The Roth IRA is a retirement savings account in which you invest only after-tax dollars. Subsequently, all earnings grow tax-free and may be withdrawn tax-free. However, there are limits to who can contribute and how much they can contribute to a Roth IRA.
Federal rules restrict direct contributions to a Roth IRA for high-income earners. In 2023, a single, head of household, or married, filing separately tax filer may contribute up to $6,500 if under age 50; $7,500 if 50 or older. However, if the investor has a modified adjusted gross income (MAGI) above $138,000, he is permitted only limited and phased out contributions up to a total annual income of $153,000, above which he cannot contribute to a Roth. Limited contributions for an investor who is married and filing jointly begin at $218,000 in annual income and phase out at $228,000.
However, there is a way to work around these contribution rules using a Roth IRA conversion. To optimize this strategy, investors may be able to conduct a Mega Backdoor conversion from their employer-sponsored retirement plan to a Roth.
The Mega Backdoor Roth strategy is suitable in a handful of circumstances:
When you’ll be able to max out your employer plan contribution
When your earned income is too high to contribute to a separate Roth IRA
If you can save more than the 401(k) and IRA combined limits in one year
Employer Rules
To deploy this strategy, the investor must check with his retirement plan administrator to ensure that the plan allows for post-tax contributions and in-service distributions. If so, the investor should first max out his income-deferred contributions to the 401(k). In 2023, the maximum 401(k) contribution limit is $22,500, $30,000 if age 50 and older.
However, he may invest a maximum of $66,000 or $73,500 (age 50 and up) in his 401(k) for the year, which is the combined total for employer and employee contributions. For example, let’s say a 52-year-old employee earns $200,000 and defers 15 percent ($30,000) of his pre-tax income. His employer kicks in another dollar-for-dollar match of up to 4 percent of his salary ($8,000). With the deferred total at $38,000, the employee could pitch in another $28,000 in post-tax contributions to his after-tax 401(k) account – to reach the maximum total of $66,000.
The next step is for the employee to take advantage of in-service distributions by immediately rolling over his contributions from the 401(k) to an in-plan Roth option or a separate Roth IRA – before any earnings accrue (to avoid taxes on earnings).
Tax Notes
Once the after-tax funds are converted to the Roth IRA, the money grows tax-free, and the investor can withdraw it as tax-free income in retirement. There also is no RMD requirement for Roth IRA funds at any age. However, note that if the funds are converted to an in-plan Roth option, earnings are subject to a penalty if withdrawn before age 59½. If the funds are converted to a separate Roth IRA, tax-free withdrawals are only available penalty-free for five years after each corresponding rollover is conducted.
The Mega Backdoor Roth strategy is appropriate for high earners looking to minimize taxes on both their current income and their long-term retirement investments.
Mega Backdoor Roth IRA
April 1, 2023 · Blog, Financial Planning, News
⏱ 3 min read
The Roth IRA is a retirement savings account in which you invest only after-tax dollars. Subsequently, all earnings grow tax-free and may be withdrawn tax-free. However, there are limits to who can contribute and how much they can contribute to a Roth IRA.
Federal rules restrict direct contributions to a Roth IRA for high-income earners. In 2023, a single, head of household, or married, filing separately tax filer may contribute up to $6,500 if under age 50; $7,500 if 50 or older. However, if the investor has a modified adjusted gross income (MAGI) above $138,000, he is permitted only limited and phased out contributions up to a total annual income of $153,000, above which he cannot contribute to a Roth. Limited contributions for an investor who is married and filing jointly begin at $218,000 in annual income and phase out at $228,000.
However, there is a way to work around these contribution rules using a Roth IRA conversion. To optimize this strategy, investors may be able to conduct a Mega Backdoor conversion from their employer-sponsored retirement plan to a Roth.
The Mega Backdoor Roth strategy is suitable in a handful of circumstances:
When you’ll be able to max out your employer plan contribution
When your earned income is too high to contribute to a separate Roth IRA
If you can save more than the 401(k) and IRA combined limits in one year
Employer Rules
To deploy this strategy, the investor must check with his retirement plan administrator to ensure that the plan allows for post-tax contributions and in-service distributions. If so, the investor should first max out his income-deferred contributions to the 401(k). In 2023, the maximum 401(k) contribution limit is $22,500, $30,000 if age 50 and older.
However, he may invest a maximum of $66,000 or $73,500 (age 50 and up) in his 401(k) for the year, which is the combined total for employer and employee contributions. For example, let’s say a 52-year-old employee earns $200,000 and defers 15 percent ($30,000) of his pre-tax income. His employer kicks in another dollar-for-dollar match of up to 4 percent of his salary ($8,000). With the deferred total at $38,000, the employee could pitch in another $28,000 in post-tax contributions to his after-tax 401(k) account – to reach the maximum total of $66,000.
The next step is for the employee to take advantage of in-service distributions by immediately rolling over his contributions from the 401(k) to an in-plan Roth option or a separate Roth IRA – before any earnings accrue (to avoid taxes on earnings).
Tax Notes
Once the after-tax funds are converted to the Roth IRA, the money grows tax-free, and the investor can withdraw it as tax-free income in retirement. There also is no RMD requirement for Roth IRA funds at any age. However, note that if the funds are converted to an in-plan Roth option, earnings are subject to a penalty if withdrawn before age 59½. If the funds are converted to a separate Roth IRA, tax-free withdrawals are only available penalty-free for five years after each corresponding rollover is conducted.
The Mega Backdoor Roth strategy is appropriate for high earners looking to minimize taxes on both their current income and their long-term retirement investments.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Investing in Main Street Act of 2023 (HR 400) – Introduced by Rep. Judy Chu (D-CA) on Jan.20, this bill would permit certain financial institutions to increase investments in small business investment companies (SBICs). The current cap is 5 percent; if passed, the amount would rise to up to 15 percent of their capital and surplus. The bill passed in the House on Jan.25 and is now under consideration in the Senate.
To terminate the requirement imposed by the Director of the Centers for Disease Control and Prevention for proof of COVID-19 vaccination for foreign travelers and for other purposes (HR 185) – This bill would nullify the standing CDC order that requires non-U.S. citizens who are not immigrants to be fully vaccinated against COVID-19 (or otherwise prove adherence to public health measures to prevent contagion)for entry into the United States by air travel. The bill also would nullify both successor and subsequent orders that would require proof of a COVID-19 vaccination as a condition of entry and prohibit the use of federal funds to enforce such a requirement. However, the bill carves out exceptions for certain individuals traveling from China to the United States. The bill was introduced on Jan. 9 by Rep. Thomas Massie (R-KY). It passed in the House on Feb. 8 and is currently under consideration in the Senate.
Freedom for Health Care Workers Act (HR 497) – The passage of this bill would eliminate the current COVID-19 vaccine mandate for healthcare providers working in certain federal healthcare programs. The bill was introduced by Rep. Jeff Duncan (R-SC) on Jan. 25 and passed in the House on Jan. 31. It is currently awaiting review in the Senate.
To nullify the modifications made by the Food and Drug Administration in January 2023 to the risk evaluation and mitigation strategy for the abortion pill mifepristone and for other purposes (HR 383) – This bill would nullify the FDA’s new rule allowing a pharmacy to dispense mifepristone, as well as ban the pill from being offered by mail. Medication abortion is now the most commonly used abortion method in the United States. Under the current guidelines, pharmacies may prescribe mifepristone in person to patients, essentially permitting it to be disseminated at the same time with misoprostol. This two-pill combination is taken in sequence to induce an abortion at home. The bill to ban this access was introduced on Jan. 17 by Rep. Diana Harshbarger (R-TN) but has yet to be assigned to a committee for review.
