Vision Payroll

October 23, 2011

IRS Announces Adjustments to SIMPLE Plan Limits for 2012

IRS Announces Adjustments to SIMPLE Plan Limits for 2012
IRS Announces Adjustments to SIMPLE Plan Limits for 2012
In IR-2011-103, the Internal Revenue Service (IRS) announced cost-of-living adjustments to the limits on SIMPLE plan contributions for 2012. The limitation for SIMPLE plans is codified in §408(p)(2)(E) of the Internal Revenue Code of 1986 (IRC). This section also requires annual adjustments as necessary to keep pace with inflation in a manner similar to that required by IRC §415 for retirement plans.

2012 Contribution Limits Remains Unchanged

For 2012, the SIMPLE plan regular limitation remains at $11,500. The age 50 and over catch-up contribution remains at $2,500 for individuals who plan to reach age 50 before the end of 2012.

Contact Vision Payroll for More Information on 2012 SIMPLE Plan Changes

Contact Vision Payroll if you have questions on the SIMPLE plan contribution limits or get further information at Important Facts and Figures.

November 1, 2010

IRS Announces Adjustments to SIMPLE Plan Limits for 2011

IRS Announces Adjustments to SIMPLE Plan Limits for 2011
IRS Announces Adjustments to SIMPLE Plan Limits for 2011
In IR-2010-108, the Internal Revenue Service (IRS) announced cost-of-living adjustments to the limits on SIMPLE plan contributions for 2011. The limitation for SIMPLE plans is codified in §408(p)(2)(E) of the Internal Revenue Code of 1986 (IRC). This section also requires annual adjustments as necessary to keep pace with inflation in a manner similar to that required by IRC §415 for retirement plans.

2011 Contribution Limits Remains Unchanged

Because the cost-of-living index in 2010 is lower than it was in 2008, there will be no increases to the amounts. For 2011, the SIMPLE plan regular limitation remains at $11,500. The age 50 and over catch-up contribution remains at $2,500 for individuals who plan to reach age 50 before the end of 2011.

Contact Vision Payroll for More Information on 2011 SIMPLE Plan Changes

Contact Vision Payroll if you have questions on the SIMPLE plan contribution limits or get further information at Important Facts and Figures.

October 17, 2009

IRS Announces Adjustments to SIMPLE Plan Limits for 2010

In IR-2009-094, the Internal Revenue Service (IRS) announced cost-of-living adjustments to the limits on SIMPLE plan contributions for 2010. The limitation for SIMPLE plans is codified in §408(p)(2)(E) of the Internal Revenue Code of 1986 (IRC). This section also requires annual adjustments as necessary to keep pace with inflation in a manner similar to that required by IRC §415 for retirement plans. Because the cost-of-living index in 2009 is lower than in 2008, there will be no increases to the amounts. For 2010, the SIMPLE plan regular limitation remains at $11,500. The age 50 and over catch-up contribution remains at $2,500 for individuals who plan to reach age 50 before the end of 2010. Contact Vision Payroll if you have questions on the SIMPLE plan contribution limits or get further information at Important Facts and Figures.

September 22, 2009

IRS Releases Notice 2009-67 on Adding Automatic Enrollment to SIMPLE IRA Plans – Sample Amendment

The Internal Revenue Service (IRS) recently released Notice 2009-67, Adding Automatic Enrollment to SIMPLE IRA Plans – Sample Amendment. Notice 2009-67 facilitates automatic enrollment by providing a sample plan amendment that a prototype sponsor of a SIMPLE IRA plan (using a designated financial institution) can use in drafting an amendment to add an automatic contribution arrangement to the SIMPLE IRA plan. The IRS plans to issue a revised Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) — for Use With a Designated Financial Institution, that includes an automatic contribution arrangement.

Contact Vision Payroll if you have any further questions on Notice 2009-67.

