Wednesday, September 30, 2009

Pulled cash out of an IRA, you can put it back this year penalty free!

Here's a chance for a tax-saving do-over you might want to use. The IRS says it will give some taxpayers who took payouts from an individual retirement account or 401(k) this year the chance to put the money back in without paying any taxes or penalty.

Wednesday, September 09, 2009

New Retirement vehicles brought to you by the IRS!

IRS Boosts Tax Incentives for Retirement Savings

September 8, 2009

The IRS released several pieces of guidance Tuesday designed to boost tax incentives for retirement savings. The initiatives include expanded opportunities for automatic enrollment in 401(k) plans, vehicles for taxpayers to save their tax refunds and convert accrued vacation time into savings, and better explanations of the available options for taxpayers receiving rollover distributions from Roth and non-Roth employer plans.

Retirement Plans

The IRS issued pre-approved automatic enrollment language so that 401(k) plan sponsors will not have to seek IRS approval to adopt automatic enrollment (Notice 2009-65). The notice includes two sample plan amendments. This should allow plan sponsors to adopt automatic enrollment more quickly.

The IRS also issued guidance that will allow automatic enrollment in SIMPLE-IRAs (Notice 2009-66 and Notice 2009-67). Notice 2009-66 gives guidance for plan sponsors, and Notice 2009-67 contains a sample plan amendment.

The IRS also issued a ruling that allows 401(k) plans to institute voluntary automatic contribution increases (Revenue Ruling 2009-30). The new procedures are illustrated using two specific fact situations: One involves a basic automatic contribution arrangement, and the other involves an eligible automatic contribution arrangement described in IRC § 414(w).

Tax Refund Savings

Another new initiative announced Tuesday will allow taxpayers to purchase U.S. savings bonds with their tax refunds by checking a box on their tax return. This will be implemented in 2010, and starting in 2011 taxpayers will also be able to add co-owners to the bonds.

Converting Vacation Time Into Savings

Two new revenue rulings will allow workers who leave their jobs and receive cash payments for their unused vacation time to contribute those amounts to their 401(k) plans (Revenue Ruling 2009-31 and Revenue Ruling 2009-32).

Plain-English Explanation of Rollovers

The IRS also issued updated “plain English” explanations of the various options involved in rolling over money from a retirement plan when changing jobs that may be given to recipients of eligible rollover distributions from an employer plan to satisfy the requirements of IRC § 402(f). (Notice 2009-68). One explanation covers distributions from IRC § 402A Roth accounts and the other covers distributions not from Roth accounts.

Tuesday, September 08, 2009

Cash For Clunkers Appliances

  • Energy Star appliances
    Cash for Clunkers for appliances will be hitting your state by fall 2009. The Cash for Appliances program (also referred to as "Cash for Refrigerators") is part of the economic stimulus plan similar to the popular Cash for Clunkers vehicle trade-in program. The Cash for Appliances program will be implemented this fall to give consumers rebates of $50 to $200 when they purchase new energy-efficient appliances. Qualifying household appliances include refrigerators, washing machines, dishwashers, furnaces, and air conditioners that carry an Energy Star seal.

    $300 million in funding will be allocated for the Cash for Appliances program. The allocation of funds will be based on each state's population, which will give California the largest share of the stimulus money.

  • Rebates on Energy Star Appliances

    The Cash for Appliances program will help to stimulate consumer spending and lessen the nation's energy use. Each state has until October 15, 2009 to submit their plan to the Department of Energy for a program that would give consumers a rebate on the purchase of energy-efficient appliances such as refrigerators, washing machines, dishwashers, air conditioners, and furnaces.

    The states will submit a plan to the Department of Energy specifying which Energy Star appliances to include in their programs, how much of a rebate each appliance category will receive, how the rebates will be processed, and their plan for recycling old appliances.

    Under the Cash for Appliances program, consumers could receive up to $200 towards the purchase of an energy-efficient appliance. The program is designed to improve household energy efficiency and stimulate the economy by boosting appliance sales. To qualify for the Cash for Appliances rebate program, consumers are required to purchase an appliance with an Energy Star seal and will receive up to $200 off the purchase price. And unlike the Cash for Clunkers program, consumers will not have to trade in their old appliance to get the rebate. The Cash for Appliances economic stimulus program (aka "Cash for Refrigerators") will be capped at $300 million taxpayer dollars.

Late election of tax status extended for S election

Check-the-box regulations generally allow noncorporate business entities to elect how to be treated for federal tax purposes -- as an association, partnership or, in certain cases, a disregarded entity. The Internal Revenue Service extended the due date for late-entity classification election relief to three years and 75 days after the requested effective date for the election. This gives eligible entities a much longer time to request relief from the IRS if they failed to properly file Form 8832 but have otherwise filed their tax returns consistent with the failed election.