Jacksonville CPA | Getting You Important Information

Hello everyone and welcome to this episode of the podcast. My name is Brandon Mcelroy and I am the president of Mineva, Jacksonville based tax and accounting firm. So if the average actual CPA that is not exceeding your expectations and please give me a call and we will help you to develop a, a solid financial plan. So today I want to talk about deferring income into retirement. Okay, so a strategy well known strategy for small business owners to defer income into retirement. So what vehicles should we use and how do we set this up? It’s common question I get. So I want to go over just a list of several different options that you can use and kind of their differences and the pros and cons. And so let’s start with a Myra. Okay. This is a Roth Ira that invested in government bonds. The myra. The myra is pretty simple, simple as it gets.

It’s a concert. It’s a no hassle plan for employers. Okay? Jacksonville CPA The minimum deposit is $25 per person and you can contribute as little as $5 per pay period. And there’s no cost to employers. You don’t have to administer the employee accounts and you don’t have to contribute to them are matched the contributions and the government provides all the materials you need to explain how it works. And so it was pretty simple. The counts are Roth Iras, which means contributions are made with after tax dollars. So no tax deduction going in. Okay, but the money earns a guaranteed return equal to that of a refund. And the government’s thrift savings plan. Okay? It’s currently one point eight, seven five, not great, but just kinda going over options. So you can contribute up to 5,500 a year or 6,500 if you’re 50 or older. And the money contributed can be withdrawn at any point without taxes or penalties.

Okay? And you can contribute the. I’m sorry, the employees can accumulate no more than 15,000. After that, the money must be rolled over to a privately held Roth Ira. Okay. So what are some benefits to this? So if you are an employer that is, doesn’t want to contribute anything to retirement, you just want to give your employees a little added benefit. Very simple, no cost to you ploys perspective, it’s great after tax dollars, Roth Ira, an individual for an individual person, just wanting to put them aside, a small amount every year is a good thing. Um, grows tax free.

The current one point eight, seven, five, return rate. Not Great at all. Not Great at all. So you can do much better than that somewhere else. Um, so if your Jacksonville CPA has not told you about this, then come to Mineva. Okay? Okay. Another on the list as a Sep IRA, Sep IRA. Sep Ira stands for simplified employee pension plan. Okay. You don’t have to do any government filings. Contributions come only from the employer. So this is not an employee participating plan you have to make as the employer, you have to make all of the contributions. So who is most likely to benefit from this sole proprietors? You know, those attorneys, sole proprietor, attorneys, um, real estate agents, consultants, um, you know, maybe even I’m a doctor, doesn’t have a staff, um, partnerships. Corporations. Okay. So all contributions for the sap, like I said, are made by the employer for Jacksonville.

CPA is not shown you this. Definitely give them an eva call. Okay? So you cannot, you have to make all the contributions. You cannot exclude any employee. That’s why mostly the um, sole proprietor type individual is going to want to look at this. It’s all for one and one for all. So you know, it can be a benefit to somebody who’s wanting to put aside a lot of money. It’s just them. Maybe one key employee. You don’t have to file anything with the government and the maximum contribution it, it’s kind of for the years. Um, for 2016 it was $53,000. It’s the lesser of. Okay, I’m sorry, it can’t exceed the less or so it cannot go the lesser of $53,000 or 25 percent of the employee’s compensation. So you know, if you’re only making $100,000, you can’t put in 53, but if you’re making a million dollars, you can put in 53.

You can’t put in 25 percent for making main knowledge, that’d be 250. So it cannot exceed the lesser of $53,000 or 25 percent of the employees net compensation. So if your Jacksonville CPA has not shown you this plan, then you definitely need to give them an I have a call for self employed individuals. The irs defines compensation as your net earnings from self employment because I reduced by one half of your self employment tax and by your entire Sep Ira contribution to a compensation limit. Two hundred $65,000 for 2015 and 16. Okay. So besides the Sep Ira contribution made by an employer, employees can also save in their own Iras up to the limits. And if you are an owner only business, you can save both ways. So you can put it into a traditional and Acep. Right? Okay. So, and you may, a small company may be eligible for a $500 tax credit for three tax years.

Offset startup costs. Okay. You don’t have to contribute every year if you don’t want to. Kevin. And down here you can contribute a small amount or not at all. If you have an a great year. Contributed a lot, but just know that you have to contribute for everyone, right? So another very low cost option works very similar to a 401k, which has a lot of people, which is what a lot of people are familiar with. So definitely give me a call if you’re Jacksonville CPA has not, has not made you familiar with this plan. Okay? You as part of the simple, you’d be employers must contribute annually. Okay? So you do have to contribute for the employees employees, which is an owner, an owner employee you can contribute. Um, let me see what the 2018 simple IRA limits are. So if 2018 is 12,500 or if you’re over 50, you can have an extra $3,000. So $15,500. Okay? So you can also match, right? You can participate. Employer can participate in one of two ways. You can choose to match each employee’s contributions, dollar for dollar up to the three percent of employee compensation. Okay? If you have a lousy year,

you can reduce the match to less than three percent, but the contribution must be at least one percent. And you can only do this for two out of five years. Okay? And you can also make a two percent contribution of total compensation for an eligible employee. Okay? Under this option, employees don’t have to contribute anything, but they can up to the employer contribution limit stated above. Okay? So, you know, there’s going to have to be some paperwork filed with this one. Um, some annual filings. So for small companies, I’m looking to have a retirement plan for their employees to compete with the larger company, but a few Jacksonville CPA has not. Uh, there’s more that we’ll cover in more in subsequent episodes. But if your Jacksonville CPA has not given you this information, please give me a call.