Wednesday, August 03, 2016

Correct Employer Matches with True Up Conributions.


Solo 401k


 When employers match employee deferrals each payroll throughout the year, each employer contribution is based on the participant deferral for that payroll. 

Any contribution changes an employee makes during the year could change the match amount, even if the  contributions are enough to receive the full amount that year. 

The true-up match additional contribution is how the employer's contributions are adjusted out so participants receive the accurate value from the employer match.

Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Monday, August 01, 2016

What You Need to Know if You Stop all Contributions to the 401k Plan

Solo 401k 


While plan sponsors aren’t required to make contributions to their 401(k) plan every year, contributions must be “recurring and substantial” for a plan to be considered ongoing.

IRS Audit guidelines state that if the employer hasn’t made contributions in three of the past five consecutive years, the plan may have incurred a complete discontinuance of contributions.

When this occurs, the plan sponsor must treat the plan as a terminated plan and fully vest all participant accounts for the plan to remain qualified.

Determining if there’s been a complete discontinuance of contributions is based on facts and circumstances, for example, the plan sponsor’s history of profitability, and the probability of future contributions from the sponsor.

If you haven’t made contributions to your 401k plan for three of the past five years, consider

  1. Your history of profitability/ability to make contributions.
  2. Whether you’ll be able to make contributions in the future.




Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Consequences of RMD distribution failure


When plan sponsors don’t pay and a participant doesn’t receive a RMD:

  • The plan sponsor faces the potential disqualification of the plan which ultimately affects all plan participants.
  • The plan participant who should’ve received the RMD may be liable for an excise tax under IRC Section 4974 equal to 50% of the amount of the RMD not received.
Plan Sponsors should review their files and make sure those employees  subject to the RMD rules receive the distributon.


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Tuesday, July 19, 2016

Consultant Not an ERISA Fiduciary


Solo 401k









The Tenth Circuit dismissed the complaint because the petitioner failed to sufficiently allege that the consultant had fiduciary status.  

The Court explained that “fiduciary status requires authority or responsibility that is discretionary, which entails ‘the freedom to decide what should be done in a particular situation’” and that conducting a routine computation, as required by one’s job, does not require discretion.  The Court also relied on the Department of Labor’s regulations, 29 C.F.R. §§ 2509.75-8 and 2509.75-5, which explain that “a person who performs administrative functions, such as calculating benefits, does not automatically have discretionary authority.”  Because the Court concluded that the consultant was not a plan fiduciary, it determined that it need not decide whether the fiduciary status could support liability of the other defendants.


The case is Lebahn v. Nat’l Farmers Union Unif. Pension Plan, et al., No. 15-3201, 2016 BL 221313 (10th Cir. July 11, 2016).

Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

New Changes for Small Plan Filers Not Using the Form 5500-SF


Solo 401k




The Proposed 5500 Revisions also make significant changes for small plans that are not eligible to file a Form 5500-SF. For
these plans, the Proposed Revisions –



  1. Eliminate the Schedule I, the schedule currently used by small plans to report financial information;
  2. Require that the Schedule H be completed, including the schedules of assets, though small plans that arecurrently exempt from the audit requirement will continue to be exempt under the Proposed Revisions;
  3.  Revise the Form 5500 to add a new question asking defined contribution pension plans to report the number of participants with account balances at the beginning of the plan year; and
  4.  Revise the audit exemption to be based on the number of participants with account balances as of the beginning of the plan year, rather than on the total number of participants at the beginning of the plan year.



Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Thursday, June 23, 2016

Use QLAC's to Reduce Your RMD Distribution

Reduce your Required Minimum Distributions with a Qualified Longevity Annuity  Contract


You can invest up to 25% , up to $125, 000, of your Solo 401(k) account balance in an annuity called a qualified longevity annuity contract. Funds in a Qualified Longevity Annuity Contract are disregarded for Required Minimum Distribution purposes. A Qualified Longevity Annuity  Contract is a deferred-income annuity that begins payments some years after your investment. Check this--- a 70-year-old woman who invests $125,000 in a Qualified Longevity Annuity  Contract will get an estimated $23,750 per year starting at age 80, or $46,500 per year if payments start at age 85 . That will reduce the Required Minimum Distribution at age 71 by an estimated more than $4,750.


