retirement - Linkenheimer LLP CPAs & Advisors

Selling Stock By Year-End? Watch Out For The Wash Sale Rule

If you’re thinking about selling stock shares at a loss to offset gains that you’ve realized during 2022, it’s important to watch out for the “wash sale” rule.

The loss could be disallowed

Under this rule, if you sell stock or securities for a loss and buy substantially identical stock or securities back within the 30-day period before or after the sale date, the loss can’t be claimed for tax purposes. The rule is designed to prevent taxpayers from using the tax benefit of a loss without parting with ownership in any significant way. Note that the rule applies to a 30-day period before or after the sale date to prevent “buying the stock back” before it’s even sold. (If you participate in any dividend reinvestment plans, it’s possible the wash sale rule may be inadvertently triggered when dividends are reinvested under the plan, if you’ve separately sold some of the same stock at a loss within the 30-day period.)

The wash sale […]

By Linkenheimer LLP|2022-12-14T20:28:01+00:00December 14th, 2022|retirement, year-end|0 Comments

Choosing A Retirement Plan For Your Small Business

Most growing small businesses reach a point where the owner looks around at the leadership team and says, “It’s time. We need to offer employees a retirement plan.”

Often, this happens when the company is financially stable enough to administer a retirement plan and make substantive contributions. Other times it occurs when the business grows weary of losing good job candidates because of a less-than-impressive benefits package.

Whatever the reason, if you don’t have a retirement plan and see one in your immediate future, you’ll want to carefully select the one that will work best for your company and its employees. Here are some basics about three of the most tried-and-true plans.

401(k) plans offer flexibility

Available to any employer with one or more employees, a 401(k) plan allows employees to contribute to individual accounts. Contributions to a traditional 401(k) are made pretax, reducing taxable income, but distributions are taxable.

Both employees and employers can contribute. For 2023, employees can contribute up to $22,500 (up from $20,500 in 2022). Participants who are age 50 or older by the end of the year can make an additional “catch-up” contribution of $7,500 (up from $6,500 in 2022). Within limits, employers […]

By Linkenheimer LLP|2022-12-08T16:37:29+00:00December 8th, 2022|retirement, small business|0 Comments

Inflation Means You And Your Employees Can Save More For Retirement In 2023

How much can you and your employees contribute to your 401(k)s next year — or other retirement plans? In Notice 2022-55, the IRS recently announced cost-of-living adjustments that apply to the dollar limitations for pensions, as well as other qualified retirement plans for 2023. The amounts increased more than they have in recent years due to inflation.

401(k) plans

The 2023 contribution limit for employees who participate in 401(k) plans will increase to $22,500 (up from $20,500 in 2022). This contribution amount also applies to 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan.

The catch-up contribution limit for employees age 50 and over who participate in 401(k) plans and the other plans mentioned above will increase to $7,500 (up from $6,500 in 2022). Therefore, participants in 401(k) plans (and the others listed above) who are 50 and older can contribute up to $30,000 in 2023.

SEP plans and defined contribution plans

The limitation for defined contribution plans, including a Simplified Employee Pension (SEP) plan, will increase from $61,000 to $66,000. To participate in a SEP, an eligible employee must receive at least a certain amount of compensation for the year. That amount will […]

By Linkenheimer LLP|2022-11-02T18:38:07+00:00November 2nd, 2022|retirement|0 Comments

Tax And Other Financial Consequences Of Tax-Free Bonds

If you’re interested in investing in tax-free municipal bonds, you may wonder if they’re really free of taxes. While the investment generally provides tax-free interest on the federal (and possibly state) level, there may be tax consequences. Here’s how the rules work.

Purchasing a bond

If you buy a tax-exempt bond for its face amount, either on the initial offering or in the market, there are no immediate tax consequences. If you buy such a bond between interest payment dates, you’ll have to pay the seller any interest accrued since the last interest payment date. This amount is treated as a capital investment and is deducted from the next interest payment as a return of capital.

Interest excluded from income

In general, interest received on a tax-free municipal bond isn’t included in gross income although it may be includible for alternative minimum tax (AMT) purposes. While tax-free interest is attractive, keep in mind that a municipal […]

By Linkenheimer LLP|2022-10-14T18:30:43+00:00October 14th, 2022|retirement|0 Comments

ERISA and EAPs: What’s the Deal?

In recent years, more and more businesses have increased efforts to support the well-being of their employees. This means not only providing health care benefits, but also offering other initiatives designed to help workers cope with challenges such as substance dependence, financial planning, legal woes and mental health issues.

Among the options usually considered is an employee assistance program (EAP). These programs typically offer a set of benefits intended to address circumstances and challenges that might adversely affect employees’ ability to work. Benefits may include short-term mental health or substance abuse counseling or referral services, as well as financial counseling and legal services.

When considering an EAP, many business owners eventually ask a common question: Will the program be subject to the Employee Retirement Income Security Act (ERISA)?

Medical care

The answer depends on how the EAP is structured and what benefits it provides. Generally, an arrangement is an ERISA welfare benefit plan if it’s a plan, fund or program established or maintained by an employer to provide ERISA-listed benefits, which include medical services.

Indeed, the category of ERISA-listed benefits most likely to be provided by an EAP is medical care or benefits. Mental health counseling — […]

By Linkenheimer LLP|2022-03-23T18:00:28+00:00March 23rd, 2022|business, employee, retirement|0 Comments