To ensure the privacy of pregnancy termination or loss information under the HIPAA privacy regulations and the HITECH Act (HR 459) – This legislation was introduced in the House by Rep. Anna Eshoo (D-CA) on Jan. 24. It would ban doctors from revealing a patient’s abortion information without consent, even under a court order or subpoena. Presently, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) restricts doctors, psychologists, pharmacies, hospitals, etc., from revealing a patient’s protected health information – unless compelled to do so by law. This bill would make it illegal for a medical professional to reveal a patient’s abortion information without the patient’s consent, superseding even a court order or subpoena. The bill is currently in the House awaiting a potential vote by the Energy and Commerce Committee.
Prescription Pricing for the People Act of 2023 (S 113) – This bill would authorize the Federal Trade Commission to study the role of intermediaries in the pharmaceutical supply chain and report on anti-competitive practices and other trends that impact how prescription medications are priced. In an effort to increase transparency, the FTC also would provide recommendations to Congress for potential legislative action. The bill was introduced on Jan. 26 by Sen. Chuck Grassley (R-IA) and is currently being considered in the Senate.
Increasing Small Business Investments, Relaxing COVID Vaccination Requirements and Generating More Challenges to Abortion Access
March 1, 2023 · Blog, Congress at Work, News
⏱ 4 min read
Investing in Main Street Act of 2023 (HR 400) – Introduced by Rep. Judy Chu (D-CA) on Jan.20, this bill would permit certain financial institutions to increase investments in small business investment companies (SBICs). The current cap is 5 percent; if passed, the amount would rise to up to 15 percent of their capital and surplus. The bill passed in the House on Jan.25 and is now under consideration in the Senate.
To terminate the requirement imposed by the Director of the Centers for Disease Control and Prevention for proof of COVID-19 vaccination for foreign travelers and for other purposes (HR 185) – This bill would nullify the standing CDC order that requires non-U.S. citizens who are not immigrants to be fully vaccinated against COVID-19 (or otherwise prove adherence to public health measures to prevent contagion)for entry into the United States by air travel. The bill also would nullify both successor and subsequent orders that would require proof of a COVID-19 vaccination as a condition of entry and prohibit the use of federal funds to enforce such a requirement. However, the bill carves out exceptions for certain individuals traveling from China to the United States. The bill was introduced on Jan. 9 by Rep. Thomas Massie (R-KY). It passed in the House on Feb. 8 and is currently under consideration in the Senate.
Freedom for Health Care Workers Act (HR 497) – The passage of this bill would eliminate the current COVID-19 vaccine mandate for healthcare providers working in certain federal healthcare programs. The bill was introduced by Rep. Jeff Duncan (R-SC) on Jan. 25 and passed in the House on Jan. 31. It is currently awaiting review in the Senate.
To nullify the modifications made by the Food and Drug Administration in January 2023 to the risk evaluation and mitigation strategy for the abortion pill mifepristone and for other purposes (HR 383) – This bill would nullify the FDA’s new rule allowing a pharmacy to dispense mifepristone, as well as ban the pill from being offered by mail. Medication abortion is now the most commonly used abortion method in the United States. Under the current guidelines, pharmacies may prescribe mifepristone in person to patients, essentially permitting it to be disseminated at the same time with misoprostol. This two-pill combination is taken in sequence to induce an abortion at home. The bill to ban this access was introduced on Jan. 17 by Rep. Diana Harshbarger (R-TN) but has yet to be assigned to a committee for review.
To ensure the privacy of pregnancy termination or loss information under the HIPAA privacy regulations and the HITECH Act (HR 459) – This legislation was introduced in the House by Rep. Anna Eshoo (D-CA) on Jan. 24. It would ban doctors from revealing a patient’s abortion information without consent, even under a court order or subpoena. Presently, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) restricts doctors, psychologists, pharmacies, hospitals, etc., from revealing a patient’s protected health information – unless compelled to do so by law. This bill would make it illegal for a medical professional to reveal a patient’s abortion information without the patient’s consent, superseding even a court order or subpoena. The bill is currently in the House awaiting a potential vote by the Energy and Commerce Committee.
Prescription Pricing for the People Act of 2023 (S 113) – This bill would authorize the Federal Trade Commission to study the role of intermediaries in the pharmaceutical supply chain and report on anti-competitive practices and other trends that impact how prescription medications are priced. In an effort to increase transparency, the FTC also would provide recommendations to Congress for potential legislative action. The bill was introduced on Jan. 26 by Sen. Chuck Grassley (R-IA) and is currently being considered in the Senate.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Customer loyalty is critical to any successful business strategy in today’s digital age. With emerging technologies such as the internet of things (IoT), companies are now leveraging a new approach called the internet of behavior (IoB) to gain deeper insights into their customers’ behavior and preferences.
What is IoB?
The internet of behavior exists because of the internet of things. IoT is the interconnection of physical digital objects that gather and exchange information over the internet. On the other hand, IoB makes sense of the collected data from various sources, including wearable devices, digital household devices, human online activity and social media.
The acronym internet of behavior (IoB) was coined by Gartner, a tech research firm, as identified among the top 10 trends in their strategic technology report for 2021. However, the concept of using data to influence customer behavior was developed in 2012 by Göte Nyman, a psychology professor at the University of Helsinki, long before the internet of things took hold.
Gartner defines IoB as an extension of the internet of things, focusing on capturing, processing and analyzing the “digital dust” of people’s daily lives.
Simply put, IoB interconnects IoT, consumer psychology and data analytics. The data is analyzed in terms of behavioral psychology to capture patterns that marketing and sales teams can use to influence customer behavior.
How IoB can Influence Customer Loyalty
Aside from products and services, customer experience has become a significant factor in business success. By understanding customer behavior, businesses can leverage IoB data to influence customer loyalty in various ways.
To take advantage of IoB, companies study insights extracted from collected data and use it to decipher customer behavior; that is, their practices, preferences, habits, needs, wants and more. The company can then leverage this data to offer personalized product recommendations, such as insurance premiums, saving plans, travel destinations, etc.
For example, an insurance company can have users install apps on their phones that collect data on distance traveled, car speed, etc., and optimize their car’s premium based on driving behavior.
Timely Improvement of Products and Customer Services
IoB also makes studying how customers interact with specific services or products easy. This saves companies from time-consuming surveys that are used to determine consumer preferences. The collected data is analyzed to identify pain points and issues of concern. The company can then address the issues before they become significant problems, such as by improving on products and services. This is an excellent way to build trust and confidence in a brand, leading to customer retention.
Behavioral Retargeting
Since companies can access customer preferences, recent activities, likes, dislikes, and location data, they can send real-time notifications to customers about discounts and new offers in stores nearby. They also can track loyal customers and offer them rewards. This kind of retargeting will make customers feel like a business values them and caters to their interests.
Develop a Tailored Marketing Strategy
Insights from IoB data can help tailor marketing strategies to individual customers. For instance, a retail store can offer products or services based on the mood, age or gender of a customer; thereby providing a satisfying experience that will lead to a stronger emotional connection with the brand.
Key Challenges that must be Addressed for the Success of IoB
Despite the opportunities IoB offers, companies must be aware of some key challenges to fully realize its benefits.
Privacy Concerns – Although personalization will make consumer lives easier, there is a concern about privacy. Companies must implement strong cybersecurity policies and measures to ensure that customer information is used only for that which a customer has given consent.