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Friday, August 14, 2015

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015


Solo 401k Plan


The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236), signed by President Obama on July 31, 2015, extends the due date for many tax returns.

Among those of importance to retirement plans, the bill provides that the maximum extension for the returns of employee benefit plans filing Form 5500 shall be an automatic 3 1⁄2-month period ending on November 15 for calendar year plans. (edit-- new dates reverted back to original Oct 15th)In addition, the maximum extension for the returns of organizations exempt from income tax filing Form 990 (series) shall be an automatic 6-month period ending on November 15 for calendar year filers.


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Wednesday, August 12, 2015

Solo-k Plan




After December 31, 2016, the rules in Treasury Regulation 1.401(b)-1 will determine the deadline for adopting legally required plan amendments. 
The extended deadline to adopt plan amendments required to maintain a retirement plan’s tax qualified status no longer applies.  This means that plan sponsors no longer have until the end of the remedial amendment cycle to adopt an amendment to correct a legally required plan provision. 

  Instead, for single-employer plans, Treasury Regulation 1.401(b)-1 generally  requires a plan to be amended for a legally required provision by the later of:
          A.   the last day of the plan year in which the legally required provision became effective with respect to the plan, or  
          B.   the plan sponsor’s income tax return filing deadline (including extensions) for the tax year in which the legally required provision became effective with respect to the plan. 
Plan sponsors should ensure that any amendments required in connection with determination letters recently issued by the IRS have been adopted timely and dated accordingly.



Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Tuesday, June 02, 2015

IRS Finalizes 5500 EZ Tax Relief


Late filing tax relief

Rev. Proc. 2015-32 provides a new permanent procedure for Solo 401k plans to receive penalty relief for late filed 5500 EZ returns without having to demonstrate reasonable cause for the late filing. Eligible plans include plans covering only the business owner and their spouse or one or more partners and their spouses that have not received a notice from the IRS regarding late returns. The permanent relief does include a filing fee of $500 per delinquent return, up to a maximum of $1,500 per plan. In addition, Rev. Proc. 2015-32 requires a Form 14704, Transmittal Schedule, be submitted with the late returns.

In case you need it, a good practice is to file for an extension each year to give yourself an extra 6 months to file each year.


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Friday, May 08, 2015

" Optimal Investment Strategy" According to Dept of Labor






In their most recent proposed regulation the Dept of Labor is suggesting the following investment options. If adopted by the Plan sponsor these options would provide an exception for the  plan advisor of further liability:

 The DOL believes advisors who recommend portfolios consisting of low-management-fee index funds, passively managed funds or exchange-traded funds presumptively could be treated as acting in a manner consistent with their fiduciary obligation, since these investment options “present minimal risk of abuse.”

 The DOL justifies this position by noting it is “consistent with the prevailing view in the academic literature that posits that the optimal investment strategy is often to buy and hold a diversified portfolio of assets calibrated to track the overall performance of financial markets.”

Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Thursday, January 15, 2015

What is IRS Form 3115?

Solo 401k
IRS Form 3115
WHAAAAAT?

IRS Form 3115 is an Application for Change in Accounting Method. The IRS recent final regulations  require every landlord owning rental property prior to 2014 to change their accounting treatment of classifying expenses for repairs or improvements. Changing the accounting treatment requires changing the accounting method, and hence we are brought to Form 3115.
The IRS  has streamlined the process for acceptance. When you file Form 3115, your application will be automatically approved by the IRS. You  file Form 3115 with your timely prepared tax returns for this year, at the latest being October 15, 2015. 
You only need to file one 3115 for each legal entity owning property prior to 2014. If you have several properties under one legal entity, you still only need to file one Form 3115. However, if you placed properties in separate entities, each entity will need to file Form 3115 which is going to be a costly headache. 

