- Reimbursements may include Health Insurance while collecting unemployment.
- Disbursements not used for qualified medical expenses are taxable AND PENALIZED 20%
- Cannot be enrolled in Medicare
- Cannot be claimed as a dependent on someone else's tax return.
- Your plan cannot allow for prescription drug coverage before deductible is met.
Who: All employers interested in retirement plans (this is what we do)
What: Simple IRA’s
When: Can sign up until September 30, 2014 for new plans and fund later.
Why: Cause you are going to want to retire someday. It is never too early nor too late to start.
How Much Can an Employee Contribute:
Up to $12,000 per employee plus $2,500 if over age 50. THAT IS EMPLOYEE MONEY
How Much Must the Employer Match:
Our suggestion is the employer adds the lower of:
3% of wages or whatever employee contributes
(This is a low cost way to implement a significant employee benefit)
Employee earns $30,000 x 3% = $900 is the maximum exposure the employer must match.
If the employee puts in nothing, the employer puts in nothing.
If the employee puts in $5,000 (employee’s money), employer can only put in $900.
If the employee put in $300, the employer can only put in $300.
To Know More:
Call Lonnie Young (407) 936-2500 x107
for Tax Implications and W2 Reporting Requirements (easy).
This is an easy no administrative cost solution to having an employee retirement benefit.
Additionally, since the employee picks the individual investment, there is no fiduciary
responsibility on your part for investment performance.
If a trust has capital gains, the trust pays the tax except in the final year when the trust is closed.
In any other year, if beneficiaries receive a distribution, they are taxed on any ordinary income over and above deductible expenses. If there is not a distribution, the trust pays the tax on the ordinary income.
Not all costs paid by a trust are deductible. Often people think, well, the trust earned this much but I spent this much so there is no gain….. very often that is incorrect. Best example, the deceased creates a trust at death. The trust pays for the funeral. That is not a deduction. It is a deduction if the estate is worth more than $5m (varies by year of death) on a separate one time tax return Form 706. But, the trust itself reports on Form 1041 and here it is not a deduction.
We believe by not filing the Form 1041 correctly, the tax is probably not paid correctly or the beneficiaries are not receiving their proper loss allocation. Good example, deceased leaves a home valued at $100k. It sells for $100k. Most beneficiaries do not realize they have a loss based on the closing costs at sale and the non-deductible costs they’ve incurred managing/carrying this ‘investment’.
Additionally, by having an outside firm actually prepare this return, it takes some of the questions away from the beneficiaries.. the person in charge of the estate/trust has hired an independent person so we don’t have as many questions.
Gets complicated quickly.