Greetings!
Tuesday, November 6th is Election Day and we encourage everyone to exercise their responsibility to vote their conscience! This is a particularly important election which will have a dramatic impact on our collective future in terms of the economy, regulations, and taxes.
Also, we wish you and your family a very Happy Thanksgiving! |
IRS ISSUES NEW GUIDANCE ON EMPLOYER PENALTIES
Beginning in 2014, large employers (presumably employers of 50 or more full time employees) may face penalties if they do not offer any health coverage to their full time employees or if they offer health coverage that is unaffordable. The penalty is triggered if even just one of the employer's full time employees receives a premium tax credit or cost sharing reduction for coverage obtained through a health insurance exchange. The IRS issued Notice 2012-58 which describes safe harbor methods and rules that employers may use to determine which employees are considered full time for purposes of the "Affordable Care Act".
The Notice also addresses a safe harbor based on the Form W-2 wages for employers to use in determining whether their health coverage is affordable. The "Affordable Care Act" dictates that coverage is considered affordable if the employee's required contribution is less than or equal to 9.5% of his or her household income for the taxable year. To address the issue of employers being unaware of their employees' family members' income levels, the safe harbor allows only the employee's wages from the employer that is providing coverage to determine coverage affordability. |
UP-DATED "RETIREMENT PLAN" LIMITS
The Internal Revenue Service has just released the cost-of-living adjustments for various retirement plan limitations that will take effect on January 1, 2013. The 2012 and the new 2013 limits are as follows:
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For Calendar Year |
2012 |
2013 |
Maximum Defined Benefit Plan Benefit (IRC �415(b)) (applies to limitation years ending in indicated year) |
$200,000 |
$205,000 |
Maximum Defined Contribution Annual Addition (IRC �415(c)) (applies to limitation years ending in indicated year) |
$50,000 |
$51,000 |
Salary Deferral Limit (IRC �402(g)) |
$17,000 |
$17,500 |
Catch-up Limit for 401(k), 403(b), 457 plans (applies to calendar year) |
$5,500 |
$5,500 (NC) |
HCE Compensation (applies to look-back years in indicated year) |
$115,000 |
$115,000 (NC) |
Maximum Compensation for Retirement Plan Purposes (IRC �401(a)(17)) (applies to plan years beginning in indicated year) |
$250,000 |
$255,000 |
Key Employee: Officer |
$165,000 |
$165,000 (NC) |
Key Employee: 1% Owner |
$150,000 |
$150,000 (NC) |
457(b) Contribution Limit |
$17,000 |
$17,500 |
SIMPLE Salary Deferral Limit |
$11,500 |
$12,000 |
SIMPLE Catch-up Limit |
$2,500 |
$2,500 (NC) |
IRA Contribution Limit |
$5,000 |
$5,500 |
IRA Catch-up Limit |
$1,000 |
$1,000 (NC) |
SEP Threshold |
$550 |
$550 (NC) |
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"Taxing" Implications of the "Affordable Care Act"
Beginning in 2014, under the Patient Protection and Affordable Care Act, individuals must make a "shared responsibility payment" if they do not have minimum essential health insurance for themselves and their
dependents. That penalty (the Supreme Court defined as a "Tax") will be the greater of: a flat dollar amount
per person that rises to $695 in 2016 and is indexed by inflation thereafter (the penalty for children will be
half that amount and an overall cap will apply to family payments); or a percentage of the household's income
that rises to 2.5 percent for 2016 and subsequent years (also subject to a cap). The average penalty paid in
2016 will be $1,200, the CBO reported.
According to the Congressional Budget Office (CBO), 6 million Americans will face a tax penalty for being
uninsured in 2016. The 6 million figure in the report, Payments of Penalties for Being Uninsured Under the
Affordable Care Act, is a 50 percent increase over a previous projection from the CBO in April 2010. The
earlier estimate found that 4 million people would be affected by the tax penalty in 2016, when the penalty
fully goes into effect. The CBO now estimates that total collections from the penalty will be about $7 billion in
2016 and average about $8 billion per year over the 2017-2022 period. |
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