https://www.groupbenefits.org/portal/page/portal30/SHARED/O/OGBWEB/EXPLORE_OGB
The IRS has announced the annual cost-of-living adjustments made to several employee benefits and taxable amounts. These are the maximum amounts that may be excluded in 2014 from an employee's taxable income for specific benefits. Qualified Transportation Fringe Benefits The amounts that may be excluded from an employee's gross income for employer-provided qualified transportation fringe benefits for 2014 have changed from the 2013 amounts. Specifically: Up to $250 per month may be excluded for qualified parking benefits (increased from $245 in 2013); and Up to $130 per month may be excluded for transportation in a commuter highway vehicle and any transit pass. The parity for mass transit benefits, which was extended by the American Taxpayer Relief Act of 2012, expires at the end of 2013. Standard Deduction The standard deduction amounts will increase for 2014 to
Flexible Spending Account (FSA) Deferrals The dollar limitation under Internal Revenue Code (IRC) § 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements for plan years beginning in 2014 is unchanged at $2,500. Adoption Assistance Exclusion Under IRC § 137(a)(2) the amount that can be excluded from an employee's gross income for the adoption of a child with special needs increases for 2014 to $13,190 (from $12,970 in 2013). The same amount is the maximum that can be excluded under § 137(b)(1) from an employee's gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished under an adoption assistance program for other adoptions by an employee. The amount excludable from an employee's gross income begins to phase out for employees with modified adjusted gross income (MAGI) exceeding $197,880 (up from $194,580 in 2013), and is completely phased out for employees with MAGI of $237,880 (up from $234,580 in 2013) or more. Medical Savings Accounts For 2014, a high deductible health plan is defined as a plan with an annual deductible of $2,200 - $3,250 for individual coverage (up from $2,150 - $3,250 in 2013) and $4,350 - $6,550 for family coverage (up from $4,300 - $6,450 in 2013). Maximum out-of-pocket expenses cannot exceed $4,350 for individual coverage ($4,300 in 2013) and $8,000 for family coverage ($7,850 in 2013). Long-Term Care Health Insurance Benefits For long-term care insurance contracts that make per diem benefit payments, the maximum amount of the payments that is excludable from income in 2014 is $330 per day (up from $320 per day in 2013). Foreign-Earned Income Exclusion The 2014 maximum foreign-earned income exclusion amount under IRC § 911(b)(2)(D)(i) is increased to $99,200 (from $97,600 in 2013). The maximum foreign housing cost exclusion amount is increased to $13,888 (from $13,644 in 2013). Pipeline Construction Industry Per Diem Option In 2014, an eligible employer may pay certain welders and heavy equipment mechanics up to $17 per hour for rig-related expenses that will be deemed substantiated under an accountable plan, and up to $10 per hour for fuel, when paid in accordance with Internal Revenue Service Revenue Procedure 2002-41, 2002-23 IRB 1098. These amounts are unchanged from 2013. http://www.xperthr.com/news/irs-announces-2014-inflation-adjustments-to-transportation-fringe-benefit-amounts-standard-deduction-and-other-benefits/11747/ The federal government's Social Security website is your one stop shop to all information that you may need to know about Social Security. http://www.ssa.gov/
There is no tax withholding if you leave for a new job and roll over your money into an IRA or your new employer's 401(k), 403(b) or 457 plan – or if you take regular installments for 10 years or more. (All other distributions are subject to 20% withholding for federal taxes.) Keep in mind that federal income tax laws are complex and subject to change. Neither Nationwide nor our representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions. http://www.nationwide.com/457-retirement-plans.jsp · There are limits to contributing to Roth Plans o $5,500 and if you are 50 or older you can give and extra $1,000 as a catch up · As long as you follow the rules, distributions are tax free · By converting your tradition IRA to a Roth, you can get around certain limits. http://www.fool.com/retirement/iras/2014/02/07/roth-ira-rules-whats-new-for-2014-and-beyond.aspx To meet increasing service demands despite shrinking budgets, Social Security has invested in technological innovations offering more convenient, cost-effective and secure options for the public. Considering these factors, Social Security is making some service changes in our field offices across the country. On August 1, 2014, Social Security will stop offering Social Security number printouts. Also, on October 1, 2014, our offices no longer will issue benefit verification letters. As a result of these changes, we ask agencies and organizations that routinely need access to these materials to use