Contribution — Articles

Why and How to Recharacterize an IRA Contribution

A recharacterization is a transaction that allows an IRA owner to “undo” a regular Traditional or Roth IRA contribution and to treat it as though it had been made to the opposite type of IRA.

IRAAscensusSeptember 19, 2024Recharacterization, Contributions, Contribution, IRA, Roth IRA, Traditional IRA

Contribution Limits Increased for SIMPLE Plans

Employers that sponsor a SIMPLE plan may allow increased salary deferral limits for their employees, starting in tax year 2024.

IRAAscensusMarch 21, 2024SIMPLE IRA Plan, IRA, Business Insights, Contribution, Compliance & Operations

Our Client Says That We’ve Incorrectly Reported His SEP Contribution—What Do We Do?

There can be confusion surrounding how to report SEP contributions. Our ERISA consultants receive frequent calls about this topic on our 800 Consulting lines. A common scenario involves a self-employed business owner receiving a Form 5498, IRA Contribution Information, and noticing that the SEP contribution that he made wasn’t reported for the tax year in which he reported the contribution on his federal tax return.

IRAAscensusMay 18, 2023SEP Plan, SIMPLE IRA Plan, Reporting, Regulations, Contribution

Your SEP and SIMPLE Questions Answered

A sole proprietor whose aim is maximizing her contribution may find a SEP plan more appealing than a SIMPLE IRA. But as her business grows and she starts hiring employees, she might decide to switch to a SIMPLE IRA, which allows for employee deferrals instead of solely relying on employer contributions.

expert, IRAAscensusMay 18, 2023Compliance & Operations, IRA, SEP Plan, SIMPLE IRA Plan, Contribution, Traditional IRA

SECURE 2.0 Opens Window to Increase Catch-Up Contributions

SECURE 2.0 has now opened a new window, allowing eligible retirement plan participants and IRA owners to make larger catch-up contributions.

Rollovers vs Postponed/Late Contributions vs Repayments

Here’s a refresher on how to know the reporting differences between rollovers, postponed/late contributions, and repayments.

2023 Benefit Limit Increases Reflect Inflation in U.S. Economy

The IRS in Notice 2022-55 has issued the inflation-adjusted retirement savings limitations for the coming year. Those who follow these annual announcements will note some significant year-over-year increases from the 2022 amounts.

Solving the Complexities of Calculating Self-Employed Retirement Plan Contributions

For self-employed individuals, determining the amount that can be contributed to a qualified plan can be daunting. It is important to understand that the compensation that can be used to calculate a retirement plan contribution is likely to be a different amount than what is reported to the Internal Revenue Service (IRS) as net earnings (profit or net business income) for tax purposes.

Employer Plan, IRAAscensusNovember 17, 2022Retirement Plan, Qualified Retirement Plan, Plan Establishment, Contribution, IRA, IRS

Designated Roth Account and Roth IRA Portability

Your client may establish a Roth IRA and roll over an eligible rollover distribution from a designated Roth account to that Roth IRA (or to an existing Roth IRA) even if he is not eligible to make regular contributions because of the MAGI limits.

expert, IRAAscensusNovember 17, 2022Compliance & Operations, IRA, Roth IRA, Distribution, Contribution, Q&A, Retirement Plan, Reporting

How to Handle Complex Beneficiary Scenarios Following Recent Changes

Beneficiary options have become more complex in light of recent guidance, including SECURE Act changes, proposed RMD regulations, and Notice 2022-53. This article may help address some questions that your clients may have.

A Refresher on Recharacterizations

IRA owners have until their federal tax return deadline, plus extensions, to recharacterize a 2021 IRA contribution, so you may be fielding many questions about recharacterizations between now and the October 15 deadline.

IRA, expertAscensusSeptember 15, 2022IRA, Compliance & Operations, Traditional IRA, Roth IRA, Distribution, Contribution, Q&A, Reporting, Form 5498, Form 1099-R

Loan Programs in Employer-Sponsored Retirement Plans

Many plan sponsors believe that the availability of loans in retirement plans is an attractive feature. Specifically, participants are more likely to contribute to a plan if they know that they can access a portion of their plan assets while they are still employed—without having to suffer the accompanying tax consequences.

Timing is Key When Funding Matching Contributions

Many defined contribution qualified plans, such as 401(k) plans, allow employers to make a matching contribution. Providing a match may encourage employees to make elective deferral contributions to the plan. There are several guidelines that may affect when matching contributions should be made.

Answering Your Clients’ Tricky Tax Reporting Questions

As your clients prepare their tax returns, you may find yourself receiving a barrage of tax reporting questions. Hopefully, here are the answers to some of your challenging questions during tax season.

Top Trending IRA Questions (and Answers) from ERISA Consultants

In 2021, Ascensus’ ERISA consultants fielded approximately 40,000 calls from our clients who subscribe to our 800 Consulting Lines. We asked our experienced IRA consultants what their trending IRA questions were last year and we compiled a list, along with their responses.

Brace Yourself for 2022 Contributions (And Watch for Those Last-Minute Prior-Year Contributions)

The first few months of each year usually bring an increased number of contributions for individual retirement arrangements (IRAs) and health savings accounts (HSAs). During this flurry of contribution activity, it’s important to make sure that your clients clearly designate the year that a contribution is for.

HSA, IRAAscensusFebruary 17, 2022Compliance & Operations, IRA, Traditional IRA, Roth IRA, HSA, Contribution, Reporting

How Insurance Coverage May Affect HSA Eligibility

To make HSA contributions, an individual must be covered by a qualifying high deductible health plan (HDHP), and not be covered by a plan that is not an HDHP. However, when it comes to HSA eligibility, not all HDHPs are created equal.

HSAAscensusFebruary 17, 2022Compliance & Operations, HSA, Contribution, Distribution, Eligibility, Q&A

Retirement Enhancements Expected in 2022 Legislative Proposals

Several bills with provisions that would alter tax-advantaged savings arrangements have been introduced. If these provisions are approved, they represent important priorities for the House and Senate lawmakers responsible for their drafting and introduction.