Check with your tax professional to see how the Form 3115 affects your real estate investments.

Solo 401k plan:Your Opportunity for Checkbook control of your future

Tuesday, December 30, 2014

solo 401k


The IRS has recently announced answers to the questions for Notice 2014-54.
Can I roll over just the after-tax amounts in my Solo 401k account to a Roth IRA and leave the remaining amounts in the plan (i.e., take a partial distribution of just the after-tax amounts)? 
No. Notice 2014-54 provides that each distribution from a solo 401k plan must include a proportional share of both the pre-tax and after-tax amounts in the account. You cannot take a distribution of only the after-tax amounts and leave the pre-tax amounts in the plan. In order to roll over all of your after-tax contributions, you could take a distribution of the full amount (all pre-tax and after-tax amounts) in your account, roll over all the pre-tax amounts in a direct rollover to a traditional IRA or another eligible retirement plan, and roll over all the after-tax amounts in a direct rollover to a Roth IRA. 
In addition to Roth contributions, I have after-tax voluntary contributions. I want to roll over my after-tax contributions to a Roth IRA and roll over earnings on my after-tax contributions to a traditional IRA. Can I do that? 
Yes. Earnings associated with after-tax contributions are pre-tax amounts in your account. Thus, solo 401k after-tax contributions can be rolled over to a Roth IRA without also including earnings. Under Notice 2014-54, all distribution pre-tax amounts may be rolled over to a traditional IRA and, will not be included in income until distributed from the IRA.


Solo 401k plan:Your Opportunity for Checkbook control of your future

Thursday, November 20, 2014

Increasing Employer Contributions in 2015


Solo 401k Employer Matching Contributions for 2015
Solo 401k


With the 2015 annual compensation limit increasing to $265,000 from $260,000, the limit on the maximum amount of employer matching contributions participants can receive will also increase.
Employer Matching Contribution Limits
Maximum  Matching Percentage
Maximum   Matching Contribution in 2015
Maximum   Matching Contribution in 2014
3.00%
$7,950
$7,800
3.50%
$9,275
$9,100
4.00%
$10,600
$10,400
4.50%
$11,925
$11,700
5.00%
$13,250
$13,000
5.50%
$14,575
$14,300
6.00%
$15,900
$15,600
7.00%
$18,550
$18,200
8.00%
$21,200
$20,800
9.00%
$23,850
$23,400
10.00%
$26,500
$26,000
11.00%
$29,150
$28,600
12.00%
$31,800
$31,200
13.00%
$34,450
$33,800
14.00%
$37,100
$36,400
15.00%
$39,750
$39,000
The maximum matching contribution is calculated by multiplying the maximum matching percentage by the annual compensation limit. Employer matching contributions can make up a large portion of a participant’s retirement savings


Solo 401k plan:Your Opportunity for Checkbook control of your future

Wednesday, October 22, 2014

New IRS Rules Expand 401(k) and IRA Life Annuity Opportunuties

Solo 401k




The U.S. Department of the Treasury issued final rules relaxing the regulations for fixed-income vehicles as a life expectancy hedge.

Internal Revenue Service (IRS) says the final rules make longevity annuities more accessible to 401(k)s and individual retirement accounts (IRAs). The final rules ease minimum distribution requirements that have made it difficult for retirees to hold longevity annuity products without the possibility of jeopardizing the qualified status of their accounts.

“All Americans deserve security in their later years and need effective tools to make the most of their hard-earned savings,” says J. Mark Iwry, senior adviser to the Secretary of the Treasury and Deputy Assistant Secretary for Retirement and Health Policy.“Longevity income annuities can help Boomers plan for retirement and provide a regular stream of income for as long as they live.”

A longevity annuity is a type of deferred income annuity that begins payments at a later age, say 80 or 85. Once payments begin the income stream continues throughout the retiree's lifetime. The deferred income annuity can offer a solution for retirees who want to use part of their lump sum savings to protect against outliving their assets, and help them avoid the prospect of limiting too muich spending in retirement.