Convincing Users to Share Personal Data – People might not be comfortable sharing their personal data.
Laws and Regulations – Strict regulations around collecting and using personal data, such as the General Data Protection Regulation (GDPR), require companies to comply in order to avoid fines and legal issues.
Cybersecurity – As reliance on technology rises, so do cyberattacks. Cybercriminals may access sensitive data on consumer behavior, making consumers susceptible to online scamming and identity theft, among other threats.
Conclusion
Leveraging IoB can provide businesses with a competitive edge and drive revenue growth. Companies seeking continuous success should consider placing IoB at the center of business innovation to create personalized customer experiences. At the same time, they must also examine any challenges that might reduce the effectiveness of IoB.
Leveraging the Internet of Behavior (IoB) to Boost Customer Loyalty
March 1, 2023 · Blog, News, What's New in Technology
⏱ 4 min read
Customer loyalty is critical to any successful business strategy in today’s digital age. With emerging technologies such as the internet of things (IoT), companies are now leveraging a new approach called the internet of behavior (IoB) to gain deeper insights into their customers’ behavior and preferences.
What is IoB?
The internet of behavior exists because of the internet of things. IoT is the interconnection of physical digital objects that gather and exchange information over the internet. On the other hand, IoB makes sense of the collected data from various sources, including wearable devices, digital household devices, human online activity and social media.
The acronym internet of behavior (IoB) was coined by Gartner, a tech research firm, as identified among the top 10 trends in their strategic technology report for 2021. However, the concept of using data to influence customer behavior was developed in 2012 by Göte Nyman, a psychology professor at the University of Helsinki, long before the internet of things took hold.
Gartner defines IoB as an extension of the internet of things, focusing on capturing, processing and analyzing the “digital dust” of people’s daily lives.
Simply put, IoB interconnects IoT, consumer psychology and data analytics. The data is analyzed in terms of behavioral psychology to capture patterns that marketing and sales teams can use to influence customer behavior.
How IoB can Influence Customer Loyalty
Aside from products and services, customer experience has become a significant factor in business success. By understanding customer behavior, businesses can leverage IoB data to influence customer loyalty in various ways.
To take advantage of IoB, companies study insights extracted from collected data and use it to decipher customer behavior; that is, their practices, preferences, habits, needs, wants and more. The company can then leverage this data to offer personalized product recommendations, such as insurance premiums, saving plans, travel destinations, etc.
For example, an insurance company can have users install apps on their phones that collect data on distance traveled, car speed, etc., and optimize their car’s premium based on driving behavior.
Timely Improvement of Products and Customer Services
IoB also makes studying how customers interact with specific services or products easy. This saves companies from time-consuming surveys that are used to determine consumer preferences. The collected data is analyzed to identify pain points and issues of concern. The company can then address the issues before they become significant problems, such as by improving on products and services. This is an excellent way to build trust and confidence in a brand, leading to customer retention.
Behavioral Retargeting
Since companies can access customer preferences, recent activities, likes, dislikes, and location data, they can send real-time notifications to customers about discounts and new offers in stores nearby. They also can track loyal customers and offer them rewards. This kind of retargeting will make customers feel like a business values them and caters to their interests.
Develop a Tailored Marketing Strategy
Insights from IoB data can help tailor marketing strategies to individual customers. For instance, a retail store can offer products or services based on the mood, age or gender of a customer; thereby providing a satisfying experience that will lead to a stronger emotional connection with the brand.
Key Challenges that must be Addressed for the Success of IoB
Despite the opportunities IoB offers, companies must be aware of some key challenges to fully realize its benefits.
Privacy Concerns – Although personalization will make consumer lives easier, there is a concern about privacy. Companies must implement strong cybersecurity policies and measures to ensure that customer information is used only for that which a customer has given consent.
Convincing Users to Share Personal Data – People might not be comfortable sharing their personal data.
Laws and Regulations – Strict regulations around collecting and using personal data, such as the General Data Protection Regulation (GDPR), require companies to comply in order to avoid fines and legal issues.
Cybersecurity – As reliance on technology rises, so do cyberattacks. Cybercriminals may access sensitive data on consumer behavior, making consumers susceptible to online scamming and identity theft, among other threats.
Conclusion
Leveraging IoB can provide businesses with a competitive edge and drive revenue growth. Companies seeking continuous success should consider placing IoB at the center of business innovation to create personalized customer experiences. At the same time, they must also examine any challenges that might reduce the effectiveness of IoB.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
The College Savings 529 plan offers a way for modest-income families to save and invest for college expenses for their children as early as birth up to college age. When invested 529 funds are used to pay for the beneficiary’s qualifying education costs, earnings are distributed tax-free.
However, a lesser-known advantage for wealthier families is that the 529 plan can be used as an effective tax-advantaged tool for funding college expenses for family members over multiple generations. Basically, the 529 enables the investment to continue growing tax-free for years and even decades after the death of the original owner and beneficiary.
Assets from a 529 account may be used to pay for expenses associated with higher education, including tuition, fees, books, room, and board. The 529 also can be used to pay up to $10,000 a year in tuition expenses for K-12 education and a lifetime total of up to $10,000 in student loan repayments.
No Age or Use Restrictions
The two key components to this planning strategy, referred to a Family Dynasty 529 plan, are that the beneficiary can be changed at any time and that there is no time frame during which all assets must be distributed (including no required minimum distributions).
Note that the selection of a 529 beneficiary is rather broad:
Account owner (self)
Spouse
Child
Spouse of a child
Brother, sister, stepbrother, stepsister or their spouse
Mother, father, the ancestor of either or their spouse
Stepfather, stepmother or the spouse of either such person
Nephew, niece or their spouse
Aunt, uncle or their spouse
Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, sister-in-law or their spouse
First cousin
While the 529 can have only one named beneficiary at a time, the beneficiary can be changed at any time (such as once a student graduates), leaving the remaining funds for the next beneficiary.
No Contribution Limit
Unlike federal tax filings, many states offer a limited tax deduction on annual 529 contributions. Note that there is no limit to the amount that can be contributed to a 529 account each year. However, there is a limit to how much can be contributed to each 529 account in total, and that amount differs by state, with the range falling between $235,000 and $529,000. Georgia and Mississippi are the lowest at $235,000, and California features the highest limit at $529,000 (note that a California account can be opened no matter where the owner or beneficiary lives). Moreover, there is no limit to how much invested tax-free 529 assets can grow.
One strategy is to fund a family dynasty 529 with the maximum limit in one lump sum. The idea here is that one lump sum invested for tax-free growth offers the potential to fund college education expenses for a vast number of extended family members over several generations. Each time a beneficiary graduates, a new beneficiary is named. If there are multiple students scheduled to attend college at the same time, multiple 529 accounts can be opened with separate beneficiaries.
Changing Owner for Dynasty Plan to Continue
It is likely that when funding over several generations, the original 529 account owner will pass away. A few plans permit change of ownership only in the event of the death or incapacity of the current owner, but most 529 plans allow the change in ownership at any time, as long as the owner has reached the age of majority for that state’s plan. By periodically changing both owners and beneficiaries of the account, the family dynasty 529 can continue to grow and pay for qualified education expenses indefinitely.
The 529 also may be structured so that the account owner is a trust, which makes it unnecessary to change owners as they pass away. A trust can help protect 529 funds from creditors and may contain language mandating that assets can be used only for higher education – thus eliminating the potential for a beneficiary to drain the account with non-qualified withdrawals.
