News

44 pages; Mar. 7, 2024. "What's New: [1] Compensation ... Elective deferral ... Defined contribution ... Defined benefit ... SIMPLE plan salary reduction contribution ... [and] Catch-up contribution limits for 2023 and 2024 ... [2] Required minimum distributions (RMDs).... [3] Plans established after end of taxable year.... [4] Increased small employer pension plan startup cost credit.... [5] Employer contributions credit.... [6] Small employer military spouse participation credit.... [7] Designated Roth nonelective contributions and designated Roth matching contributions."

"[T]he IRS is soliciting comments concerning the burden associated with the salary reduction simplified employee pension-individual retirement accounts contribution agreement.... Form 5305A-SEP is used by an employer to make an agreement to provide benefits to all employees under a Simplified Employee Pension (SEP) described in Internal Revenue Code section 408(k). This form is not to be filed with the IRS, but is to be retained in the employer's records as proof of establishing a SEP and justifying a deduction for contributions made to the SEP."

"The information on Form 5498 is submitted to the IRS by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account."

"[1] Which employees will you cover? ... [2] Contribution amount ... [3] Flexibility and commitment ... [4] Potential complexity ... [5] Control and responsibility."

44 pages; Jan. 31, 2024. "What's New: [1] Compensation limits for 2023 and 2024.... [2] Elective deferral limits for 2023 and 2024.... [3] Defined contribution limits for 2023 and 2024.... [4] Defined benefit limits for 2023 and 2024.... [5] SIMPLE plan salary reduction contribution limits for 2023 and 2024.... [6] Catch-up contribution limits for 2023 and 2024 ... [7] Required minimum distributions (RMDs)."

"[This post focuses] specifically on SECURE 2.0 changes to small employer plans, including SIMPLE IRA Plans and SEPs.... The chart [in this article] is intended to be used as a reference for describing many of the Small Plan changes relative to current law, the type of plans affected, whether the change is mandatory or optional, and the effective date of the change."

"Many of the general changes ... apply to individual retirement accounts (IRAs) as well as to other types of retirement plans. Other new options apply to SEP-IRAs and SIMPLE IRAs ... [including] the ability to match participant loan repayments under SIMPLE IRAs and the ability to establish a SEP for domestic employees. Additional changes that enhance the benefits of participation and permit increased contributions are specific to IRAs, SEP-IRAs and SIMPLE IRAs."

"The information on Form 5498 is submitted to the IRS by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account."

"As the June 30, 2022 CalSavers deadline bears down on employers with five or more California employees, many small employers may be giving thought to adopting a simplified retirement plan, whether a SEP or SIMPLE IRA.... [E]ach of these types of plans imposes participation notification duties that employers often overlook, and noncompliance can put the tax-sanctioned status of the whole arrangement at risk."

"This temporary suspension comes as no surprise as the [SECURE Act] made significant changes to IRAs, and questions regarding some of the SECURE Act's more complex changes still remain.... The IRS intends to issue updated model forms and LRMs as well as a new revenue procedure for requesting an IRS opinion letter on prototype IRAs."

"This announcement provides that, effective March 14, 2022, and until further notice, the [IRS] will not accept applications for opinion letters on prototype IRAs (traditional, Roth and SIMPLE IRAs), SEPs (including salary reduction SEPs (SARSEPs)), and SIMPLE IRA plans. This announcement also provides that, pending issuance of future guidance [1] adopters of prototype IRAs, SEPs, and SIMPLE IRA plans may rely on a previously received favorable opinion letter, and [2] taxpayers may use existing model forms to maintain current plans and accounts or establish new plans and accounts."

"Plan sponsors may use this Voluntary Correction Program (VCP) Submission Kit if they: [1] Aren't eligible to sponsor a SIMPLE IRA Plan, because they have too many employees, or [2] Can't sponsor a SIMPLE IRA Plan, because they maintain another type of retirement plan.... Receiving IRS approval of this submission kit, however, doesn't correct other failures in your plan, like the failure to: [1] Limit contributions made to the SIMPLE IRA plan in accordance with IRC Section 408(p); [2] Update your SIMPLE IRA plan document for current law changes; [3] Operate the SIMPLE IRA plan according to its written terms; [4] Admit all eligible employees."