Treasury officials say the final rules make longevity annuities more available for retirement savers by changing required minimum distribution regulations so that longevity annuity payments will not need to begin prematurely in order to comply with those regulations.

Instead of having all of their account balance in annuities, retirees will be able to follow a combination strategy that uses some of their savings to purchase guaranteed income for life while maintaining other savings in other investments.

The final rules build upon the proposed rules, as follows:

A. Under the final rules, a 401(k), similar plan, or IRA custodian, may permit account holders to use up to 25% of their account balance or  $125,000, whichever is less, to purchase a qualifying longevity annuity without concern about noncompliance with the age 70½ minimum distribution requirements.

B. The dollar limit will be adjusted for cost-of-living increases more frequently than under the proposed rules (in $10,000 increments instead of the $25,000 increments).

C. Under the final rules, a longevity annuity in a plan or IRA can provide that, if the retiree dies before (or after) the age when the annuity begins, the premiums they paid but have not yet received as annuity payments, will be returned to their accounts. This option may be right for individuals seeking solace that if they die before receiving the annuity, their initial investment can go to their heirs.

D. The final rules permit individuals who mistakenly exceed the 25% or $125,000 limits on premium payments to correct the excess without disqualifying the annuity purchase.

E. The final rules ease the issuance of longevity annuity contracts by allowing alternatives such as a statement in an insurance certificate, rider, or endorsement relating to a contract.

The improved availability of longevity annuities in 401(k) plans and IRAs will ease access to a steady flow of guaranteed income throughout a retiree’s later years and help Americans improve their retirement security when they are most vulnerable to outliving their financial assets or facing lowered standards of living.


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Sunday, October 19, 2014

IRS Allows Truncated SS#, EIN and TIN on Certain Forms

Effective July 2014 the IRS will allow truncating payee identification number on payee statements.

Filers of information returns Forms 1098, 1099, and 5498 are permitted to truncate a payee's SSN, ITIN, ATIN, or EIN on payee statements. Filers may truncate a payee's identification number on the payee statement (including substitute and composite substitute statements) furnished to the payee in paper form or electronically. If a filer truncates an identification number on Copy B, other copies of the form furnished to the payee may also include a truncated number.

Generally, the payee statement is that copy of an information return designated
"Copy B" on the form. A "payee" is any person who is required to receive a copy of the information set forth on an information return by the filer of the return. For some
forms, the term "payee" will refer to beneficiary, borrower, debtor, insured, participant, payer, policyholder, recipient, shareholder, student, or transferor.

A filer may not truncate a payee's identification number on any forms the filer files with the IRS. A filer's identification number may not be truncated on any form.

To truncate where allowed, replace the first 5 digits of the 9-digit number with asterisks (*) or Xs (for example, an SSN xxx-xx-xxxx would appear on the paper payee statement as ***-**-xxxx or XXX-XX-xxxx). See TreasuryDecision 9675, 2014-31 I.R.B. 242, available at www.irs.gov/irb/2014-31_IRB/ar07.html.





Solo 401k plan:Your Opportunity for Checkbook control of your future

Friday, October 17, 2014

Watch Out !! Your Large 401k Balance May Penalize You in Retirement


Medicare Premiums
Solo 401k


A new paper by HealthView Services, details how Medicare premiums and surcharges are charged to retirees’ Social Security payments.

Medicare uses Modified Adjusted Gross Income (MAGI) to calculate Medicare's premiums.

MAGI is the sum of almost all sources of retiree income, including money earned through work in retirement, Social Security, pensions, distributions from self-directed plans, dividends, realized interest and capital gains.
Once MAGI surpasses $85,000 for an individual, or $170,000 for a couple, Medicare surcharges and premium increases are charged, and withdrawn from monthly Social Security benefits.
The reduced payments could have considerable consequences on retirees’ monthly income in some cases.“These thresholds may seem high, but retirees including those on traditional pensions, are already crossing them,” explained Ron Mastrogiovanni, CEO of HealthView Services.

