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Posts made in August, 2017


Have You Outgrown Your SIMPLE IRA?

Have You Outgrown Your SIMPLE IRA?


Posted By on Aug 16, 2017

For small business owners and their employees, a SIMPLE IRA plan is often the best retirement planning solution. But as your company grows, it is possible to outgrow your SIMPLE IRA. At that point, the benefits of a 401(k) become clear. To start, remember that a SIMPLE IRA is only available to companies with fewer than 100 employees. So you really can quite literally outgrow it! It can be difficult for your employees to let go of their familiar plan, so it will help to point out how a 401(k) can offer additional benefits to them.. Who doesn’t want to save more for retirement? That’s exactly what you can do with a 401(k). Under the SIMPLE plan, employees are limited to a $12,500 annual tax-advantaged contribution. When you switch to a 401(k), that limit increases to $18,000 annually. This not only allows for greater potential for retirement savings; it can decrease employees’ tax burdens as well. A 401(k) plan also offers greater flexibility for your employees. You can structure the plan to allow for profit sharing incentives. Loans are also permitted under a 401(k), whereas they are not allowed via SIMPLE IRAs. Your employees might enjoy the peace of mind of knowing that they could borrow from their retirement fund in an emergency. Under a 401(k), employees are also allowed to fund multiple retirement funds. This provision is an additional form of security not offered under the SIMPLE plan, which restricts contributors to one retirement account only. Finally, if any of your employees have reached age 50, they can make additional catch-up contributions to boost their retirement preparedness. Currently, they can make a $3,000 catch-up contribution each year, under their SIMPLE IRA. That limit would double to $6,000 annually under a 401(k). If you’re thinking of transitioning from a SIMPLE IRA to a 401(k) for the 2018 tax year, keep in mind that the deadline is November 2 of this year. You are also required to give your employees a 60-day notice before the start of the year in which the SIMPLE will no longer be offered. As you plan for a retirement plan changeover, remember to point out how the new plan benefits your employees. Change can be scary, but satisfied employees are loyal...

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It would be nearly impossible to avoid the news facing the health insurance world right now. As Congress continues to debate the merits and drawbacks of various replacements, the Affordable Care Act stands… But that doesn’t mean that things will continue exactly as they have been. For one thing, there is no guarantee that the federal government will continue to fund subsidies that help to pay for premiums. That leaves our state lawmakers deciding what to do about the cost of health insurance plans offered through Covered California. Not only are premiums set to rise about 12.5 percent next year; California lawmakers are considering a 12.4 “CSR surcharge” to silver-level plans on top of that, if the federal government fails to fund subsidies next year. The uncertainty is impacting health insurance providers as well. Anthem Blue Cross has just announced that they will pull out of much of California’s market, remaining only in Santa Clara County, parts of Northern California, and the Central Valley. About 153,000 Anthem customers, or nearly 10 percent of those enrolled in a health care plan through Covered California, will lose their provider. Luckily, for now most will still be able to choose from at least three other providers, depending upon their geographic area. It’s not just happening in California. All over the nation, insurers are forced to reconsider their participation in the Affordable Care Act exchanges, or issue significant rate hikes. It’s clear that Covered California and other states’ exchanges are facing some turmoil. In the meantime, remember that you don’t have to purchase your coverage through the exchange. If you’re one of the ten percent who will be affected by Anthem’s exit, or you just want to compare rates for the 2018 coverage year, we can help you decide if purchasing a plan on the private market would be right for...

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