Why You Should Not Own Mutual Funds at this time --- Mutual Funds can be considered dangerous to own. We have information on this and many other financial pitfalls in the business world.
Journal of Accountancy Large Logoe financial fallout from penalties.
The sponsor of an abusive plan can expect to be treated more harshly. Although in some situations something can be salvaged, the possibility is definitely on the table of having to treat the plan as if it never existed, which of course triggers the full extent of back taxes, penalties and interest on all contributions that were made, not to mention leaving behind no retirement plan whatsoever.
AICPA RESOURCES
CPE Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots, by Sid Kess, a CPE self-study course (#733720) Sid Kess’ Practical Alternatives to Commonly Misused and Abused Small Business Tax Strategies: Insuring Your Client’s Future, a CPE self-study course (#733730)
For more information or to place an order, visit www.cpa2biz.com or call the Institute at 888-777-7077.
AICPA PFP Center and PFS Credential The AICPA Personal Financial Planning (PFP) Center provides resources to CPAs for professional and ethical financial planning. The center also contains information about the AICPA Personal Financial Specialist (PFS) credential and PFP section membership. Visit the PFP Center at http://pfp.aicpa.org.
AICPA Tax Membership Section The Tax Membership Section provides tools, technologies and peer interaction to CPAs with tax practices. The Section keeps members up to date on tax legislative and regulatory developments. For more information, visit the AICPA’s Tax Center at http://tax.aicpa.org.
OTHER RESOURCES
Law, rulings and guidance Internal Revenue Code §§ 264, 419, 419A, 6111 and 6112
Small business owners playing catch-up on retirement savings might reach their goals with 412(i) plans, if they are aware of possible IRS pitfalls and tax savings in those programs. That is an overview from several financial advisors who say that some but not all age 50-plus business owners should consider those plans. The main advantage is that 412(i) plans permit larger tax-deductible contributions than other defined benefit retirement plans. As in other defined benefit plans, the business owner must put in the same percentage of annual salary for each participating employee of the same age. In 412(i) plans, percentages are often very high and businesses must be certain they can meet ongoing requirements. If cash flow of a business slows, some owners might have trouble making contributions and could be subject to IRS penalties for early termination of a plan. Another downside is that 412(i) plans can invest only in whole life insurance policies and annuity contracts. Thus, the programs are what advisors consider relatively safe and stable, but they don't offer the bigger potential gains of stocks and some other investments. In addition, some advisors note that the IRS is increasing its reviews and audits of 412(i) plans to see if contributions are producing total benefits that exceed its limits for retirement plans.
Journal of Accountancy Large Logoe financial fallout from penalties.
ReplyDeleteThe sponsor of an abusive plan can expect to be treated more harshly. Although in some situations something can be salvaged, the possibility is definitely on the table of having to treat the plan as if it never existed, which of course triggers the full extent of back taxes, penalties and interest on all contributions that were made, not to mention leaving behind no retirement plan whatsoever.
AICPA RESOURCES
CPE
Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots, by Sid Kess, a CPE self-study course (#733720)
Sid Kess’ Practical Alternatives to Commonly Misused and Abused Small Business Tax Strategies: Insuring Your Client’s Future, a CPE self-study course (#733730)
For more information or to place an order, visit www.cpa2biz.com or call the Institute at 888-777-7077.
AICPA PFP Center and PFS Credential
The AICPA Personal Financial Planning (PFP) Center provides resources to CPAs for professional and ethical financial planning. The center also contains information about the AICPA Personal Financial Specialist (PFS) credential and PFP section membership. Visit the PFP Center at http://pfp.aicpa.org.
AICPA Tax Membership Section
The Tax Membership Section provides tools, technologies and peer interaction to CPAs with tax practices. The Section keeps members up to date on tax legislative and regulatory developments. For more information, visit the AICPA’s Tax Center at http://tax.aicpa.org.
OTHER RESOURCES
Law, rulings and guidance
Internal Revenue Code §§ 264, 419, 419A, 6111 and 6112
Small business owners playing catch-up on retirement savings might reach their goals with 412(i) plans, if they are aware of possible IRS pitfalls and tax savings in those programs.
ReplyDeleteThat is an overview from several financial advisors who say that some but not all age 50-plus business owners should consider those plans.
The main advantage is that 412(i) plans permit larger tax-deductible contributions than other defined benefit retirement plans.
As in other defined benefit plans, the business owner must put in the same percentage of annual salary for each participating employee of the same age.
In 412(i) plans, percentages are often very high and businesses must be certain they can meet ongoing requirements. If cash flow of a business slows, some owners might have trouble making contributions and could be subject to IRS penalties for early termination of a plan.
Another downside is that 412(i) plans can invest only in whole life insurance policies and annuity contracts. Thus, the programs are what advisors consider relatively safe and stable, but they don't offer the bigger potential gains of stocks and some other investments.
In addition, some advisors note that the IRS is increasing its reviews and audits of 412(i) plans to see if contributions are producing total benefits that exceed its limits for retirement plans.