Because the income brackets for Medicare are not indexed to inflation, as interest rates rise, more retirees will suffer due to higher retirement income.
“Surcharges will not only impact affluent Americans, but practically everyone with a income that is moderate” said Mastrogiovanni.

Those increment premium surcharges could be significant, according to HealthView’s detail of Medicare’s charges. Medicare Part B and D costs increase by about 35 percent when retirees cross the MAGI first threshold. When the top threshold is exceeded ($214,000 for individual, $428,000 for a couple), premium costs can increase by 200 percent, according to HealthView.

Under the Medicare Modernization Act of 2007, means testing was introduced to deal with Medicare liabilities. Health care costs are projected to grow 6 percent annually over the next eight years, according to U.S. Office of the Actuary. That rate of inflation will certainly exceed Social Security adjustments, the latest was less than 2 percent.

“Those whose annual incomes propel them across MAGI thresholds will have to pay significantly more for the same services,” wrote the authors of Health View’s paper. Medicare uses a two-year “look back” period, meaning income earned at 63 is used to assess MAGI at 65. The sale of a house before retirement—an often-advised way of reducing costs after leaving the workforce—could generate capital that is enough to surpass a MAGI threshold.
Required minimum distributions that start after turning age 70 could also increase retiree income, and end up increasing monthly Medicare premiums.

Good News.! Retirees may also be able to move the MAGI gauge in a propitious direction.

Retirees can take strategic action to lower MAGI assessments. Diversifying portfolios with Roth IRAs, HSAs, and annuities can protect and grow assets while affirming income streams—and can all be used to potentially shift a retiree to a lower MAGI bracket, thus maximizing Social Security benefits.

"Pursing the goal of higher retirement income without consideration of MAGI may move a retiree into a higher surcharge bracket and potentially reduce income that is disposable" added Mastrogiovanni.
"In one of the case studies in our paper, it would require a 6 percent return on a $400,000 investment over five years, to equal the savings an advisor would be able to attain by simply adjusting their client's investment mix," he said.

A. When do I start making Medicare decisions?

The first date to sign up for Medicare Parts A and B  is the third month before turning 65, if you are not already enrolled. You may be enrolled if you already have started Social Security. If not, you can sign up for Medicare at your local Social Security office or online.

Medicare Parts A (Hospital Insurance) and B (Medical Insurance) together form Medicare and that’s where you should start.  File an application at least three months before your 65th birthday, and both parts should begin on the first day of the month. Part A is free for qualifying individuals and Part B costs most people $104.90 per in 2014 month. If you start Medicare before Social Security benefits, Medicare premiums will be automatically deducted from a personal account.

B. Why would the Part B premium be higher than $104.90 per month? If so, is it still advantageous to choose Part B?

If the modified adjusted gross income reported on your federal tax return two years earlier (i.e., in 2012 for 2014 Medicare purposes) is above $85,000 for an individual or $170,000 for joint filers, you will pay more for Part B than $104.90 per month in 2014. There are four MAGI tiers, each with graduated premiums, topping at $335.70 per month for incomes that are high. You can find the 2014 Medicare premium at:  http://www.medicare.gov/Pubs/pdf/11579.pdf.

You should choose Part B when you turn age 65 for several reasons.

1. It may not be too costly. The highest monthly premium ($335.70) was built to cover 100% of Part B’s cost.

2. You must have both parts(A & B) to qualify for Medigap coverage.

3. At 65, premiums will be permanently higher if you do not choose Part B. You can always change your part B election later.

C. Should I get a Medicare Supplement (“Medigap”) policy immediately?

Yes. Otherwise, you are subject to paying for gaps that Medicare does not cover. Medigap coverage is not difficult to review and buy, and there are protections during the initial Open Enrollment. This period begins on the first day of the month you turn 65 and are enrolled in Medicare Part B, and it ends six months later. During this period, you can’t be denied coverage or charged a higher premium for pre-existing conditions or health and/or lifestyle reasons.

