IRS Adds Student Loan Contributions to 401(K) Plans

IRS Adds Student Loan Contributions to 401(K) Plans

It’s no secret student debt has been a rising epidemic in our nation; over $1.4 trillion now owed in student bills country-wide. For countless millennials, it’s an easy trap to fall into, and while the reasons behind why student debt is so high in recent years are complicated, for many, it’s a situation that seems impossible to escape. Until now. In a brilliant move to help lower student debt and empower millennial workers, the IRS has now opened a door for employers to contribute towards their employee’s student loans through an altered 401(k) plan. The program, introduced in an private letter ruling, works the same way a 401(k) does, with similar rules and restrictions, but instead of saving towards retirement – a plan only 52% of millennials participate in currently – employees now have the option of putting tax-free dollars towards eliminating their student loans. Plus, as an added benefit, employers may also match employee repayments for additional savings! Like all 401(k)s, this plan has limitations. To be IRS compliant, a student debt 401(k) plan must: • Be voluntary – an employee only receiving nonelective contributions for each student loan repayment if they choose to sign up for the plan; • Have each contribution match what the worker would normally receive with a retirement plan, for each pay period; • Replace any and all other 401(k) benefits – the employee choosing between either saving for retirement or paying off their student loans, not both; • Not exceed $18,500 in yearly deferrals ($24,500 if over 50); • Have all additional employer contributions perfectly match an employee’s deferral until an amount...
Federal Reserve Increases Interest Rates Yet Again

Federal Reserve Increases Interest Rates Yet Again

For the third time this year, the Federal Reserve has raised their interest rates yet again from 2% to 2.25%, and according to most, it’s a change that was both expected and welcome. Used to calculate the rates for credit cards, mortgages, and other forms of consumer loans, the interest increase was unanimously voted in under Chairman Jerome Powell for one simple reason: The economy is on the rise. Ever since the recession, the Federal Reserve (Fed) have kept the rates at never-before-seen lows in the interest of helping the economy grow and level out once more. But with little unemployment, inflation under control, small businesses thriving, and entrepreneurial optimism blossoming, the time is right for the Fed to gradually begin increasing those rates. The trick, however, lies in the timing and just how much. Too fast and they can risk a recession, too slow and the economy will become fragile from overgrowth. So far, “the Fed shows no signs of taking (a) breath in rate hikes,” Navy Federal Credit Union corporate economist, Robert Frick, wrote in a research article. Though gradual and small climbs, as mentioned above, this is the third interest increase this year, while a fourth is expected by central bankers to take place sometime in December. Come 2019, another three interest hikes are expected by the Fed, before finally settling with one more in 2020. Another change, enacted by the central bank, came in the form of dropping the word “accommodative” from it’s monetary policy description – signaling the belief that interest rates are neutral point in the economy, neither helping nor harming it’s growth....
New Amnesty Laws in Wake of Wayfair v. South Dakota

New Amnesty Laws in Wake of Wayfair v. South Dakota

Ever since the decisive Supreme Court ruling on the requirements of online businesses regarding sales tax, Wayfair v. South Dakota, states across the nation have been enacting new sales tax laws, while the businesses they affect have been left scrambling to keep up. In light of this, to help encourage retailers to move into compliance, several states have adopted amnesty periods to help businesses become current with the new tax code, without the accruing of penalties. In Indiana, for instance, since May 2nd  the Indiana Department of Revenue (DOR) has offered a Voluntary Disclosure Initiative (VDI) for online retailers until December 31st of this year. Through this VDI, out-of-state sellers are offered a Voluntary Disclosure Agreement (VDA) on their tax requirements, while qualifying businesses are given a look-back period of: • The full calendar year of 2017, and the current period for state sales and use tax purposes; and • The fiscal or calendar year of 2017 for state income tax purposes. In New Jersey, a potential amnesty of 100% of penalty fees and 50% interest has been passed on July 1st, 2018. In this new legislation, the New Jersey Division of Taxation must come up with an amnesty program of at least 90 days, ending no later than January 15th of next year, that applies to most state tax liabilities between February 1st, 2009 – September 1st, 2017. Alabama also had their own amnesty period that ended on September 30th, waiving interest and penalties for all taxes besides property tax, motor vehicle, and motor fuel – while also applying to those before the first of 2017. In Connecticut,...
IRS Offers Help to Hurricane Victims

