Category: Tax

Big Changes For Retirement Planning Under Secure Act 2.0

At the tail end of December President Biden signed into law the Secure Act 2.0 as part of the $1.7 trillion Consolidated Appropriations Act of 2023. Its name represents an extension of the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act that was the Federal government’s first major retirement-focused legislation since 2006. Secure…
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Mega and Backdoor Roth Contributions: Do You Feel Lucky?

Often politicians pass laws that have unintended consequences, making tax planning difficult. This year the uncertainty revolves around two methods to build up your tax-free savings that may go away if the Biden administration’s Build Back Better legislation passes. I’ll describe the situation and the three possible outcomes. As background, some workers have the ability…
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New Tax Reduction For Some IRA Owners

It’s always nice to get a tax break. Starting in 2022 required minimum distributions (RMDs) by seniors from qualified retirement plans such as IRAs and 401(k)s will be reduced, courtesy of a change to life expectancies instituted by the IRS. Here’s an example to illustrate the change. Suppose Mary Taxpayer, born on March 1, 1950,…
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Key Tax Changes For 2022

It’s a new year and that generally means inflation adjustments to qualified retirement plan contribution limits as well as changes to other tax benefits and penalties. Here’s a brief summary of the changes most commonly utilized for 2022: 401(k) & 403(b) plans: Salary deferral limited to $20,500 (plus $6,500 if over age 50). Total additions…
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Be Careful Treating Your Hobby As A Business

Do you have a hobby that actually makes you some money? Crafting and selling jewelry or pottery for example? Or blogging about travel? Perhaps you help friends breed dogs. Did you know that hobby income is taxable (it should be reported on Form 1040 Schedule 1)? And before 2018 any expenses associated with a hobby…
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How To Increase Your Tax-Free Savings

Probably most everyone is familiar with a company 401(k) retirement savings plan. Employees age 50 or older can defer up to $26,000 of their salary in 2021. The employer can additionally add contributions based on a matching formula or some percentage of company profits. In the majority of plans today employees can even choose to…
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