Potential Gift/GST Tax Consequences
Be aware that some state 529 plans may treat a change in ownership as a distributable event and will issue Form 1099 for tax purposes. Also note that when a new 529 plan beneficiary is one or more generations below the most recent beneficiary, distributed assets beyond the annual gift tax exemption ($17,000 for 2023) may be subject to the gift tax. In this scenario, should excess amounts exceed the lifetime gift tax exemption ($12.92 million for 2023), distributions may be subject to an additional generation-skipping transfer tax (GST).
The Family Dynasty 529 plan is best optimized when started early, such as the birth of the first child, and overfunded to the maximum limit. This allows for the best growth opportunity, wherein college expenses may be funded using tax-free earnings, leaving the principal available to grow for the next student beneficiary. Better yet, parents or grandparents can retain control of the account to ensure it is used only for college funding over multiple generations.
Multigenerational College Planning with a Family Dynasty 529 Plan
March 1, 2023 · Blog, Financial Planning, News
⏱ 5 min read
The College Savings 529 plan offers a way for modest-income families to save and invest for college expenses for their children as early as birth up to college age. When invested 529 funds are used to pay for the beneficiary’s qualifying education costs, earnings are distributed tax-free.
However, a lesser-known advantage for wealthier families is that the 529 plan can be used as an effective tax-advantaged tool for funding college expenses for family members over multiple generations. Basically, the 529 enables the investment to continue growing tax-free for years and even decades after the death of the original owner and beneficiary.
Assets from a 529 account may be used to pay for expenses associated with higher education, including tuition, fees, books, room, and board. The 529 also can be used to pay up to $10,000 a year in tuition expenses for K-12 education and a lifetime total of up to $10,000 in student loan repayments.
No Age or Use Restrictions
The two key components to this planning strategy, referred to a Family Dynasty 529 plan, are that the beneficiary can be changed at any time and that there is no time frame during which all assets must be distributed (including no required minimum distributions).
Note that the selection of a 529 beneficiary is rather broad:
Account owner (self)
Spouse
Child
Spouse of a child
Brother, sister, stepbrother, stepsister or their spouse
Mother, father, the ancestor of either or their spouse
Stepfather, stepmother or the spouse of either such person
Nephew, niece or their spouse
Aunt, uncle or their spouse
Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, sister-in-law or their spouse
First cousin
While the 529 can have only one named beneficiary at a time, the beneficiary can be changed at any time (such as once a student graduates), leaving the remaining funds for the next beneficiary.
No Contribution Limit
Unlike federal tax filings, many states offer a limited tax deduction on annual 529 contributions. Note that there is no limit to the amount that can be contributed to a 529 account each year. However, there is a limit to how much can be contributed to each 529 account in total, and that amount differs by state, with the range falling between $235,000 and $529,000. Georgia and Mississippi are the lowest at $235,000, and California features the highest limit at $529,000 (note that a California account can be opened no matter where the owner or beneficiary lives). Moreover, there is no limit to how much invested tax-free 529 assets can grow.
One strategy is to fund a family dynasty 529 with the maximum limit in one lump sum. The idea here is that one lump sum invested for tax-free growth offers the potential to fund college education expenses for a vast number of extended family members over several generations. Each time a beneficiary graduates, a new beneficiary is named. If there are multiple students scheduled to attend college at the same time, multiple 529 accounts can be opened with separate beneficiaries.
Changing Owner for Dynasty Plan to Continue
It is likely that when funding over several generations, the original 529 account owner will pass away. A few plans permit change of ownership only in the event of the death or incapacity of the current owner, but most 529 plans allow the change in ownership at any time, as long as the owner has reached the age of majority for that state’s plan. By periodically changing both owners and beneficiaries of the account, the family dynasty 529 can continue to grow and pay for qualified education expenses indefinitely.
The 529 also may be structured so that the account owner is a trust, which makes it unnecessary to change owners as they pass away. A trust can help protect 529 funds from creditors and may contain language mandating that assets can be used only for higher education – thus eliminating the potential for a beneficiary to drain the account with non-qualified withdrawals.
Potential Gift/GST Tax Consequences
Be aware that some state 529 plans may treat a change in ownership as a distributable event and will issue Form 1099 for tax purposes. Also note that when a new 529 plan beneficiary is one or more generations below the most recent beneficiary, distributed assets beyond the annual gift tax exemption ($17,000 for 2023) may be subject to the gift tax. In this scenario, should excess amounts exceed the lifetime gift tax exemption ($12.92 million for 2023), distributions may be subject to an additional generation-skipping transfer tax (GST).
The Family Dynasty 529 plan is best optimized when started early, such as the birth of the first child, and overfunded to the maximum limit. This allows for the best growth opportunity, wherein college expenses may be funded using tax-free earnings, leaving the principal available to grow for the next student beneficiary. Better yet, parents or grandparents can retain control of the account to ensure it is used only for college funding over multiple generations.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
To rescind certain balances made available to the Internal Revenue Service (HR 23) – Introduced by Rep. Adrian Smith (R-NE) on Jan. 9, this bill would rescind funds allocated to the Internal Revenue Service by the Inflation Reduction Act of 2022. The bill is designed to “defund” specific enforcement activities, operational support, enhancement to the e-file tax return system, and allocations to the U.S. Tax Court and other Department of the Treasury tax agencies. The bill passed in the House on Jan. 9 and has moved to the Senate,
Protecting America’s Strategic Petroleum Reserve from China Act (HR 22) – This bill would prohibit the Department of Energy (DOE) from selling crude oil to any entity under the ownership, control, or influence of the Chinese Communist Party. The bill was introduced on Jan. 9 by Rep. Cathy Anne McMorris Rogers (R-WA). It passed in the House on Jan. 12 and is currently under consideration in the Senate.
Born-Alive Abortion Survivors Protection Act (HR 26) – An example of one of many abortion-related bills introduced by the House in the new 118th Congressional Session, this Act would require healthcare practitioners to exercise the proper degree of care in cases where a fetus survives an attempted abortion – including ensuring the neonate is immediately admitted to a hospital. Failure to provide such care or failure of others to report the crime would be subject to a fine and/or up to five years in prison. Furthermore, anyone who intentionally kills the neonate would be subject to prosecution for murder. However, this bill would bar criminal prosecution of the birth mother in these circumstances and permit her to bring civil action for these violations if perpetrated by others. The bill was introduced by Rep. Ann Wagner (R-MO) on Jan. 9 and is under assignment in a House committee.
Fair Tax Act of 2023 (HR 25) – This legislation was introduced in the House by Rep. Buddy Carter (R-GA) on Jan. 9. It is currently assigned to committee for consideration. The purpose of the bill is to replace the current income tax system (including payroll, estate, and gift taxes) with a national consumption sales tax on goods and services. Instead of paying the current 10 percent to 37 percent tax rates based on income bracket, as well as eliminating all deductions and credits, U.S. residents would pay a minimum 23 percent federal tax (in addition to state and local taxes) on all purchases, regardless of income bracket. Exemptions would include property or services purchased for business, export, investment, or state government functions. The flat rate would essentially tax a higher percentage of income from low earners while high-income earners would have more assets available for savings and investment that would not be taxable. Each state would bear the responsibility for collecting and remitting this federal sales tax to the Treasury.
