Retirement Investments Archives - CironeFriedberg, LLP

There’s a New Retirement Plan in Town

May 17, 2022 by Sandra Callanan CPA

MyCTSavings is a new retirement savings program sponsored by the State of Connecticut’s Retirement Security Authority designed to help the 600,000-plus private-sector employees who do not have an employer-sponsored retirement savings plan. It offers some of the best features of employer plans and IRAs but does not pose an administrative burden to businesses.

With MyCTSavings, employers can offer a retirement savings plan benefit, and employees can protect their financial future with a convenient savings plan. Participation in the program is completely voluntary.

Employees are able to set aside a portion of their paycheck into an individual retirement account that they fully control through online access. The plan is portable, so it goes with the employee if they change jobs or move out of state.

Employer Eligibility

All Connecticut employers with five or more employees whom they pay more than $5,000 in a calendar year are required by law to join MyCTSavings.
Employees must be at least 19 years of age to be enrolled in the program.
There are no employer fees.
Employers are neither required nor permitted to contribute to the program.
Signing up is quick, easy, and free.
There are registration deadlines. (See the chart here.)

Employer Registration

Signing up for MyCTSavings is quick, easy, and free. Once you sign up, MyCTSavings will notify you when it’s time for your business to register and provide an access code. At that time, you will need:

Your Federal Employer Identification Number (EIN)
MyCTSavings Access Code from your notification

Using Your Payroll Administrator

Employers that have registered with MyCTSavings may choose to use their current payroll administrator to provide information to facilitate the program. Vestwell is the retirement administration partner MyCTSavings uses. The employer portal integrates seamlessly with many existing payroll providers (e.g., ADP, Paychex, and more).

If an employer is not currently using a payroll system, they can easily enter and upload their payroll information. After initial setup, a business can assign administrative rights to additional users to facilitate the process.

You will need the following to set up an employer MyCTSavings account:

Your company’s EIN and the unique Access Code from your registration notification.
Your payroll provider’s name (if you use one) and your company’s payroll schedule(s).
Your company’s bank information for payments.
Your latest employee roster and accompanying personal information (employee name, contact info, date of birth, SSN, etc.). Payroll providers can compile employee information in advance using a template available on the MyCTSavings site.

Employers and employees can learn all about the program by visiting https://myctsavings.com/.

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford) or email us at info@cironefriedberg.com.

IRS Announces 2022 Limits for Retirement Plans

November 23, 2021 by Mike Jodon CPA CVA

The IRS has announced the new retirement plan numbers for 2022. Retirement limits for 401(k) and similar plans are up. The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $20,500, up from $19,500. IRA limits have changed for certain savers. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2022:

For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to $68,000 to $78,000, up from $66,000 to $76,000.
For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to $109,000 to $129,000, up from $105,000 to $125,000.
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to $204,000 to $214,000, up from $198,000 to $208,000.
For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The limit on annual contributions to an IRA remains unchanged at $6,000. Roth IRA limits are changed. The income phase-out range for taxpayers making contributions to a Roth IRA is increased to $129,000 to $144,000 for singles and heads of household, up from $125,000 to $140,000. For married couples filing jointly, the income phase-out range is increased to $204,000 to $214,000, up from $198,000 to $208,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000. Savers Credit and SIMPLE are both up. The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $68,000 for married couples filing jointly, up from $66,000; $51,000 for heads of household, up from $49,500; and $34,000 for singles and married individuals filing separately, up from $33,000. The amount individuals can contribute to their SIMPLE retirement accounts is increased to $14,000, up from $13,500. Catch-up provisions remain unchanged. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $27,000, starting in 2022. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans remains unchanged at $3,000.

The Eternal Question: Roth IRA or Traditional IRA?

November 14, 2021 by David Moseman CPA

Creating a tax-favored savings account is an important part of saving for retirement. The individual retirement account is a popular choice. But IRAs come in two basic flavors: regular and Roth. What are the differences, and which is right for you?

Contributions

The contributions to both traditional IRAs and Roth IRAs are capped at an amount set by the IRS. These limits change annually. Additional rules depend on the type of account:

In a traditional IRA, contributions are made before taxes are paid. Investments grow tax-free and are not taxed until funds are withdrawn. This makes a traditional IRA a good choice for taxpayers who believe their marginal tax rate during retirement will be lower than it has been during their working years.
In a Roth IRA, contributions are made after taxes are paid. Investments grow tax-free and are not subject to any further taxes when they are withdrawn. In effect, taxes on the funds in a Roth IRA are prepaid. However, contributions must come from earned income. Income from rentals, interest, pensions or annuities, stock dividends, or capital gains are not permitted.
In a “backdoor Roth IRA,” the income limits on Roth IRAs are avoided. High-income earners sometimes take advantage of a loophole by opening a traditional IRA and later rolling it over to a Roth IRA. This complex option may be eliminated in future tax legislation.

Withdrawals

Traditional IRA: Mandatory withdrawals must start by April 1 of the year after you turn 72. The amounts of these mandatory withdrawals, called required minimum distributions, are taxed when they are withdrawn. The RMD amount is calculated by dividing the value of the IRA by a life expectancy factor determined by the IRS.
Roth IRA: Because contributions are made with after-tax dollars, withdrawals from a Roth IRA are not taxed. In addition, there is no set age for starting to make withdrawals.

Early distributions

Traditional IRA: Account holders can begin taking money out of the account at the age of 59 1/2. With certain specified exceptions, funds removed before full retirement eligibility incur a 10% penalty on the amount withdrawn and are taxed at standard rates.
Roth IRA: Because you’ve already paid taxes on your Roth IRA contributions, you can withdraw that money at any time without incurring taxes or penalties. However, you are still subject to a 10% penalty for early withdrawals on earnings in the account.

Diversification

Some taxpayers opt to fund both types of IRAs. Taxpayers who engage in this practice believe they will benefit from having some money in a traditional account in case tax rates go down and having some money in a Roth IRA in case tax rates go up. Anyone thinking about diversifying their retirement savings in this way should carefully examine exactly what their actual benefits will be.

Other options

This article focuses on traditional and Roth IRAs, but other retirement savings vehicles are available, including 401(k) plans, Roth 401(k) plans and Simplified Employee Pension IRAs. Also, there may be other provisions or exceptions applicable to you. The bottom line? Get professional advice before making decisions about retirement savings.

There’s a New Retirement Plan in Town

IRS Announces 2022 Limits for Retirement Plans

The Eternal Question: Roth IRA or Traditional IRA?

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