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What does the term ‘qualified plan’ mean?

May 22, 2013 By

submitted by Rosemary G. Caligiuri, CASL™, President, Harvest Group Financial Services

A qualified plan is an employer-sponsored retirement plan that qualifies for special tax treatment under Section 401(a) of the Internal Revenue Code.

There are many different types of qualified plans, but they all fall into two categories.

A defined benefit plan (e.g., a traditional pension plan) is generally funded solely by employer contributions and provides you with a specified level of retirement benefits. A defined contribution plan (e.g., a profit-sharing or 401(k) plan) is funded by employer and/or employee contributions.

The benefits you receive from the plan depend on investment performance.

The annual contribution limits and other rules vary among specific types of plans. However, most qualified plans share certain key features, including:

  • Pretax contributions: Employer contributions to a qualified plan are generally able to be made on a pretax basis. That is, you don’t pay income tax on amounts contributed by your employer until you withdraw money from the plan. Your contributions to a 401(k) plan may also be made on a pretax basis.
  • Tax-deferred growth: Investment earnings (e.g., dividends and interest) on all contributions are tax deferred. Again, you don’t pay income tax on those earnings until you withdraw money from the plan.
  • Vesting: If the plan provides for employer contributions, those amounts (and related investment earnings) must vest before you’re entitled to them. Check with your employer to find out when this happens.
  • Creditor protection: In most cases, your creditors cannot reach your qualified retirement plan funds to satisfy your debts.
  • Roth contributions: Your employer may also allow you to make after-tax Roth contributions to the 401(k) plan. While there’s no up-front tax benefit, qualified distributions are totally free from federal income taxes.

If you have access to a qualified retirement plan, strongly consider taking advantage of it.

Over time, these plans can provide you with substantial retirement savings.

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Filed Under: Business Notebook, Langhorne Ledger Columnists Tagged With: , , , , ,

Doing 2012 tax returns, and now talking about 2013?

April 24, 2013 By

submitted by Martin H. Abo, CPA/ABV/CVA/CFF, Abo and Company, LLC

In general, estimated taxes must be paid on income which is not subject to withholding, including taxable income from self-employment, interest, dividends, alimony, gambling winnings, unemployment compensation, social security, rent, and gains from the sale of assets.

You also may have to pay estimates if the amount of tax being withheld from your salary, Social Security, pension or other income is not enough. Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your personal tax return.

If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty.

You may be charged a penalty even if you are due a refund when you file your return. Here are tips even the IRS agrees are worth considering about estimated taxes and how to pay them:

  1. As a general rule, you must pay estimated taxes if 1) You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and credits, and 2) You expect your withholding and credits to be less than the smaller of 90% of your 2013 taxes or 100% of the tax on your 2012 return.
  2. For Sole Proprietors, LLC Members, Partners and S Corporation shareholders, you generally have to make estimated tax payments if you expect to owe $1,000 or more in tax when you file your return.
  3. To figure your estimated tax, include your expected gross income, taxable income, taxes, deductions and credits for the year. Consider changes in your situation and recent tax law changes.
  4. The year is divided into four payment periods, or due dates, for estimated tax purposes. Those dates generally are April 15th, June 15th (17th in 2013), September 15th (16th in 2013) and January 15th.
  5. The 0.9% new Additional Medicare Tax applies to Medicare wages and self-employment income over threshold amounts. You may need to include this amount when figuring your estimated tax.
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Filed Under: Business Notebook, Morrisville Times Columnists Tagged With: , , , , ,

What are catch-up contributions?

April 24, 2013 By

submitted by Rosemary G. Caligiuri, CASL™, President, Harvest Group Financial Services

If you are 50 or older, or you will reach age 50 by the end of the year, you may be able to make contributions to your IRA or employer-sponsored retirement plan above the normal contribution limit. Catch-up contributions are designed to help you make up any retirement savings shortfall by bumping up the amount you can save in the years leading up to retirement.

Catch-up contributions can be made to traditional and Roth IRAs, as well as to 401(k) plans and certain other employer-sponsored retirement plans. But if you participate in an employer-sponsored retirement plan, check plan rules–not all plans allow catch-up contributions.

How much can you contribute as a catch-up contribution? It depends on the type of retirement plan you have and the tax year for which you are making the contribution.

