Episode 47 On the Couch with Katherine and Christopher – Friday Afternoon Bourbon Edition

Today’s Washington Update from Kristina –

The new administration has requested all agencies freeze any pending or new regulations until each have been reviewed. This includes those that:

Have been submitted to the Federal Regulation but have not been printed
The items must be withdrawn until they can be reviewed
Have been submitted and printed to the Federal Register
The items must be given a new effective date at least 60 days in the future.
Those items which were printed in the Federal Register and will be impacted by this hold are:
PTE for investment advice which had a 2/16/21 effective date
Lifetime Income Disclosure which had an effective date of 9/18/21, but Rep. Neal took exception to the projection of future earnings
Rules for ESG Investing had an effective date of 1/12/21
Proxy Voting which had an effective date of 1/15/21

Katherine and Christopher go over how both lower income employees and small employers starting new plans can benefit from different tax credits. The Retirement Saver’s Credit is available to certain employees who are over age 18, are not dependents and are not students. They receive a tax credit up to 50% of the amount they contribute to a 401(k) plan. This can help younger employees who are not making much money start to prepare for their retirement. It might also make an automatic enrollment plan a more palatable option for an employer considering that plan design feature.
Small employers sponsoring their first employer sponsored retirement plan can be eligible for a $5,000 credit for the first 3 years the employer has the plan. The limit was recently raised from $500 to a maximum of $5,000. However, it’s now based on the number of Non Highly Compensated Employees that will be eligible for the plan. From the IRS website:
The credit is 50% of your eligible startup costs, up to the greater of:
• $500; or
• The lesser of:
o $250 multiplied by the number of NHCEs who are eligible to participate in the plan, or
o $5,000.
Employers need to remember that you can’t both deduct the startup costs and claim the credit.
#401k #ERISA #IRS #Form8881 #Roth401k #401kroth #washingtonupdate #taxcredit

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