Tax rates have gone up significantly.
THE TOP INCOME TAX RATE as well as the top short term capital gains rate WENT FROM 35% IN 2013 TO 39.6% IN 2014 – AN INCREASE OF 13.14%. The LONG TERM capital GAINS rate WENT UP FROM 15% TO 20% – A 33% INCREASE .
Additionally, there is a 3.8% Medicare tax which is added to the long term rate for an effective tax rate of 23.8% — an increase of 58.6% !
As a result, many business owners who have made significant profits this year are looking for ways to protect themselves from the IRS and shelter money for 2014.
Most business owners don’t realize that, depending on their situation, they can potentially deduct and save over $250,000 a year PRE TAX in corporate retirement plans — not just the $17,500 that can go into a 401(k) plan for 2014.
Additionally, the Pension Protection Act of 2006 has mandated plan documents be amended to comply with current legal and regulatory guidance starting this year. Failure to adhere to current regulations can result in penalties and even plan disqualification.
There is still time to review the retirement plan design, funding, and administration of client retirement plans for 2014. Additionally, it is NOT too late to start a new plan and make deductions for 2014.
As stated, there is still time to create the right plan for 2014, but the window is closing fast. We have resources that can help with this, so reach out to B2B CFO® and see how we can help.