Fiduciary Is Fun!
(a.k.a. I heart taxes)
(a.k.a. I heart taxes)
For far too long, some might say from the very beginning, employers and employees have viewed their workplace benefits in silos. The company's Retirement Plan stood on one side and the Health Plan on the other. Separate and distinct with no overlap. Is that really how they should be viewed?
Probably not. When employees are financially secure, the positive benefits manifest in several areas. And it makes sense that they would. To presume that employees who are financially stressed outside on the job would leave all those stresses in the parking lot when they walk into work each day is simply naive. Moreover, those financial stresses can take on a physical toll.
Research from Prudential Retirement shows that financially stressed employees are
* 190% more likely to be depressed
* 88% more likely to be stressed overall
* 50% more likely to experience a disability claim
* 32% of Americans say that lack of money prevents them from living a healthy lifestyle.
What do these and other statistics like them mean for employers? Ignoring your employees Financial Security will harm you in other ways including increased health insurance costs as well as workers compensation costs. What's the answer? Pay people more money? Actually, no. The answer is to help employees gain control of their financial lives through better budgeting, planning, and other tools to put them in a better place.
Want to learn how? Give me a call!
While there were a number of positive changes for high income earners there were also some caps, particularly in the areas of State and Local Taxes (“SALT”).
For those individuals who might be looking at a tax bill that is larger than what was expected, the question might be asked “what can we do now?” The general answer is “not much”, but there is one area of planning that is still available post the close of the year, and that includes making profit sharing contributions to your retirement plan.
There are many ways to make contributions, but for partners and LLC members, the calculation is more than a little complex to say the least. The IRS even has the 21 Step Process for calculating your earnings and your deduction in Publication 560 to make it easy for you. Suffice to say, it’s not that easy, but given the importance in getting this tax deduction contribution correct, you should consult an expert.
For those of you looking to explore your tax planning options with your retirement plan and to understand how those changes will impact your personal situation, please reach out to us for a free consultation.
Financial Planning for Partners, LLC Members, and Shareholders of S-Corps can be challenging. The planning, tax, and legal rules for these individuals is often dramatically different from those that apply to employees and shareholders of C-Corps. Our firm is dedicated to helping this unique set of entrepreneurs manage their financial affairs.
Today, we want to cover a unique area of property exchanges. It is quite common in an partnership, LLC, or S-Corp for one or more of the partners to have contributed property to the business in the form of a building or real estate. Such contributions are often critical in the early stages of the business, but over time, there surfaces the need for another building or property and a desire to relinquish, sell, or otherwise dispose of the original building or property.
This is where the planning opportunity surfaces. If the original building or property is simply sold and the proceeds used to purchase something new, the original contributing partner will most likely find himself with a tax bill that is less than desired. If the contributed building or property has appreciated over time, the tax bill could be quite large indeed.
What’s the firm to do? You need a new building or property to grow, but no one wants to hit the partner with the large tax bill. In comes a Section 1031 Exchange to the rescue! A 1031 Exchange allows the firm to exchange the original property for a new property in an exchange that effectively defers any recognition of gain. We kick the tax down the road so to speak. What is great about a properly executed 1031 Exchange is that the properties “exchanged” do not need to be for each other. When executed with the proper “Intermediary”, you can sell your property on the open market and purchase what you want and still postpone any tax gain.
Want to learn more? Give me a shout!
401kGuy aka Pete Welsh