Contribution limits for tax years 2012 and 2013:

401(k), 403(b), governmental 457(b) plans:*

  • $17,500 regular annual contribution limit for 2013 ($17,000 for 2012) and $5,500 catch-up contribution limit.

SIMPLE plans:

  • $12,000 regular annual contribution limit for 2013 ($11,500 for 2012) and $2,500 catch-up contribution limit.

Traditional and Roth IRAs:

  • $5,500 regular annual contribution limit for 2013 ($5,000 for 2012) and $1,000 catch-up contribution limit.

*403(b) and 457(b) plans also have special catch-up rules that may apply.

Registered representative offering securities and advisory services through Centaurus Financial Inc, a Registered Investment Advisor, Member FINRA & SIPC, Supervisory Branch: 3902 State Street, Suite 101, Santa Barbara, CA 93105,1-888-569-1982, Harvest Group Financial Services, Corp and Centaurus Financial, Inc Are Not Affiliated Companies. 

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Filed Under: Business Notebook, Langhorne Ledger Columnists Tagged With: , , , ,

Bucks County Bank: Local bank, local lender

April 24, 2013 By
BC BANK PROFILE

 

by June Portnoy

Surely you’ve heard or used the phrase, “Buy Local,” in a show of support for your community. But how about “Bank Local?”

Bucks County Bank is owned and operated by people in your community who have face-to-face relationships with their customers and understand local needs. Being locally operated, Bucks County Bank offers personalized service with a wide range of products.

Bucks County Bank’s Residential Mortgage Division in Doylestown offers fixed and adjustable mortgages, as well as conventional, jumbo and government loans (Federal Housing Administration, Veteran Affairs and United States Department of Agriculture). Bucks County Bank Residential Mortgage Originators keep flexible hours and are available at your convenience.  

“We offer very personalized, one-on-one attention to our clients, and we know that not everyone has an opportunity to meet during normal business hours,” said Chris Carter, Senior Vice President of Bucks County Bank’s Residential Mortgage Division.

The Residential Mortgage Division staffs seasoned professionals who all reside in Bucks County. All members of the management staff within the Division received industry peer awards in 2012, illustrating the dedication and experience of the overall department. 

“We know our customers by name, understand their business, and are familiar with their local challenges,” said Chris. “We see our customers out in the community, at restaurants, at school events and at area grocery stores – these people are our neighbors, colleagues, associates… we take these relationships seriously. 

“Whether they’re a first-time home buyer fresh out of school or an experienced borrower looking to purchase a new home or refinance a current mortgage, we can help.”

The Residential Mortgage Division has access to multiple products and programs, all aggressively priced. Included in those programs are purchase and refinance options for owner-occupied homes, vacation homes and investment properties. 

“We look for the best opportunities so we can extend a number of options to our clients,” said Chris.

With interest rates still historically low, now is the ideal time to buy a new home or refinance an existing home.

To get in touch with Bucks County Bank’s Residential Mortgage Division, located at 16 N. Franklin Street, Suite 115, call 215-589-6970.

Bucks County Bank also offers comprehensive financial products to businesses, professionals and individuals. They are a Preferred Lender for the SBA (Small Business Administration), giving them the ability to streamline the commercial lending process.

Bucks County Bank is headquartered in Doylestown at 200 S. Main Street and has banking offices in Doylestown, Warminster, Levittown and Bensalem.

Member FDIC, 215-230-7533, www.buckscountybank.net.

PHOTO CAP: From left, Eric Goldberg, Bob O’Hara, John Garrity, Chris Carter, Joe Nelson and Jim Trauger of Bucks County Bank.

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Filed Under: Doylestown Observer Business Profiles, Langhorne Ledger Business Profiles Tagged With: , , , ,

William Penn Bank accounces surcharge-free ATM withdrawals

April 19, 2013 By

William Penn Bank is now even more convenient!

By partnering with the Allpoint ATM network, William Penn Bank cardholders and prospective customers can enjoy unlimited, surcharge-free withdrawals at over 38,000 ATMs nationwide that display the Allpoint logo.

Allpoint ATMs are found in many convenient retail locations such as Target, Costco, Walgreens, CVS and 7-Eleven.

Serving Bucks County for over 140 years, William Penn Bank has branch offices in Morrisville, Richboro and Levittown.

For more information, call 215-945-1200 or visit www.willpenn.com. Member FDIC.

