be filed… Read more ›

  Some people are worried that they will wind up in a nursing home with their life savings wiped out. But that doesn’t have to be the case. You can buy some peace of mind with long-term care insurance. But caveat emptor: These policies can be expensive, complicated and they don’t always cover all the costs involved. First, the good news: If you purchase long-term care insurance, you may be able to get a limited tax deduction. Plus, benefits received… Read more ›