September 20, 2009

IRS Releases Notice 2009-66 on Automatic Enrollment in SIMPLE IRAs

Filed under: News — Tags: , , , , — Vision @ 6:47 pm

The Internal Revenue Service (IRS) recently released Notice 2009-66, Automatic Enrollment in SIMPLE IRAs. Notice 2009-66, in question-and-answer format, provides rules for employers that maintain SIMPLE IRA plans. It confirms that SIMPLE IRAs may do the following:

  1. Include an automatic contribution arrangement;
  2. Provide that default salary reduction contributions made under an automatic contribution arrangement are made only for employees who are first eligible under the SIMPLE IRA plan on or after the effective date of the automatic contribution arrangement and who do not make an affirmative election;
  3. Provide that the percentage of compensation at which default salary reduction contributions under an automatic contribution arrangement are made for an employee increases based on the number of years or portions of years for which default salary reduction contributions have been made for the employee.

Notice 2009-66 also reviews the changes in notice requirements for SIMPLE IRAs that include an automatic contribution arrangement, explains the transfer rights that employees must receive during their 60-day election period, and confirms that if the requirements of the regulations under §404(c)(5) of the Employee Retirement Income Security Act of 1974 (“ERISA”) are met, fiduciary relief will apply with respect to the investment of default salary reduction contributions in default investments.

Contact Vision Payroll if you have any further questions on Notice 2009-66.

January 23, 2009

Question of the Week: Why Did My FIT Withheld Go Down?

This week’s question comes from Greg, a part-time accounts payable clerk. I made almost the same amount of money in 2008 as I did in 2007, but the amount of my federal income tax (FIT) withheld is significantly lower. Why did my FIT withheld go down? There are several reasons why your FIT withheld could be significantly lower, even though your income was almost the same.

  1. Inflation creep. Each year, as inflation reduces the value of the dollar, tax tables in Publication 15 (Circular E) are adjusted so that less tax would be withheld on the same amount of income. This is to adjust for the reduced buying power of the same dollar amount of income.
  2. Reduced income. At certain low-income levels, no tax is withheld if the withholding allowances claimed are greater than zero. Even FIT withholding of a few dollars each week can add up to a few hundred-dollar difference at year-end compared to no withholding at certain low-income levels.
  3. Increased withholding allowances. Many employees file a revised Form W-4, Employee’s Withholding Allowance Certificate or Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. If the number of withholding allowances claimed increases, the amount of FIT withheld will decrease. Instead of receiving a big refund when a Form 1040 is filed, the employee receives a small net pay increase each week. Some employees also file Form W-4 claiming exemption from all FIT withholding.
  4. Claiming Earned Income Credit. Many employees file a new or revised Form W-5, Earned Income Credit Advance Payment Certificate. As in the case of increased withholding allowances, claiming an advance EIC payment will increase net pay received each week, but could reduce the amount of FIT withheld.
  5. Increase in pre-tax deductions. Employees who increase the amount of a §125 election or elect to contribute more money to a pre-tax retirement plan such as a SIMPLE plan or §401(k) plan, could have a significantly reduced amount of FIT withheld on the same amount of gross pay. Since those amounts are deducted before FIT withholding is calculated, the FIT deduction should be reduced.

Employees should work with their CPA to project their FIT liability for the current year then assess their progress toward meeting that liability each quarter. If the projected FIT withholding be less than the annualized projected liability a revised Form W-4 or Form W-5 should be filed or the need to pay quarterly estimated tax payments using Form 1040-ES should be considered. Employers should update the allowances claimed by logging in to their company file or providing Vision Payroll with the updated information.

October 19, 2008

IRS Announces Increases to SIMPLE Plan Limits for 2009

In IR-2008-118, the Internal Revenue Service (IRS) announced increases to the limits on SIMPLE plan contributions for 2009. The limitation for SIMPLE plans is codified in §408(p)(2)(E) of the Internal Revenue Code of 1986 (IRC). This section also requires annual adjustments as necessary to keep pace with inflation in a manner similar to that required by IRC §415 for retirement plans. For 2009, the SIMPLE plan regular limitation will increase from $10,500 for 2008 to $11,500 for 2009. The age 50 and over catch-up contribution remains at $2,500 for individuals who plan to reach age 50 before the end of 2009. Contact Vision Payroll if you have questions on changes to the SIMPLE plan contribution limits.

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