December 2008 | FIGuide

2009 Retirement Plan Contribution Limits

Dec 22 2008

The IRS has announced the cost of living adjustments applicable to dollar limitations for 401(k), profit sharing, IRAs, and other retirement plans in 2009. The new limits are as follows:

401(k) limit will increase from $15,500 to $16,500.
401(k) “catch-up” limit for individuals age 50 and over will increase from $5,000 to $5,500.
Defined contribution plan limit will increase from $46,000 to $49,000.
Defined benefit and cash balance plan annual benefit limit will increase from $185,000 to $195,000.
Contribution limit for benefit and contribution calculation will increase from $230,000 to $245,000.
Highly compensated employee definition will increase from $150,000 to

Do You Want a Bigger Tax Refund?

Dec 22 2008

How much will you get back from the IRS this year? If you don’t know, than it’s a good time to begin your tax planning. Most people don’t plan their taxes and then hope for the best. If you get a larger refund than expected, you’re happy, but if you’re forced to pay taxes, you’ll be disappointed. Tax planning gets rid of these surprises.

The truth is, when your taxes are prepared, you are merely documenting the past. There is not much that can be done to save money, when compared to early tax planning. With tax planning there is …

House and Senate Pass Legislation Waiving 2009 RMDs

Dec 16 2008

Both the U.S. House of Representatives and the U.S. Senate passed a bill that would waive required minimum distributions (RMD) in 2009. Normally, individuals over the age of 70.5 are required to withdraw an amount calculated by dividing the prior December 31st balance of the retirement account by the individual’s life expectancy as determined by the Internal Revenue Service. The government requires these distributions to ensure that money in retirement accounts is ultimately taxed. Failure to withdraw the required amount subjects the individual to a 50% penalty on the amount that should have been withdrawn in addition to income taxes …

Uniform Transfer to Minors Act (UTMA)

Dec 13 2008

Uniform transfers to minors accounts allows someone to make a gift or a transfer of property to a minor without setting up a trust. All transfers to UTMA accounts are considered irrevocable and the donor cannot reclaim the gift or change the beneficiary of the account.

An adult is designated as the custodian to manage the account for the benefit of the minor until the child reaches the age specified in the statute. Custodians have certain powers and responsibilities under these laws and they should consult with legal counsel to understand their obligations with respect to the account. Once the …

Will 401(k) Accounts Be Eliminated?

Dec 10 2008

Back in October, some influential members of the House of Representatives held hearings to discuss overhauling the 401(k) retirement plan system. Soon thereafter, talk radio, the blogosphere, and even the generally-sober Wall Street Journal erupted with dark warnings of a plot afoot to “nationalize” or “confiscate” everyone’s 401(k) plans and convert them to accounts managed by the Social Security Administration.

The House Education and Labor Committee interviewed a number of retirees, activists, and others to open discussion on the possibility of altering the nature of 401(k) accounts. The discussions were partly a response to the realization that 401(k) holders had …

Archive - December 2008