the data exchanges specifically developed for this purpose. Social Security has collaborated with other federal, state and local agencies to build hundreds of robust data exchanges during the past few years. Today, Social Security provides more than 1.6 billion electronic verifications of Social Security numbers or benefit information to employers, state and local agencies, and other authorized third parties. Agencies and organizations should use available data exchanges to get the necessary verifications. People needing proof of their Social Security or Supplemental Security Income benefits can get verification letters online instantly through a my Social Security account atwww.socialsecurity.gov/myaccount. They also can get one mailed to them by calling our toll-free number, 1-800-772-1213 (TTY 1-800-325-0778). http://www.socialsecurity.gov/thirdparty/whatsnew.html · Attempting to put a cap on the value of tax deductions · Trying to get more lower and middle income persons into the habit of saving · This is to effect those making the bigger bucks · Hypothetical situations that many feel congress will not agree to pass · More restrictions we place, the less attractive retirement savings actually becomes. http://www.marketwatch.com/story/obama-plan-cut-tax-breaks-for-rich-retirement-savers-2014-02-21 · Benefits payable and deductions rates have both increased since 2013 into 2014 · Plans are not required to have the roll over account component. · Pension plans have to contribute to the Pension Benefit Guaranty Corporation http://smallbiztrends.com/2014/01/changes-2014-qualified-retirement-plan.html
http://www.marketwatch.com/story/retirement-planning-for-the-very-long-term-2014-02-07 You’ve probably seen the Prudential Financial stickers ad. A professor asks: “How old is the oldest person you’ve known?” In response, hundreds of folks place age stickers on a wall. The message is that you too can live to 100 and need Prudential’s help to plan for it. But a more useful (if less catchy) question would be: How old is the oldest person you’ve known, of your own sex, that you are directly related to? Or even better: What was the result when you ran the Living To 100 Life Expectancy Calculator? (The calculator incorporates findings from the New England Centenarian Study, the largest survey of centenarians and their families in the world.)I was reminded of the importance of such personalized planning recently by a new academic paper and a visit with my 88-year-old mother. Mom was reminiscing about how she worked part-time until 76 and only “retired” from her full time job at 70 because she had to do so to lock in the retiree medical benefits her employer was phasing out. While my mother never ran a retirement calculator or created a formal retirement plan, she incorporated her individual longevity expectations into her retirement thinking. She enjoyed working past 65 and was also aiming to fortify her finances for what she logically expected would be a long retirement, given her good health and matrilineage. Women who turned 65 in 1990, as my mom did, had an average life expectancy of 84.6 . But my mother’s mother lived to 97 and a maternal aunt to 101.As for that new academic study, it demonstrates my Mom wasn’t alone in explicitly or implicitly taking life expectancy into account, but also suggests even more such thinking is necessary. In the paper, three economists from the Center for Retirement Research (CRR) at Boston College find that folks who expect to live longer plan, on average, to work longer too. And if a health shock or the earlier-than-expected death of a parent leads them to lower what the paper calls their “subjective life expectancy,’’ they tend to adjust their retirement planning accordingly. It sounds sort of obvious. Yet the study is important because previous research hasn’t consistently found a relationship between life expectancy and retirement intentions, the authors note. Moreover, no one had studied whether, as the paper puts it, “new information about one’s own mortality” leads pre-retirees to alter their plans. (The CRR paper was able to study changed expectations by using data from the federally funded Health & Retirement Study, which has surveyed the same group of 50-plus Americans every two years since 1992, asking about their finances, health, family and retirement plans and whether they believe they’ll live until 75 or 85. New participants are added as their age cohort reaches 50. For the CRR study, the researchers crunched the plans and expectations of participants who were still in the workforce and aged 50 to 61.) How big a difference did subjective life expectancy make? Just 34% of those who held lower than average subjective life expectancies planned to work full time to at least their “full” Social Security retirement age, compared with 44% of those who thought they’d live longer than the norm. (That “full” age has been rising slowly from 65. It’s 66 for those born between 