In retirement planning there is something called the 4% rule. This was the general rule of thumb that you could safely withdraw 4% of your portfolio each year without completely depleting it. This has been a generally accepted rule for many years but lately planners are starting to question it’s wisdom.
The reason is two fold
1) Life expectancy has increased. Meaning hopefully your money will have to last longer.
2) Expected yields have become lower. To quote CNBC “Low interest rates also complicate the picture for savers. A one-year certificate of deposit came with a yield of just 0.28 percent, on average, through most of September, according to Bankrate. That’s hardly enough to generate much retirement income.”
What does this mean for retirees?
1) The 4% rule is still a good starting point but cannot be considered completely safe.
2) It is important to reevaluate your plan frequently
3) Remember there are also laws about required minimum distributions (RMDs) from certain retirement accounts. These penalties for not taking enough out of a tax deferred retirement account can be substantial.
4) It is a good idea to consult with your financial planner or tax professional.
If you answer Yes to any of the following questions you need to have an EIN.
- Do you have employees?
- Do you operate your business as a corporation or partnership?
- Do you file an Employment, Excise or Alcohol, Tobacco and Firearms tax return?
- Do you have a KEOGH plan
- Are you involved with any of the following types of organizations?
- Trusts (except certain grantor owner revocable trusts), IRAs, Exempt Organization Business Income Tax Returns
- Real estate mortgage investment conduits (REMICs)
- Non-profit organizations
- Farmers’ cooperatives
- Plan administrators
If you need an EIN you can easily obtain one by clicking on the following link to the IRS.
Apply for an Employer Identification Number (EIN) online.
Applying online should take less than 15 minutes from start to finish. Taxpayers and authorized third party designees will receive an EIN immediately upon completion of the application.
If you own or manage a business, you will need to be aware of filing requirements relating to the Affordable Care Act.
In general, employers with less than 50 employees are not subject to these reporting requirements. Here’s how to find out if you are exempt from filing:
- The cut-off is for 50 FTEs (full time equivalent employees)
- If your business is close to 50 employees, you should calculate the number of FTEs to be sure
- For purposes of the Affordable Care Act, a full time employee is 30 hours and up
- You need to find the hours worked by part-time employees
- Part-time employees are those who worked on average less than 30 hours per week, but more than 120 days per year
- Seasonal employees are excluded from the calculations
- Here is a helpful government linkfor determining FTEs
- If you have less than 25 FTEs and provide health insurance you may qualify for the Small Business Health Care Tax Credit
Your accountant can help you figure out your exact amount of FTEs.
If a business has more than 50 FTEs, they are required to file forms Form1095-C (Employer-Provided Health Insurance Offer and Coverage) is filed for each full time employee and Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns)
The filing is required for full time employees who participate in the health plan and those who do not
The employer must provide the 1095-C to employees by Feb 1, 2016
The employer must file the forms with the IRS by Feb 29, 2016 (March 31, 2016 if filing electronically)
Form 1094-C filing dates are the same
Grouping of companies with common ownership and self-insured programs are a few of many nuances with this law and it is wise to check with an accounting professional to verify your requirements. The penalties will be severe for not filing.
If you’ve moved recently, you’ve probably notified several organizations – like the U.S. Postal Service and utility companies – about your new address. You may have even notified the IRS about your address change. If you get health insurance coverage through a Health Insurance Marketplace, you should add one more important notification to your list: the Marketplace.
If you are receiving advance payments of the premium tax credit, it is particularly important that you report changes in circumstances, including moving, to the Marketplace. There’s a simple reason. Reporting your move lets the Marketplace update the information used to determine your eligibility for a Marketplace plan, which may affect the appropriate amount of advance payments of the premium tax credit that the government sends to your health insurer on your behalf.
Reporting the changes will help you avoid having too much or not enough premium assistance paid to reduce your monthly health insurance premiums. Getting too much premium assistance means you may owe additional money or get a smaller refund when you file your taxes. On the other hand, getting too little could mean missing out on monthly premium assistance that you deserve.
Changes in circumstances that you should report to the Marketplace include:
- An increase or decrease in your income, including lump sum payments like a lump sum payment of Social Security benefits
- Marriage or divorce
- The birth or adoption of a child
- Starting a job with health insurance
- Gaining or losing your eligibility for other health care coverage
Many of these changes in circumstances – including moving out of the area served by your current Marketplace plan – qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances. You can find information about special enrollment periods at HealthCare.gov.
The Premium Tax Credit Change Estimator can help you estimate how your premium tax credit will change if you experience a change in circumstance during the year.
Health coverage providers will file an information return, Form 1095-B, Health Coverage, with the IRS and will furnish statements to you in 2016, to report coverage information from calendar year 2015.
The law requires coverage providers to list social security numbers on this form. If you don’t provide your SSN and the SSNs of all covered individuals to the sponsor of the coverage, the IRS may not be able to match the Form 1095-B with the individuals to determine that they have complied with the individual shared responsibility provision.
Your health insurance company may send a letter that discusses these new rules and requests social security numbers for all family members covered under your policy. The IRS has not designated a specific form for your health insurance company to request this information. The Form 1095-B will provide information for your income tax return that shows you, your spouse, and individuals you claim as dependents had qualifying health coverage for some or all months during the year. You do not have to attach Form 1095-B to your tax return. Keep it with your other important tax documents.
Anyone on your return who does not have minimum essential coverage, and who does not qualify for an exemption, may be liable for the individual shared responsibility payment.
The information received by the IRS will be used to verify information on your individual income tax return. If you refuse to provide this information to your health insurance company, the IRS cannot verify the information you provide on your tax return and you may receive an inquiry from the IRS. You also may receive a notice from the IRS indicating that you are liable for a shared responsibility payment.