Overhauling the National Tax System, Eliminating Oil Sales to China, and Criminalizing Late Abortion Attempts
February 1, 2023 · Blog, Congress at Work, News
⏱ 3 min read
To rescind certain balances made available to the Internal Revenue Service (HR 23) – Introduced by Rep. Adrian Smith (R-NE) on Jan. 9, this bill would rescind funds allocated to the Internal Revenue Service by the Inflation Reduction Act of 2022. The bill is designed to “defund” specific enforcement activities, operational support, enhancement to the e-file tax return system, and allocations to the U.S. Tax Court and other Department of the Treasury tax agencies. The bill passed in the House on Jan. 9 and has moved to the Senate,
Protecting America’s Strategic Petroleum Reserve from China Act (HR 22) – This bill would prohibit the Department of Energy (DOE) from selling crude oil to any entity under the ownership, control, or influence of the Chinese Communist Party. The bill was introduced on Jan. 9 by Rep. Cathy Anne McMorris Rogers (R-WA). It passed in the House on Jan. 12 and is currently under consideration in the Senate.
Born-Alive Abortion Survivors Protection Act (HR 26) – An example of one of many abortion-related bills introduced by the House in the new 118th Congressional Session, this Act would require healthcare practitioners to exercise the proper degree of care in cases where a fetus survives an attempted abortion – including ensuring the neonate is immediately admitted to a hospital. Failure to provide such care or failure of others to report the crime would be subject to a fine and/or up to five years in prison. Furthermore, anyone who intentionally kills the neonate would be subject to prosecution for murder. However, this bill would bar criminal prosecution of the birth mother in these circumstances and permit her to bring civil action for these violations if perpetrated by others. The bill was introduced by Rep. Ann Wagner (R-MO) on Jan. 9 and is under assignment in a House committee.
Fair Tax Act of 2023 (HR 25) – This legislation was introduced in the House by Rep. Buddy Carter (R-GA) on Jan. 9. It is currently assigned to committee for consideration. The purpose of the bill is to replace the current income tax system (including payroll, estate, and gift taxes) with a national consumption sales tax on goods and services. Instead of paying the current 10 percent to 37 percent tax rates based on income bracket, as well as eliminating all deductions and credits, U.S. residents would pay a minimum 23 percent federal tax (in addition to state and local taxes) on all purchases, regardless of income bracket. Exemptions would include property or services purchased for business, export, investment, or state government functions. The flat rate would essentially tax a higher percentage of income from low earners while high-income earners would have more assets available for savings and investment that would not be taxable. Each state would bear the responsibility for collecting and remitting this federal sales tax to the Treasury.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Natural language processing (NLP) is a technology that allows computers to understand and process human language. Processing of natural language is necessary when you want an intelligent device to follow your instructions. NPL is an artificial intelligence (AI) component with many real-life applications.
As technology advances, business leaders have to figure out how to tap into the new trends to remain relevant, stay ahead of competition, and meet consumer expectations and needs.
How NLP Works in Brief
NLP involves making computers perform tasks with the natural language humans use. The input and output can be spoken or written text. NLP combines computational linguistics – rule-based modeling of human language – with statistical, machine learning, and deep learning models.
NLP aims to build machines that understand and react to text or voice data and then respond with text or speech in a similar manner as humans do. Examples of NLP in real life include voice-operated GPS systems, personal assistant apps, speech-to-text dictation software, and customer service chatbots.
As businesses seek better ways to improve efficiency, NLP is one technology promising huge rewards for enterprises dealing with vast quantities of unstructured text. In accounting, unstructured data include transaction descriptions, invoices, written communication, etc.
The use of NLP is growing significantly in enterprise solutions designed to help streamline business operations. Large companies such as Deloitte, Ernst & Young (EY), and PricewaterhouseCoopers (PwC) have implemented various NLP solutions. A good example is Deloitte, which incorporated NLP into its Audit Command Language to improve contract compliance.
How NLP Can Improve the Efficiency of Accounting Processes
Areas in which NLP helps improve efficiency include:
Forensic Investigations When CPAs want to perform forensic investigations, they have to deal with significant amounts of data from documents such as bank statements, transaction data tables, and data found in emails or deposition transcripts. Analyzing all the data as they try to look for specific patterns or gain insights is challenging. However, the application of NLP can be helpful in the investigative analysis process. NLP using algorithms can identify patterns automatically and reduce the time it would have taken to analyze the documents.
Accounting and Auditing Auditing is challenging due to the process of reviewing financial statements and ensuring they match regulations and legal standards. Auditors must have excellent analytical and decision-making skills to spot inaccuracies in financial statements. However, NLP helps to optimize the auditing process.
Financial Analysis and Automated Generation of Financial Reports NLP can automatically extract financial data from balance sheets, income statements, and cash flow statements. This can cut down on time and error-prone work. At the same time, it can obtain insights from massive financial data sets and financial reports. This enables accountants to make data-driven decisions and quickly identify trends and patterns in the data, hence, making it easy to provide guidance to clients on investments and household finances.
Automated Data Entry NLP can be used to extract data automatically from unstructured text documents, including bills and receipts. It also can be used to automate the entry of data from tax documents and input it into accounting systems. This can cut down on time and error-prone work.
Improve Centralized Data Management Solutions Incorporating NLP in accounting and procurement helps improve the ability of a centralized data management system to collect and integrate data from different sources. This enables standardization and collaboration. Additionally, the data provided has higher-quality insights. As a result, there is better financial planning and improved risk assessment and management.
Customer Interaction NLP can be used to enhance the effectiveness of customer interaction. This is done by automating the procedure for responding to client inquiries, such as concerning invoices, payments, and account balances.
Conclusion
Natural language processing is proving to be a powerful technology that can help improve the efficiency and effectiveness of accounting processes. As it continues to evolve, it will likely become an increasingly important tool for accountants and other financial professionals. Most importantly, these advanced technologies take care of manually reviewing unstructured data. This helps businesses scale and – at the same time – reduce costs.
How To Use Natural Language Processing To Improve The Efficiency Of Accounting Processes
February 1, 2023 · Blog, News, What's New in Technology
⏱ 4 min read
Natural language processing (NLP) is a technology that allows computers to understand and process human language. Processing of natural language is necessary when you want an intelligent device to follow your instructions. NPL is an artificial intelligence (AI) component with many real-life applications.
As technology advances, business leaders have to figure out how to tap into the new trends to remain relevant, stay ahead of competition, and meet consumer expectations and needs.
How NLP Works in Brief
NLP involves making computers perform tasks with the natural language humans use. The input and output can be spoken or written text. NLP combines computational linguistics – rule-based modeling of human language – with statistical, machine learning, and deep learning models.
NLP aims to build machines that understand and react to text or voice data and then respond with text or speech in a similar manner as humans do. Examples of NLP in real life include voice-operated GPS systems, personal assistant apps, speech-to-text dictation software, and customer service chatbots.
As businesses seek better ways to improve efficiency, NLP is one technology promising huge rewards for enterprises dealing with vast quantities of unstructured text. In accounting, unstructured data include transaction descriptions, invoices, written communication, etc.
The use of NLP is growing significantly in enterprise solutions designed to help streamline business operations. Large companies such as Deloitte, Ernst & Young (EY), and PricewaterhouseCoopers (PwC) have implemented various NLP solutions. A good example is Deloitte, which incorporated NLP into its Audit Command Language to improve contract compliance.
How NLP Can Improve the Efficiency of Accounting Processes
Areas in which NLP helps improve efficiency include:
Forensic Investigations When CPAs want to perform forensic investigations, they have to deal with significant amounts of data from documents such as bank statements, transaction data tables, and data found in emails or deposition transcripts. Analyzing all the data as they try to look for specific patterns or gain insights is challenging. However, the application of NLP can be helpful in the investigative analysis process. NLP using algorithms can identify patterns automatically and reduce the time it would have taken to analyze the documents.