1943 and 1954 and increases by two months a year after that, until it hits 67 for those born in 1960 and later.) As for working full-time until 62, the age at which a reduced Social Security retirement check can be claimed, only 43% of those with a low life expectancy planned to do so, compared with 53% of those expecting more than the average years. Personal life expectancy also made a significant, albeit smaller difference in when people actually retired. (Job loss and other events can get in the way of working as long as expected.) The authors call the differences they found “large and statistically significant.” (For statistics geeks, a one standard-deviation increase in optimism about living to ages 75 or 85 was associated with an 8% to 24% increase over the mean probability of planning to work until older ages.) But biased as I am by my own mother’s example, I’m surprised personal life expectancy didn’t have an even bigger impact on retirement intentions. (The study shows, the authors note, that survival and retirement expectations are “anchored” to the previous generation’s experience.) Indeed, while people in general are living longer, family history still predicts a lot of the differences in how long we live. So, of course, do life habits (smoker or not, exerciser or sedentary) and health status (blood pressure, weight) at middle-age. While no one should count on being able to work until 76, or, conversely, quit his job and blow his wad at 61 because his dad dropped dead of a heart attack at 62, knowing one’s individual life expectancy is an essential part of retirement planning, even if it’s not always treated as such. During the past decade, there’s been lots of attention paid to your number— the daunting amount, be it $500,000 or $1 million or $2 million, you need to amass to maintain your lifestyle in retirement. More recently, some financial service companies, such as Dimensional Fund Advisors, have decided it may be more meaningful to talk to workers about the amount of income a 401(k) balance can produce. But unless you’re rich enough, parsimonious enough or legacy minded enough to never draw down your real (inflation adjusted) investment capital, or you chose to annuitize all your wealth (generally not advisable), you can’t determine the amount of savings you need or what you can spend each year without entering into the equation how many years your money has to last. (Links to the life expectancy and other useful retirement calculators are here.) Couples also need to understand and plan for something known as joint life expectancy. As Ashlea Ebeling explains here, at 65, a male in average health has a 20% chance of living to 90 and a female a 31% chance. But together there’s a 45% chance one of them will hit 90. (This MeLife calculator gives you joint life expectancy adjusted for blood pressure, weight, smoking and alcohol use, but not for family history and other factors that make the New England calculator superior for an individual estimate.) Knowing your life expectancy is crucial for other decisions too. For example, William Baldwin has a smart column here explaining how a deferred fixed annuity can serve as both longevity insurance and a substitute for long term care insurance. But keep in mind that the insurance industry prices fixed annuity products on the assumption that people who buy them live longer—meaning this is generally not a smart purchase if your life expectancy is less than average. And then there are those two decisions which loom the largest in the living standards of average retirees: when to stop work and when to claim Social Security. The Bureau of Labor Statistics predicts that by 2022 nearly 32% of Americans ages 65 to 74 will still be in the labor force, up from 20% in 2002 and 27% today. If you’ve got a long life expectancy, you probably should plan to be one of those still working and maybe to postpone taking Social Security until 70, which yields you the largest possible monthly check. (For a married couple, it’s often smartest for just one partner to wait until 70. Advice on Social Security claiming strategies is here.) While we’re on Social Security and individual life expectancy, permit me to make a policy point. Multiple deficit commissions, including the one appointed by President Obama, have called for continuing to increase the retirement age for those born after 1960 to 68, 69, or higher, as life expectancy edges up. A higher full age, however, means even smaller benefits for who claim their checks at 62, leading some wonks to argue that the early retirement age must rise too. But do we really want to prevent any Americans from taking Social Security at 62, if it turns out that those who retire early are making sensible choices based on their individual health and family history and the physical demands of their jobs? http://www.forbes.com/sites/janetnovack/2014/01/21/an-essential-number-for-retirement-planning-your-personal-life-expectancy/ |