Revenooer Rants: Obama proposes retirement savings incentives
February 10, 2016
Lest we be chastised for not giving credit where credit is due, we have to hand it to Obama for recently announcing much needed retirement incentives, which will be included in his 2017 budget to be announced this week.
The simple fact is that, unlike the situation in our parents' generation, most folks just don't work their entire career with one company, which typically stashed away dough to fund employees' retirement years.
Further, Obama notes that fewer than 10% of workers without access to a workplace retirement plan contribute to a retirement savings plan of their own.
So, government now proposes to encourage more employers to offer plans and create alternative savings arrangements for folks whose employer does not offer a plan. To wit:
• A proposal to triple the existing "startup" credit so small employers which begin offering a retirement plan would receive a tax credit of $1,500 per year for up to three years. Further, small employers which already offer a plan and add auto-enrollment would get a tax credit of $500 per year for up to three years.
• For the benefit of part-time workers, a proposal to require that employees who have worked for an employer for at least 500 hours per year for at least three years be eligible to participate in the employer's existing plan.
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• A proposal which would require employers with more than 10 employees who do not presently offer a retirement plan to automatically enroll their workers in an IRA. Employers with 100 or less employees that offer an auto-IRA would receive a tax credit of up to $3,000.
• A proposal to increase the "portability" of retirement savings, in cases of employees who change employers through the course of their working life.
When Obama giveth, however, he also taketh away. Recall that IRS typically charges "user fees" for private letter rulings and determination letters which are available to taxpayers seeking advice on complex tax questions and/or decisions regarding tax exempt status for various nonprofit entities.
In an effort to beef up its sagging budget condition about which we hear so much, IRS recently announced they will clip folks for higher fees, starting immediately.
F'rinstance, the fee to request a ruling approving a late IRA rollover will jump to a whopping $10 grand – up from the previous $500 to $3,000 level depending on the value of the IRA rollover.
And finally, this week, as tax season eases into full swing, take comfort in the notion that you will have more time to file and pay this year!
Yep – because of the "Emancipation Day" holiday in D.C. falling on Friday, April 15 this year, you will have until Monday, April 18 to file for 2015. And if that's not enough good news, folks in Maine and Massachusetts will have until Tuesday, April 19 because of their "Patriot's Day" observance on April 18!
CONSULT YOUR TAX ADVISER – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn is a CPA recently retired from the firm Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He welcomes comments at email@example.com.