Accounting and Auditing Auditing is challenging due to the process of reviewing financial statements and ensuring they match regulations and legal standards. Auditors must have excellent analytical and decision-making skills to spot inaccuracies in financial statements. However, NLP helps to optimize the auditing process.
Financial Analysis and Automated Generation of Financial Reports NLP can automatically extract financial data from balance sheets, income statements, and cash flow statements. This can cut down on time and error-prone work. At the same time, it can obtain insights from massive financial data sets and financial reports. This enables accountants to make data-driven decisions and quickly identify trends and patterns in the data, hence, making it easy to provide guidance to clients on investments and household finances.
Automated Data Entry NLP can be used to extract data automatically from unstructured text documents, including bills and receipts. It also can be used to automate the entry of data from tax documents and input it into accounting systems. This can cut down on time and error-prone work.
Improve Centralized Data Management Solutions Incorporating NLP in accounting and procurement helps improve the ability of a centralized data management system to collect and integrate data from different sources. This enables standardization and collaboration. Additionally, the data provided has higher-quality insights. As a result, there is better financial planning and improved risk assessment and management.
Customer Interaction NLP can be used to enhance the effectiveness of customer interaction. This is done by automating the procedure for responding to client inquiries, such as concerning invoices, payments, and account balances.
Conclusion
Natural language processing is proving to be a powerful technology that can help improve the efficiency and effectiveness of accounting processes. As it continues to evolve, it will likely become an increasingly important tool for accountants and other financial professionals. Most importantly, these advanced technologies take care of manually reviewing unstructured data. This helps businesses scale and – at the same time – reduce costs.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Apart from the spike in inflation, 2023 ended the year with a relatively strong economy, boasting an unemployment rate of 3.5 percent (below the market forecast of 3.7 percent) with increases in wages, corporate profits, and economic growth over the past two quarters. Despite the positive data, a slate of companies, including Microsoft, Google, Amazon, Goldman Sachs, and Bed Bath & Beyond, have all announced significant layoffs planned for this year.
Whether the result of a layoff, a new job, or retirement, the reality is that over the course of a career, most people will change jobs several times. The good news is that 401(k) plan assets are portable – meaning you can take them with you. However, it is important to be aware of all your options so that you choose the most advantageous one each time you change employers.
You Don’t Have to do Anything Right Away
The first thing to note is that the income deferrals you contributed to your employer’s retirement plan are yours to keep. However, an employer match may be subject to a vesting schedule. If you do not work at the company long enough to satisfy the vesting schedule, you might lose all or a portion of the unvested assets in your account.
It is not necessary to roll over your 401(k) assets right away; in many cases, you can leave them where they are indefinitely. However, you will no longer be able to make contributions to the plan, receive matching funds, or tap that money for a loan. If the plan has a wide range of investment options, low fees, and expenses and has performed well, then leaving assets where they are may be your best choice.
On the other hand, you should investigate to ensure your plan does not change once you no longer work for a former employer, as some plans charge higher fees for inactive employees. Also, some employers may require you to cash out of your account balance – usually if it is below $1,000. If your balance is above $1,000, that employer must offer you the option to roll those assets into a personal IRA.
Take the Money
If you opt to withdraw the cash value of your account, you will be subject to an immediate tax impact. Your company may cut you a check for the amount withdrawn, but it is required to withhold 20 percent of the amount to prepay the tax you’ll owe. If you have not yet reached age 59½, the IRA will classify the distribution as an early withdrawal. This means you might owe a 10 percent penalty in addition to the federal tax withholding. The balance also may be subject to state and local taxes. All told, you could lose up to 50 percent of the account value if you take an early distribution.
For young adults in particular, it can be tempting to withdraw their 401(k) balance when they leave an employer. They may not have acquired much in assets, not met vesting requirements for the employer match, and figure they have more need for the money now than in 50 years when they retire. However, bear in mind that investments made early as an adult often purchase good, dependable stocks at low prices, with decades for those stocks to appreciate. Holding onto those assets over the long term allows for maximum growth opportunity, whereas withdrawing them means you’ll have to start all over again.
Roll Over Assets to Your New Employer’s 401(k)
Some employer plans will accept transfers from a former retirement plan, but not all of them do. You will have to inquire. If this is an option, recognize that there is no need to roll over right away. You may want to work there for awhile to ensure you’re happy, the company is viable, and you plan to stay there a while. Furthermore, you may have to wait until the next enrollment period to request a rollover, and some employers may require that you work a specific period of time (e.g., one full year) before you can transfer old 401(k) assets to your new plan.
Open a Personal IRA
A third option is to transfer your old employer’s 401(k) assets to a personal individual retirement account (IRA) that you open through a brokerage of your choice. The new brokerage custodian will give you the forms needed to request the formal rollover, and your former 401(k) plan administrator might have forms to complete as well. It is best to have the two custodians conduct the transfer directly so that you never take possession of the funds yourself, which could result in tax penalties if not conducted correctly.
You’ll need to select new investment options (e.g., mutual funds, exchange-traded funds, individual stocks or bonds) for the IRA, and be sure to compare its fees with your old account. By rolling over to an IRA that you manage yourself, you will have a wider range of investment options and can shop for plans with lower fees.
Bear in mind that, moving forward, any additional contributions you make to this IRA will be subject to lower annual contribution limits (in 2023: $6,500 if under age 50; $7,500 for 50 and older) than 401(k) plans as well as the income limitations applicable to a Roth IRA (2023: less than $153,000 Modified Adjusted Gross Income (MAGI) if you are single; less than $228,000 if you’re married and file jointly).
There are three IRA rollover options for 401(k) plan assets:
Roll over to a new or existing traditional IRA – No taxes are due on the assets you transfer, and earnings continue to accumulate tax deferred until withdrawn. It’s best to directly roll-over the funds from one custodian to another.
Roll over to a new or existing Roth IRA – This option requires that you pay taxes on the rollover amount in the tax filing year they are transferred. You may use money from the 401(k) plan or pay the tax separately using other assets (the latter is preferable so that your equity continues to appreciate). Once the IRA has been open for at least five years, and you are at least age 59½, contributions and earnings can be withdrawn free of all taxes and penalties. Furthermore, unlike the traditional IRA, you are not required to take minimum distributions (RMDs) from a Roth.
Roll over a Roth 401(k) to a new or existing Roth IRA – No taxes are due when the money is transferred, and new earnings accumulate tax deferred. Contributions and earnings are eligible for tax-free withdrawals once the IRA has been open at least five years and you are at least age 59½.
Do Something
Leaving your 401(k) with a former employer is a perfectly acceptable option, but you should consider consolidating your 401(k) plans at some point. More and more people are working for multiple employers throughout their careers, and they may lose track of where they hold 401(k) assets. In fact, at the end of 2021, there was a nationwide total of $1.35 trillion sitting in forgotten 401(k) plans.
Don’t let that happen to you.
401(k) Options After You Leave an Employer
February 1, 2023 · Blog, Financial Planning, News
⏱ 6 min read
Apart from the spike in inflation, 2023 ended the year with a relatively strong economy, boasting an unemployment rate of 3.5 percent (below the market forecast of 3.7 percent) with increases in wages, corporate profits, and economic growth over the past two quarters. Despite the positive data, a slate of companies, including Microsoft, Google, Amazon, Goldman Sachs, and Bed Bath & Beyond, have all announced significant layoffs planned for this year.
Whether the result of a layoff, a new job, or retirement, the reality is that over the course of a career, most people will change jobs several times. The good news is that 401(k) plan assets are portable – meaning you can take them with you. However, it is important to be aware of all your options so that you choose the most advantageous one each time you change employers.