Each year, you will have an opportunity to change Medigap plans during an Open Enrollment from October 15 to December 7. However, the protections for pre-existing conditions or health and/or lifestyle reasons will no longer apply.

D. Which Medigap plan should I choose, and what are the premiums?

Except for Massachusetts, Minnesota and Wisconsin who have their own Medigap systems, Medigap current programs fall into one of 10 standard designs each identified by a letter.
The 10 standard plans available for new sales are: A, B, C, D, F, G, K, L, M and N. Plan F is available in both a standard and a version that is high-deductible.

The basic policy of Plan A is usually the least expensive – costing from $130 to $260 per person per month. Premiums are influenced primarily by the cost of health care delivery in the plan’s geographic area.

Premiums are low in the high-deductible version of Plan F, and also in Plans K and L, which pay only 50% (Plan K) or 75% (Plan L) for several benefits. Plans D and G are expensive because they cover the full realm of benefits – .
Although standard plans make it easier for consumers to comparison shop, premiums can vary widely. The average premium for Medigap in the U.S. is about $2,000 per person.

If you are unsure about the design that is best for you, give special consideration to Plans F (standard) and C. These are the most popular, selected by 51% and 14% of the market, respectively.  They offer comprehensive benefits, and their popularity helps to increase scale and make premiums more affordable.

E. Should Medicare Prescription Drug Plan (Part D) be elected immediately?

Yes, as the 2014 Part D National Base premium is only $32.42 per month, although each plan is allowed to charge geographically competitive rates. Like Part B, premiums go up as MAGI increases. Part D is subsidized by the government at about 89%, so for most retired people it’s a good deal . Under the Patient Protection and Affordable Care Act(OBAMACARE), enhanced Part D benefits will phase in through 2020, so benefits will keep improving.
Note, premiums will go permanently higher if you don’t participate in Part D by the third month after you turn 65. Remember,you can shop around and switch plans each year during the Open Enrollment period from October 15 through December 7. Part D plans' premiums have become very competitive, so  it pays to shop for the best deal available each year . If you do not need prescription drugs when you turn 65, a prospective strategy is to choose the lowest-cost Part D plan as a proxy, to prevent future premiums from going higher. Then upgrade to a more comprehensive plan if you need more prescription drugs later.

F. What is Part C Medicare Advantage?

 All Medicare participants who have Parts A and B are able to receive treatment through private health insurance plans. The premiums charged by these plans are paid directly by Medicare, and some Medicare Advantage plans add an additional premium that is paid directly by members. Almost 12 million people, about 25% of all Medicare participants, now choose Part C.
Medicare Advantage plans must provide all benefits of Part A and Part B coverage, including emergency and care that is urgent. They also may add benefits that are extra included in Parts A and B, such as prescription drug, vision, hearing, dental, and wellness programs. People who participate in Medicare Advantage do not need separate coverage that is medigap and by law Medigap can’t be sold to Medicare Advantage participants.

G. What are the drawbacks to Medicare Advantage plans?

Yes. Medicare Advantage plans may have different deductibles and co-pay arrangements than original Medicare, and they may charge premiums that are extra. Their costs that are out-of-pocket will increase in the future due to changes mandated by the Patient Protection and Affordable Care Act(OBAMACARE).

Since Medicare Advantage participation has increased, the cost of the “Part C subsidy” has escalated for the U.S. Government. The government now estimates that its cost per Part C participant is about 13% higher than in traditional Medicare. The primary cause of higher cost is the county-level formula that benchmarking uses to reimburse private health care organizations. Benchmarking rates for Part C are up to 40% above comparable fee-for-service cost, effectively creating a national government subsidy for Medicare Advantage.