"Depending on the time of year you ask this question, you may find you've eliminated one of the options right off the bat.... Is there a chance you might want to wait until after the tax year to fund the plan? ... Are you looking for the simplest and easiest option? ... Do you want a Roth Option? ... Do you want to make the highest possible contribution? ... Do you earn more than $280,000? ... Do you want to contribute your entire earnings? ... Are you age 50 or above and wish to take advantage of a catch-up provision? ... Do you think you might need to take a loan from your retirement savings? ... Do you expect to hire employees in the future?"

28 pages; Jan. 24, 2019. "What's New: [1] Compensation limits for 2018 and 2019.... [2] Elective deferral limits for 2018 and 2019.... [3] Defined contribution limits for 2018 and 2019.... [4] Defined benefit limits for 2018 and 2019.... [5] SIMPLE plan salary reduction contribution limit for 2018 and 2019.... [6] Catch-up contribution limits for 2018 and 2019 ... [7] Changes to the hardship distribution rules for section 401(k) plans.... [8] Tax relief for victims of Hurricanes Michael and Florence."

Revised Aug. 2018. "Every year it's important to review the requirements for operating your Salary Reduction Simplified Employee Pension (SARSEP) plan. Use this checklist to help you keep your plan in compliance with many important rules. For additional information (including examples) on how to find, fix and avoid each mistake click on [a link in the text of this Checklist].' "

Rev. Aug. 2018. "Every year it's important that you review the requirements for operating your Simplified Employee Pension (SEP) plan. Use this checklist to help you keep your plan in compliance with many of the important rules."

"The information on Form 5498 is submitted to the IRS by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account."

"The IRA owner's ability to reclaim these monies from the state unclaimed property fund is noted in the ruling but does not figure in the analysis. For Form 1099-R reporting, the ruling does not prescribe a unique reporting code or other designation that the IRA has been escheated to the state. The ruling by its terms is inapplicable to simplified employee pensions (SEPs), SIMPLE-IRAs and deemed IRAs."

An entity that is not a bank (or an insurance company in the case of Archer Medical Savings Accounts and health savings accounts) can request to be a nonbank trustee/custodian by applying in writing and demonstrating that certain requirements will be met in order to handle any of the following fiduciary accounts: [1] Archer Medical Savings Account (MSA); [2] Health Savings Account; [3] Qualified Retirement Plan Custodial Account; [4] 403(b)(7) Custodial Account; [5] Individual Retirement Arrangement (IRA); [6] Roth IRA; [7] Deferred Compensation Plan of State & Local Government and Tax Exempt Organizations; [8] Custodial Accounts Coverdell Education Savings Account. [More information is on an IRS web page.]

12 pages; rev. Dec. 2017. "A SARSEP is a written arrangement (a plan) that allows an employer to make contributions toward its employees' retirement without becoming involved in more complex retirement plans. A self-employed individual may also maintain a SARSEP. Under a SARSEP, SEP-IRAs are set up for each eligible employee and contributions are made to the traditional SEP-IRAs -- not Roth or SIMPLE IRAs -- of the plan participants." [Also available: IRS Publication 4407, SARSEP Key Issues and Assistance, rev. Dec. 2017]

"Aside from the philanthropical aspect of making a [qualified charitable contribution (QCD)], a QCD is excludable from taxable income, plus it may count towards the individual's required minimum distribution (RMD) for the year, and may lower taxable income enough for the person to avoid paying additional Medicare premiums.... Where an individual has made nondeductible contributions to his or her traditional IRAs, a special rule treats amounts distributed to charities as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions."

"The purpose of this outline is to compare a SEP with a safe harbor 401(k) plan -- especially for employers who must cover participants other than just the owners. Note that a SEP is funded entirely by Employer contributions -- there are no employee deferrals allowed in a SEP."

"To better maximize the potential for success in retirement, it is essential for small business owners to understand the basics regarding the retirement options available.... Many choices are available ... The most popular plans are the SIMPLE IRA and Solo (Individual) 401k. The pros and cons of each plan are discussed [in this article]."

"While a SEP may be the perfect plan type for some situations, many employers who start with a SEP later realize that a 401(k) plan may actually help the owners better meet their objective of maximizing contributions to themselves at a lower contribution obligation for the employees.... A SEP may be terminated at any time and all funding can stop once the plan is terminated.... No notice has to be provided to the IRS about the SEP termination. Employees may take a distribution from the SEP or may roll their SEP account into the new 401(k) plan or into an IRA."

"The 401(k) Plan offers the most flexibility (and high contribution limits) ... SEP IRAs are pretty easy to start and 100% funded by the employer.... The SIMPLE IRA is a solid, affordable option."