Reap the benefits of new laws
Recent legislation makes changes to popular retirement savings plans like IRAs and 401(k)s. Here are the major changes and how you can benefit from the new rules. You now have until age 72 before you MUST take withdrawals from your retirement accounts. How to take advantage: Use these extra 18 months to create a plan to reduce the tax applied to your distributions. Who wouldn't rather pay less of your retirement funds to the government! There are no longer age limits for contributions to a traditional IRA. How to take advantage: Consider taking a part-time job in retirement. Then you can choose to contribute to EITHER a Roth IRA or a traditional IRA. No early withdrawal penalty to use up to $5,000 to pay for a recent birth or adoption. How to take advantage: A new birth or adoption costs a lot! Consider using these funds to help cover some of the cost. While you will pay tax on the funds taken out of your IRA, you will not need to pay the 10% early withdrawal penalty. And even better, you can later reimburse your account without impacting your annual contribution limit. Elimination of the stretch IRA-Beneficiaries now have 10 years to withdraw inherited funds. How to take advantage for your estate: Not everyone is covered by this new restriction. Review your beneficiary designations to minimize the impact of this change. How to take advantage if you inherit funds: If you inherit funds, you must now actively plan the withdrawals to minimize your potential tax hit! Key business retirement plan changes Many changes are also made to business retirement plan rules. Key among them are: • Qualified part-time employees may now participate in an employer's 401(k) plan. • Your employer can now proactively increase your participation in their retirement plan. How to take advantage: Talk to your employer. Find out if part-time workers may participate in their savings plan and double check the amount withheld from your paycheck to ensure you are comfortable with your level of participation. The bottom line? Actively manage your retirement accounts! If you leave it to chance, your tax bill will inevitably be higher than necessary. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720
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BLOGTo better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful! CATEGORIES
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September 2023
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