Tax & Financial Planning
- What to Expect from Retirement Benefits
• Social Security will be staying as is. While there is usually some cost of living adjustment associated with payments, 2010 will not show an increase.
• 401k contributions limits are staying as is. While the government has been building in slight increases each year, there will not be any for 2010. Limits will stay a $16,500 maximum, with a $5500 catchup provision for participants over age 50.
• 401(k) matches are returning. Statistics are showing that ofthose company plans that cut employer contributions, 27% have already become matching again. Look for this trend to continue as the economy continues to stabilize.
- Roth Conversion
• Be sure to consider whether a Roth Conversion is right for you. 2010 marks the first time that the conversion opportunity is open to EVERYONE. Be sure to avoid potential tax pitfalls of conversion.
- What about the Estate Tax?
• The current law on estate tax is that there isn't one. The tax expired at the end of2009, but Congress has until September to make a retroactive law, and you can probably bet that something will shake out of Washington between now and then.
- RMDs Return
• After the financial crisis in the fall of 2008, Congress decided to suspend required minimum distributions from retirement plans. Well, they are back in 2010, so be sure that you are set to continue withdrawing, otherwise you could be penalized.
- Tax Rates--Capital Gains Rates are Still Low ... For Now
• Capital gains rates are set to increase in 2011, as the government grapples with deficit, but for now, the highest rate is 15 percent for individuals in the 25 percent to 35% brackets. There is no capital gains for individuals in the 10 percent and 15 percent tax brackets pay no capital gains.
- Tax Rates--One of the Lowest Income Tax Rate Eras ... For Now
• The fact that we are probably in a rising income tax environment (given the fact that we are at near historic low levels for the top income tax bracket), traditional ideas for retirement planning are being rethought. Roth Conversion, Section 79 Plans, and other tax advantaged tools for retirement are becoming more important for business owners.