You Don’t Have to do Anything Right Away
The first thing to note is that the income deferrals you contributed to your employer’s retirement plan are yours to keep. However, an employer match may be subject to a vesting schedule. If you do not work at the company long enough to satisfy the vesting schedule, you might lose all or a portion of the unvested assets in your account.
It is not necessary to roll over your 401(k) assets right away; in many cases, you can leave them where they are indefinitely. However, you will no longer be able to make contributions to the plan, receive matching funds, or tap that money for a loan. If the plan has a wide range of investment options, low fees, and expenses and has performed well, then leaving assets where they are may be your best choice.
On the other hand, you should investigate to ensure your plan does not change once you no longer work for a former employer, as some plans charge higher fees for inactive employees. Also, some employers may require you to cash out of your account balance – usually if it is below $1,000. If your balance is above $1,000, that employer must offer you the option to roll those assets into a personal IRA.
Take the Money
If you opt to withdraw the cash value of your account, you will be subject to an immediate tax impact. Your company may cut you a check for the amount withdrawn, but it is required to withhold 20 percent of the amount to prepay the tax you’ll owe. If you have not yet reached age 59½, the IRA will classify the distribution as an early withdrawal. This means you might owe a 10 percent penalty in addition to the federal tax withholding. The balance also may be subject to state and local taxes. All told, you could lose up to 50 percent of the account value if you take an early distribution.
For young adults in particular, it can be tempting to withdraw their 401(k) balance when they leave an employer. They may not have acquired much in assets, not met vesting requirements for the employer match, and figure they have more need for the money now than in 50 years when they retire. However, bear in mind that investments made early as an adult often purchase good, dependable stocks at low prices, with decades for those stocks to appreciate. Holding onto those assets over the long term allows for maximum growth opportunity, whereas withdrawing them means you’ll have to start all over again.
Roll Over Assets to Your New Employer’s 401(k)
Some employer plans will accept transfers from a former retirement plan, but not all of them do. You will have to inquire. If this is an option, recognize that there is no need to roll over right away. You may want to work there for awhile to ensure you’re happy, the company is viable, and you plan to stay there a while. Furthermore, you may have to wait until the next enrollment period to request a rollover, and some employers may require that you work a specific period of time (e.g., one full year) before you can transfer old 401(k) assets to your new plan.
Open a Personal IRA
A third option is to transfer your old employer’s 401(k) assets to a personal individual retirement account (IRA) that you open through a brokerage of your choice. The new brokerage custodian will give you the forms needed to request the formal rollover, and your former 401(k) plan administrator might have forms to complete as well. It is best to have the two custodians conduct the transfer directly so that you never take possession of the funds yourself, which could result in tax penalties if not conducted correctly.
You’ll need to select new investment options (e.g., mutual funds, exchange-traded funds, individual stocks or bonds) for the IRA, and be sure to compare its fees with your old account. By rolling over to an IRA that you manage yourself, you will have a wider range of investment options and can shop for plans with lower fees.
Bear in mind that, moving forward, any additional contributions you make to this IRA will be subject to lower annual contribution limits (in 2023: $6,500 if under age 50; $7,500 for 50 and older) than 401(k) plans as well as the income limitations applicable to a Roth IRA (2023: less than $153,000 Modified Adjusted Gross Income (MAGI) if you are single; less than $228,000 if you’re married and file jointly).
There are three IRA rollover options for 401(k) plan assets:
Roll over to a new or existing traditional IRA – No taxes are due on the assets you transfer, and earnings continue to accumulate tax deferred until withdrawn. It’s best to directly roll-over the funds from one custodian to another.
Roll over to a new or existing Roth IRA – This option requires that you pay taxes on the rollover amount in the tax filing year they are transferred. You may use money from the 401(k) plan or pay the tax separately using other assets (the latter is preferable so that your equity continues to appreciate). Once the IRA has been open for at least five years, and you are at least age 59½, contributions and earnings can be withdrawn free of all taxes and penalties. Furthermore, unlike the traditional IRA, you are not required to take minimum distributions (RMDs) from a Roth.
Roll over a Roth 401(k) to a new or existing Roth IRA – No taxes are due when the money is transferred, and new earnings accumulate tax deferred. Contributions and earnings are eligible for tax-free withdrawals once the IRA has been open at least five years and you are at least age 59½.
Do Something
Leaving your 401(k) with a former employer is a perfectly acceptable option, but you should consider consolidating your 401(k) plans at some point. More and more people are working for multiple employers throughout their careers, and they may lose track of where they hold 401(k) assets. In fact, at the end of 2021, there was a nationwide total of $1.35 trillion sitting in forgotten 401(k) plans.
Don’t let that happen to you.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Technology advancement has brought about great digital transformation. Unfortunately, this has come with a global tech talent shortage. IT executives highlight the shortage as a huge barrier to the adoption of emerging technologies, as reported by this Gartner study.
It is estimated that the demand for tech talent will keep increasing, and this could result in an estimated 85 million global talent shortage by the year 2030. Therefore, companies need to rethink their approach to hiring and retention.
Reasons Behind the Tech Talent Shortage
It is worth trying to first understand what is causing the tech talent shortage. A few of the reasons that have led to the shortage include:
Advances in technology – technology is advancing at high speed, requiring workers with skills to match the new technology. Unfortunately, the tech education system can’t keep up with the speed, hence a shortage of people with the required skills.
High demand for tech talent – There has been an increase in the demand for tech workers in recent years as more businesses and industries turn to technology for daily operations. New technology creates new roles, such as data professionals, data security specialists, and software engineers, among others that are highly competitive.
Challenges in training and development – some companies might not have the resources and time to invest in employee development.
Business Challenges of IT Talent Shortage
Businesses are feeling the effect of the tech talent shortage, especially when it comes to digital transformation. Emerging technologies such as robotic process automation (RPA), artificial intelligence, blockchain, and augmented reality that promise to keep a business ahead of its competition require skilled workers.
Hiring new talent or reskilling employees also comes at a cost, and companies struggle to fill positions. On the other hand, failing to have skilled employees results in unrealized annual revenues.
As a result, businesses of all sizes find themselves failing to develop projects on time and hence fail to meet deadlines. In other cases, the existing employees end up overburdened with too much work, and this may lead to them quitting. Eventually, a business experiences slow innovation and slow growth.
How to Handle the Tech Talent Shortage
A few strategies to help address this issue include:
Investing in employee development and training Providing ongoing training and development opportunities for current employees can help them acquire new skills and knowledge. This will not only make them more valuable to your organization, but also less likely to leave.
Attract top talent through a strong employer brand Building a strong employer brand can help in attracting top talent to your organization. This can involve highlighting your company’s culture, values and mission, as well as offering competitive compensation and benefits packages. A good reputation will also help attract new talent.
Partnering with educational institutions A company may also partner with local colleges and universities to gain access to a pool of talented students who are looking for internships or entry-level positions. Additionally, setting up mentorship or internship programs helps build a pipeline of talent for your organization.
Increase recruitment efforts Sometimes it might be difficult to find the right talent, which makes it necessary to increase recruitment efforts. This could involve working with recruitment agencies, posting job openings on job boards and social media platforms, and attending job fairs and industry events.
Consider hiring remote workers Even with all efforts in place, it may still be difficult to find the right talent in a business location. Today, technology has enabled people to work remotely. This offers access to a larger pool of candidates and also can help attract top talent from other parts of the country or even the world. It is also possible to work with freelancers or contractors to fill specific skills gaps on a project-by-project basis.