The Patient Protection and Affordable Care Act(OBAMACARE) will reduce the benchmark rates to between 95% and 115% of fee-for-service costs, which is expected to save Medicare $136 billion over a decade. However, it also will cause Medicare Advantage plans to reduce benefits and increase co-pays and deductibles. The Congressional Budget Office has projected that benefit cuts and fee increases will cause enrollment in Medicare Advantage to decline by 35-50% over several years.

H.  Are Medicare and Medigap premiums deductible?

For taxpayers who itemize income tax deductions, Medicare Part B and D premiums, Medigap premiums and any out-of-pocket costs are deductible to the extent that they exceed 7.5% of adjusted income that is gross AGI. Since 2010, the IRS has allowed self-employed individuals to claim Medicare Part B and D premiums for purposes of the health deduction, to the extent that premiums exceed net income from self employment less 50% of the self-employment tax and any retirement plan contribution.

I. Is there a smart Medicare strategy?

Most people should consider:
1) Apply three months before age 65
2) Enroll in in Parts B and D;
3) Choose affordable plans for Medigap and Part D; and
4) Keep shopping for better Medigap and Part D coverage and, if favorable, switch plans during the Open Enrollment period from October 15 through December 7.

For 2014-2015 expect to spend about $3,000 to $4,000 per person per year for the total realizing that comparable private insurance could cost three to four times more. The Medicare trust fund is scheduled to run out of money in 2026, so it’s also smart to expect the total cost of  medicare/Medigap to increase gradually during retirement, as seniors are forced to pick up a larger share of the bill.

Solo 401k plan:Your Opportunity for Checkbook control of your future

Monday, September 29, 2014

401k Tax Required by Florida on Participant Loans

Document tax for Florida 401k loans



Under Florida revenue laws, a document tax is imposed on loan transactions that are made, signed, executed, issued, or transacted in the State.  The Florida Department of Revenue has ruled that pension and 401(k) plan loans are subject to the tax. 

Section 201.08(1), F.S., imposes documentary stamp tax on written obligations to pay money that are made, executed, or delivered in Florida, including promissory notes made in connection with pension plan loans, 401K plan loans, and share loans. To constitute a taxable written obligation to pay money, the document must contain an unconditional written obligation to pay a sum certain in money and be signed by the obligor.

To be taxable, the written obligation must be fixed and absolute at the time of execution. The tax rate on written obligations to pay money is $.35 for each $100, or fraction thereof, of the obligation evidenced by the document.

The law further provides that no state court may enforce the provisions of a promissory note if the document tax is not paid.

A failure to pay the tax could mean that a 401(k) plan is making loans that are not adequately secured, creating the {possibilities} for both prohibited transaction issues and operational failure issues.

The Florida statute reaches not only plan loans made to participants who are Florida residents but to plans with sponsors resident in Florida or third party administrators resident in Florida.

The Florida law contemplates a procedure for paying past due taxes.

No other state currently appears to have a loan tax


Solo 401k plan:Your Opportunity for Checkbook control of your future

Friday, June 13, 2014

IRA one-rollover-per-year rule. Another reason for Solo 401k



You generally cannot make more than one rollover from the same IRA within a 1-year period. You also cannot make a rollover during this 1-year period from the IRA to which the distribution was rolled over.
Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.
The one-per year limit does not apply to:
  • rollovers from traditional IRAs to Roth IRAs (conversions)
  • trustee-to-trustee transfers to another IRA
  • IRA-to-plan rollovers
  • plan-to-IRA rollovers
  • plan-to-plan rollovers
Once this rule takes effect, the tax consequences are:
  • you must include in gross income any previously untaxed amounts distributed from an IRA if you made an IRA-to-IRA rollover (other than a rollover from a traditional IRA to a Roth IRA) in the preceding 12 months, and
  • you may be subject to the 10% early withdrawal tax on the amount you include in gross income.


You can still roll several traditional IRAs into a Solo 401k plan without penalty. Maybe now is the time to Roll your IRAs over.


Solo 401k plan:Your Opportunity for Checkbook control of your future