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Filed Under: Morrisville Times News, Northampton Herald News Tagged With: , , , ,

Warning against taking distributions from inherited IRAs

March 20, 2013 By

submitted by Martin H. Abo, CPA/ABV/CVA/CFF

We have been seeing some interesting financial scenarios presenting themselves as we hunker down into tax season. Here’s one such item that came upon us that we thought we’d share with other clients and friends.

As you probably know, these days it’s increasingly common for individuals to inherit IRAs. By inheriting an IRA, we mean when you become entitled to some or all of the balance in a deceased account owner’s traditional IRA or Roth IRA by virtue of being designated as an account beneficiary.

In this scenario, you may think your share of the inherited IRA balance can be distributed to you and then rolled over tax-free into your own IRA before the familiar 60-day deadline for rollovers has passed. While this seems like a very reasonable assumption, we just learned IT’S WRONG – unless you are the deceased IRA owner’s surviving spouse. In other words, only a surviving spouse is allowed to roll over a distribution from an inherited IRA into his or her own IRA. Nobody else can.

Fortunately, there are apparently ways to finesse the “no-rollover-allowed rule” so that you can take control of your share of an inherited IRA without adverse tax consequences. However, to make this work, we just learned that you must follow some important rules, one of which is that you cannot receive a distribution check payable to you personally from the inherited IRA.

If you do so and are not the deceased IRA owner’s surviving spouse, you can’t put the money back into an IRA and continue earning tax-deferred income (or possibly tax-free income in the case of an inherited Roth IRA).

Furthermore, if you know the distribution is from an inherited traditional IRA and you are not the deceased IRA owner’s surviving spouse, you must include it in your taxable income. Depending on the circumstances, a distribution from a Roth IRA may result in taxable income to you as well.

To avoid adverse tax outcomes, we suggest you contact a pension/IRA/retirement specialist before taking any distributions from an inherited traditional or Roth IRA. That way, they can work with you to achieve the most favorable tax consequences for your inherited IRA money.

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Filed Under: Business Notebook, Morrisville Times Columnists Tagged With: , , , , ,

Highly regarded accounting firm expands practice into Newtown

February 19, 2013 By
BBCO PROFILE

 

by June Portnoy

Effective January 1st, 2013, Bee, Bergvall & Co. (BBCO), located in Warrington and Lansdale, expanded its accounting, tax and advisory practices through a merger with Burton & Browse, Certified Public Accountants, located in Newtown, Doylestown and Lambertville, NJ.

This combined firm will remain Bee, Bergvall & Co., and will continue serving all five locations.

Since its inception 30 years ago, BBCO has built a firm that is known for its innovation, knowledge and experience in accounting, auditing, as well as tax services. 

More than a traditional accounting firm, BBCO is a business advisory firm with extensive experience in the issues businesses encounter. The firm is often called upon to provide expertise and to speak at local and national conferences.

The experience and academic credentials of the partners and staff provide clients with the expertise of a larger firm, while the commitment to superior customer service offers a personal, one-on-one approach. 

BBCO serves a broad base of clients of all sizes. They provide tax planning and tax return preparation for individual clients. Cash flow projections, profit improvement, multi-state tax returns, succession planning and business valuations are a few of the services offered to business owners.

Two of the staff are qualified QuickBooks Pro-Advisors.

Bee, Bergvall & Co. has developed a unique expertise working with not-for-profit clients. In addition to providing audit and tax and informational returns to clients, they provide management and consulting expertise to the nonprofit community through their affiliate, the Catalyst Center for Nonprofit Management. 

The leadership team of BBCO consists of James L. Bee, CPA, Cynthia Bergvall, CPA and Jennifer J. McHugh, CPA.

Established in 1959, Burton & Browse offered a range of accounting, tax and financial planning services. It was managed by Ken Cronlund, CPA, Craig Burton, CPA and Tom Newman, CPA, who will remain as Principals at Bee, Bergvall & Co.

“The team of Burton & Browse shares our values and will be an excellent fit,” says BBCO partner Jim Bee. “We look forward to adding their skills and knowledge to our own and using that greater capacity to service our clients.”

The merger creates new opportunities for both firms to build on the strength of the individual practices, creating synergies with a larger client service team. The additional locations provide clients with the opportunity to meet in an office location most convenient to them.

As a result of this merger, the newly expanded BBCO now has a staff of 22 professionals and a six-person administrative team.