IRS Offers Help to Hurricane Victims

The Internal Revenue Service has recently released information on tax relief that is available to victims of Hurricanes Harvey, Irma, and Maria. In general, the IRS is now providing relief to individuals and businesses anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, as well as parts of Texas. Because this relief postpones various tax deadlines, individuals and businesses will have until Jan. 31, 2018 to file any returns and pay any taxes due. Those eligible for the extra time include: Individual filers whose tax-filing extension runs out on Oct. 16, 2017. Because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief. Business filers, such as calendar-year partnerships, whose extensions ran out on Sept. 15, 2017. Quarterly estimated tax payments due on Sept. 15, 2017 and Jan. 16, 2018. Quarterly payroll and excise tax returns due on Oct. 31, 2017. Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017. A variety of other returns, payments and tax-related actions also qualify for additional time. See the disaster relief page on IRS.gov for details on these and other relief the IRS has offered since these hurricanes began hitting in August. The IRS also continues to closely monitor the aftermath of these storms, and additional updates for taxpayers and tax professionals will be posted to be IRS.gov. Besides extra time to file and pay, the IRS offers other special assistance to disaster-area taxpayers. This includes the following: Special relief helps employer-sponsored leave-based donation programs aid hurricane victims. Under these programs, employees may forgo their vacation,...
Hurricane Charity Scams on the Rise

Hurricane Charity Scams on the Rise

With many victims of the most recent natural disasters still dealing with the devastating effects on their homes and businesses, good hearted people are looking to donate and help in any way possible. The IRS has recently issued information to help protect taxpayers from criminals who want to take advantage of charitable people. If you’re currently searching for a way to donate, unfortunately, there are things you should be aware in order to avoid fake charity scams. While there has been an enormous wave of support across the country for the victims of the hurricanes people should be aware of criminals who look to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations. Criminals often send emails that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources. IRS.gov has the tools people need to quickly and easily check the status of charitable organizations. The IRS cautions people wishing to make disaster-related charitable donations to avoid scam artists by following these tips: Be sure to donate to recognized charities. Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of...
Wage Theft and Worker Mis-classification: Part 3

Wage Theft and Worker Mis-classification: Part 3

In the second part of our blog series on the lawsuits filed by the Labor Commissioner’s Office, we covered a Chula Vista restaurant, La Querencia, who deprived their workers of their hard-earned pay and was ordered to pay over $274,000. You can review our last blog post here: (http://bit.ly/2y3MUuX). With information provided to us from the State of California Department of Industrial Relations’ new release, the Labor Commissioner’s Office has cited a Jack in the Box franchise operator $903,084. The franchise’s owner, Nor-Cal Venture Group, Inc., misclassifed 40 managers as exempt and denied them overtime pay. This case is an great example on how important it is for employers to be aware of overtime protection laws along with how to correctly classify their employees. Nor-Cal Venture Group, Inc. owns 26 Jack in the Box franchises in California, most of the which are in the greater Sacramento area. The Labor Commissioner’s Office opened an investigation after receiving a complaint and found that 40 employees were misclassified as exempt. As managers, they were required to work a minimum of 45 hours per week with no overtime, regardless of how many hours they worked. “For these employees, being misclassified as managers resulted in being paid less then minimum wage,” said Labor Commissioner Julie A Su. “That’s not an acceptable way of doing business in California, and my office will continue to enforce labor laws that uphold that wage floor.” Managers who spend less than half of their work time on managerial duties must be paid overtime. Investigators determined that the 40 workers were performing the same duties as other employees. The citations...

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