DIVIDENDS August 2011
The IRA: A Great Place to Start a Retirement Fund
Retirement should be easy and fun, but it can be scary if you’re not prepared. Especially in a shaky and uncertain economy, everyone should open and fund a retirement plan to ensure a graceful retirement.
Start saving as early as you can to allow your money more time to grow.
An easy, great place to start is with an Individual Retirement Account (IRA). An IRA is basically a savings account with bigger tax breaks. An IRA is not an investment; it is simply the vessel that keeps your stocks, bonds, mutual funds, etc. There are several different types of IRAs: traditional IRAs, Roth IRAs, SEP IRAs and SIMPLE IRAs.
- Traditional IRAs
A Traditional IRA is a tax-deferred retirement savings account in which you are taxed only when you make withdrawals. - Roth IRAs
Roth IRAs are retirement accounts that allow your money to grow tax-free. It is funded with after-tax dollars, money you’ve already paid taxes on. Your money continues to grow tax-free and you pay no taxes upon withdrawal, the benefit of no up-front tax breaks. - SEP IRAs
A SEP IRA is a type of traditional IRA for the self-
employed or small business owner. SEP stands for Simplified Employee Pension. Money put into the SEP IRA is not taxable until withdrawal. - Simple IRAs
Like a SEP IRA, a SIMPLE IRA is a type of traditional IRA for the self-employed or small business owner. However, a Simple IRA allows an employee to make contributions. Unique to the Simple IRA is that the employer is required to make a contribution on behalf of the employee, either a dollar-for-dollar match of up to 3% of the salary or a flat 2% of pay, regardless of what the employee contributes.
A Simple IRA must be set up by October 1.
This is a general overview of information regarding the different types of IRAs. You should discuss more specific details with a tax professional before setting up an IRA to ensure it is the best fit for your specific situation. If you are not sure which IRA is right for you, call us and we will be happy to discuss your options with you.
Source www.irs.gov
Did You File an Extension?
October 15th is fast approaching.
If you have filed an extension, collect your individual tax data and prepare your return.
The 1099 Nightmare is Over
In April, President Obama signed legislation that officially repealed the expansions of the 1099 reporting rules – a big win for small business.
The repeal scrapped the requirements that businesses had to issue 1099s when the annual amount for services, to basically all vendors, was more than $600. The repeal reinstates the former reporting rule that businesses must report payments made only for services rendered by unincorporated businesses.
Also gone is the mandate that landlords and owners of rental properties file 1099s when paying $600 or more annually for services relating to their properties.
Many claimed the expanded 1099 reporting rules were a barrier to small business growth as it would bury them in paperwork and the cost of complying were expected to be considerable.
Critical Upcoming Deadlines
Sept. 15: Business Tax Return - Final Deadline
Sept. 15: Payment of 3rd Quarter Individual Estimated Tax Due
October 15: File your tax return if you previously filed an extension.