BBCO remains large enough to provide a full range of services, but small enough to give you personalized attention.

Members of the firm are encouraged to volunteer and serve in the community, and many sit on boards of directors of local not-for-profit organizations.

This firm looks forward to serving your needs. Please do not hesitate to contact them at their Newtown office at Newtown Professional Park, 444 South State Street, Suite B2 at 215-968-4224.

For additional information visit www.bbco-cpa.com.

PHOTO CAP: Bee, Bergvall & Co. welcomes Burton & Browse to the firm. From left, Jennifer McHugh, CPA; Craig Burton, CPA; Ken Cronlund, CPA; Cynthia Bergvall, CPA; Thomas Newman, CPA. Seated: James Bee, CPA.

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Filed Under: Newtown Gazette Business Profiles Tagged With: , , , , ,

It’s February, and I forgot to contribute to my IRA. Is it too late?

February 19, 2013 By

submitted by Rosemary G. Caligiuri, CASL™, President, Harvest Group Financial Services

The answer is no. Generally speaking, the IRS allows you to make your IRA contribution for a particular tax year up until April 15th of the following year. This rule applies to both traditional IRAs and Roth IRAs, giving you some flexibility in terms of the timing of your annual IRA contribution.

You can contribute an aggregate amount of $5,500 to all the IRAs you own in 2013 ($5,000 in 2012). In addition, if you’re age 50 or older, you can make an extra “catch-up” contribution of $1,000 a year in 2012 and 2013.

Note that you can make your annual IRA contribution in a series of payments rather than in one lump sum. For example, let’s say you want to invest the maximum amount in your IRA for 2013. You can either make a lump-sum contribution of $5,500, or you can set up a savings plan whereby you invest a fixed amount each month in your IRA.

Because you’re allowed to spread your 2013 IRA contribution over a 15½-month period (January 1st, 2013 through April 15th, 2014), you can invest as little as $354.83 per month and still end up contributing the full $5,500.

As always, I recommend investors consult with their own qualified tax and financial advisors prior to making any investment decisions.

Registered representative offering securities and advisory services through Centaurus Financial Inc., a registered investment advisor. Member FINRA and SIPC, Supervisory Branch: 3902 State Street, Suite 101, Santa Barbara, CA 93105, 1-888-569-1982. Harvest Group Financial Services and Centaurus Financial are not affiliated.

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Filed Under: Business Notebook, Langhorne Ledger Columnists Tagged With: , , , ,

Public Service Announcement

December 21, 2012 By

The Society for Financial Awareness (SOFA) is a 501(c)3 non-profit organization that provides companies, churches, and organizations with financial education through seminars and workshops.

All education programs are available at no charge to corporations, family businesses and community groups for the advancement of financial and health education.

They do not endorse any specific products or services. Their primary purpose is to provide generic financial education to the community.

For more information contact Jeffrey Beyer at 215-860-3101 or jeffbeyer@1apg.com.

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Filed Under: Newtown Gazette News, Northampton Herald News Tagged With: , , , ,

How do I divest an annuity?

December 14, 2012 By

submitted by Rosemary G. Caligiuri, CASL™, President, Harvest Group Financial Services

You can cancel your annuity at any time. However, you may have to pay an early cancellation fee known as a surrender charge. The federal government will also penalize you if you cancel your annuity before you reach age 59½.

Your annuity contract should have its surrender charges explained in the contract itself. If you cancel the annuity before the date stipulated in the contract, you will be charged a fee that is a percentage of the withdrawn amount.

The surrender charge is usually reduced as the annuity gets older and typically ends after the first 10 years. For example, if you wish to cancel a contract that has been in effect for five years, the surrender charge will typically be a lower percentage than it would be if your contract has been in effect for only three years.

Insurance companies will usually allow you to withdraw a certain percentage, typically 10%, of your account annually without having to pay any surrender charge.

Besides the surrender charges that the insurance company imposes, the federal government may penalize you 10% of the earnings portion of the withdrawn amount if you cancel your annuity before you reach age 59½. In fact, the government will charge the same percentage on any amount you withdraw from your annuity before age 59½, to the extent the withdrawal represents untaxed earnings, even if you don’t cancel the contract.

So, before you cancel your annuity, speak to a trusted financial advisor to make sure you understand any surrender charges or governmental penalties you may incur.

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