September 2014 Tax Alerts

IRS Publishes 2015 HSA Contribution Limits
Deadline for Roth Change Coming Up
Keep Your SIMPLE Plan Compliant


IRS Publishes 2015 HSA Contribution Limits

The IRS has announced the inflation-adjusted contribution limits for health savings accounts (HSAs) for 2015. HSAs allow taxpayers with high-deductible health insurance plans to set aside pretax dollars that can be withdrawn tax-free to pay unreimbursed medical expenses. The 2015 contribution limit for individuals is $3,350; the limit for family coverage is $6,650. A catch-up contribution of an additional $1,000 is permitted for individuals who are 55 or older.

Deadline for Roth Change Coming Up

It turns out you cango back after all - at least when it comes to last year's decision to convert your traditional IRA to a Roth. The question is, do you want to? You might, if your circumstances have changed. For example, say the value of the assets in your new Roth account is currently less than when you made the conversion. Changing your mind could save tax dollars. Recharacterizing your Roth conversion lets you go back in time, as if the conversion never happened. You'll have to act soon, though, because the window for undoing a 2013 Roth conversion closes October 15, 2014. Before that date, you have the opportunity to undo all or part of last year's conversion. After October 15, you can change your mind once more and put the money back in a Roth. That might be a good choice when you're recharacterizing because of a reduction in the value of the account. Just remember you'll have to wait at least 30 days to convert again. Give us a call for information on Roth recharacterization rules. We'll help you figure out if going back is a good idea.

Keep Your SIMPLE Plan Compliant

When was the last time you looked at your business retirement plan? If you offer a straightforward option such as the Savings Incentive Match Plan for Employees (SIMPLE), the answer may be... not since establishing the plan.

That's understandable, since SIMPLE plans require no discrimination testing and no annual government reporting. Still, SIMPLE plans do have rules, and keeping your plan current and compliant helps you retain tax benefits.

Here are three items to review.
The participation status of your employees. Make sure you haven't overlooked workers who became eligible to participate in your plan. Generally, eligible employees include those who earned at least $5,000 during any two prior years and who you expect to pay at least $5,000 this year.
Your calculation of employee compensation. The contributions your employees make and the contributions your business makes depend on calculating compensation correctly. For purposes of SIMPLE contributions, compensation means regular pay as well as overtime, bonuses, and commissions.
Timely deposits of contributions. Contributions made by your employees must be deposited with the trustee of your plan within 30 days after the end of the month they were withheld. Your employer matching contributions are due on the same date as your federal income tax return.

Other things to check include making sure your plan is using the correct model plan agreement and that you're providing employees with required notices each year. Give us a call. We're here to help you make sure your retirement plan continues to offer all the benefits available.