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Powerful tools for the self-employed and business owner

This time of the year brings a myriad of questions surrounding retirement plans for the self-employed and the business owner.  Whether you are a sole proprietor, small business owner, medical practice or larger corporation, retirement plans are essential tools for tax and retirement savings.  We understand every business is different and welcome the opportunity to discuss your needs and help design a plan that makes sense.  If you currently have a plan in place and would like to review it, we would be more than happy to look at it with you.  In the end, there are few tools more powerful than retirement plans for the business owner – they can create annual tax savings, provide tax deferred growth to fund retirement and if applicable, aide in the recruiting and retention of employees.

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New IRS rules for IRA rollovers

Back in March, the IRS announced that an individual can do only one rollover from one IRA to another in 365-day period, noting that the rule wouldn't apply before Jan. 1, 2015.

The regulation only applies to rollovers from one IRA to another, as well as one Roth IRA to another. Rollovers out of retirement plans and Roth conversions aren't covered under this rule. 

The latest announcement from the IRS provides additional clarity on the timing and application of the regulation.  For one thing, the agency confirmed that the rule will take effect on Jan. 1, putting to rest concerns that rollovers made anytime in 2014 might be subject to the regulation.

Further, the IRS's announcement clarifies that the rule applies to all of a given individual's accounts. Previously, some people thought that the rules applied individually to IRAs and Roth IRAs, hence permitting one IRA-to-IRA rollover and one Roth-IRA-to-Roth-IRA rollover. That's not the case, you get only one of these transactions per 365-day period.

Clients who are moving an IRA and who end up getting a check need to ensure that the check is being made to the receiving IRA and not to them personally. A check made directly to the client is considered a rollover, and the rules will apply. A check made to an institution, however, is considered a trustee-to-trustee transfer.

Naturally, with all tax law changes, you should consult your CPA to see how such a change may impact you directly.

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New IRS Adjustments to Retirement Plans for 2015

The Internal Revenue Service has just announced the cost-of-living adjustments and other dollar limitations for retirement plans that take effect January 1, 2015.

Maximum Defined Contribution Plan Annual Addition
$53,000 - increase of $1,000 from 2014.
Effective for limitation years ending in 2015.

Salary Deferral Limit
$18,000 - increase of $500 from 2014.

Catch-up Limit for 401(k), 403(b), and 457 Plans
$6,000 - increase of $500 from 2014.

HCE Compensation
$120,000 - increase of $5,000 from 2014.
Applies for determining HCE's in 2016, based on compensation in 2015.

Maximum Compensation for Retirement Plan Purposes
$265,000 - increase of $5,000 from 2014.
Applies to plan years beginning in 2015.

Compensation for Determining if Officers can be Key Employees
$170,000 - remains unchanged from 2014.

Taxable Wage Base
$118,500 - increase of $1,500 from 2014.

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