Enhance the recruitment process An inefficient recruitment process will cost the company good talent. Therefore, any poor communication or delayed communication will affect talent acquisition. A company might need to streamline its recruitment process.
Final Thoughts
The global tech talent shortage is already negatively affecting businesses. Since the shortage is expected to rise, business leaders need to decide on the best way forward so they are not left behind in digital transformation. A good decision should fit business goals whether choosing to hire internal talent, remote workers, or outsource technology needs.
Handling Talent Shortages in Tech Departments
January 1, 2023 · Blog, News, What's New in Technology
⏱ 4 min read
Technology advancement has brought about great digital transformation. Unfortunately, this has come with a global tech talent shortage. IT executives highlight the shortage as a huge barrier to the adoption of emerging technologies, as reported by this Gartner study.
It is estimated that the demand for tech talent will keep increasing, and this could result in an estimated 85 million global talent shortage by the year 2030. Therefore, companies need to rethink their approach to hiring and retention.
Reasons Behind the Tech Talent Shortage
It is worth trying to first understand what is causing the tech talent shortage. A few of the reasons that have led to the shortage include:
Advances in technology – technology is advancing at high speed, requiring workers with skills to match the new technology. Unfortunately, the tech education system can’t keep up with the speed, hence a shortage of people with the required skills.
High demand for tech talent – There has been an increase in the demand for tech workers in recent years as more businesses and industries turn to technology for daily operations. New technology creates new roles, such as data professionals, data security specialists, and software engineers, among others that are highly competitive.
Challenges in training and development – some companies might not have the resources and time to invest in employee development.
Business Challenges of IT Talent Shortage
Businesses are feeling the effect of the tech talent shortage, especially when it comes to digital transformation. Emerging technologies such as robotic process automation (RPA), artificial intelligence, blockchain, and augmented reality that promise to keep a business ahead of its competition require skilled workers.
Hiring new talent or reskilling employees also comes at a cost, and companies struggle to fill positions. On the other hand, failing to have skilled employees results in unrealized annual revenues.
As a result, businesses of all sizes find themselves failing to develop projects on time and hence fail to meet deadlines. In other cases, the existing employees end up overburdened with too much work, and this may lead to them quitting. Eventually, a business experiences slow innovation and slow growth.
How to Handle the Tech Talent Shortage
A few strategies to help address this issue include:
Investing in employee development and training Providing ongoing training and development opportunities for current employees can help them acquire new skills and knowledge. This will not only make them more valuable to your organization, but also less likely to leave.
Attract top talent through a strong employer brand Building a strong employer brand can help in attracting top talent to your organization. This can involve highlighting your company’s culture, values and mission, as well as offering competitive compensation and benefits packages. A good reputation will also help attract new talent.
Partnering with educational institutions A company may also partner with local colleges and universities to gain access to a pool of talented students who are looking for internships or entry-level positions. Additionally, setting up mentorship or internship programs helps build a pipeline of talent for your organization.
Increase recruitment efforts Sometimes it might be difficult to find the right talent, which makes it necessary to increase recruitment efforts. This could involve working with recruitment agencies, posting job openings on job boards and social media platforms, and attending job fairs and industry events.
Consider hiring remote workers Even with all efforts in place, it may still be difficult to find the right talent in a business location. Today, technology has enabled people to work remotely. This offers access to a larger pool of candidates and also can help attract top talent from other parts of the country or even the world. It is also possible to work with freelancers or contractors to fill specific skills gaps on a project-by-project basis.
Enhance the recruitment process An inefficient recruitment process will cost the company good talent. Therefore, any poor communication or delayed communication will affect talent acquisition. A company might need to streamline its recruitment process.
Final Thoughts
The global tech talent shortage is already negatively affecting businesses. Since the shortage is expected to rise, business leaders need to decide on the best way forward so they are not left behind in digital transformation. A good decision should fit business goals whether choosing to hire internal talent, remote workers, or outsource technology needs.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Even if you have no heirs, you should have an estate plan. Otherwise, the state will determine the fate of your worldly possessions. In fact, if you pass away “intestate” (without a will), the state can even keep all of your assets for itself – if no heirs are found.
The most basic tenet of no-heir estate planning is to write a will. Every state has different rules about what constitutes a legally enforceable will, so be sure to check out your state’s guidelines. If you move, you’ll need to update your will according to the state you live in when you pass away.
In your will, direct who receives which of your assets. There is no edict that says you must leave possessions to a relative. You can choose a friend, a group of people, or even one or more charitable organizations. You also should choose an executor of your will: someone you trust to carry out your wishes. This person can be an attorney or bank custodian of your assets. You should speak with whomever you choose to make sure they are willing to take on the role of executor. It is generally no small task and might entail distributing and even selling your possessions in order to make cash distributions to the beneficiaries.
If you have any pets, be sure to figure out during the planning process who is willing to take care of your animals after you pass or direct their care to a specific shelter.
Also, consider the beneficiaries you will designate for bank and investment accounts, as well as any insurance policies you own. Note that beneficiary designations you assign on these accounts will supersede your will instructions, even if they preceded when you wrote your will. For example, your employer might pay for a life insurance policy in your name that pays out proceeds equaling two to three times your salary. You might not even remember that you completed this paperwork years ago, naming your girl/boyfriend at the time as your beneficiary. If you don’t keep those designations up to date, you may end up leaving a substantial sum to a woman/man who broke your heart instead of the person who embraces it now.
It is also a good idea to name a “Transfer on Death” (TOD) designation on other types of accounts, such as your bank checking and savings accounts. This designation also supersedes will instructions and allows your money to be distributed once the beneficiary presents your death certificate and proper ID. It’s actually advisable to name the executor of your will as TOD, as he may need to access your funds quickly to pay for funeral and burial expenses. Other assets can take longer to distribute, so a TOD designation is a quicker way for your beneficiary to access cash.
Be aware that even if you have prepared a will, your estate will still be subject to probate, in which a judge makes the final determination of your assets. If you wish to avoid this step, you can fold all or a portion of your assets under one or more trusts, which will distribute them according to the trust directions and avoid probate altogether. A trust is particularly beneficial if you have a large estate or wish to leave a substantial donation to one or more charities.
Another estate planning consideration is what to do if, instead of dying, you become incapacitated and cannot make decisions for yourself. As part of the estate planning process, you should name a power of attorney to make financial decisions for you. This can be anyone – a friend or close neighbor or the person you name as executor of your will.
You should also establish a living will, advanced care directive, and/or healthcare proxy. A living will is a directive that states your wishes regarding medical care should you become incapacitated (e.g., permanently unconscious). An advanced care directive can be more specific, such as establishing a “do not resuscitate” (DNR) order if your breathing or heartbeat stops and if you would like to donate tissues or organs after you pass.
A healthcare proxy, which may be referred to as a medical or durable power of attorney, is the assignment of a person who will make all of your healthcare decisions when you no longer can. Note that with medical instructions as well, states have varying guidelines. It’s important to be familiar with your state’s requirements and update your medical care directives if you relocate to another state.
No-Heir Estate Planning
January 1, 2023 · Blog, Financial Planning, News
⏱ 4 min read
Even if you have no heirs, you should have an estate plan. Otherwise, the state will determine the fate of your worldly possessions. In fact, if you pass away “intestate” (without a will), the state can even keep all of your assets for itself – if no heirs are found.
The most basic tenet of no-heir estate planning is to write a will. Every state has different rules about what constitutes a legally enforceable will, so be sure to check out your state’s guidelines. If you move, you’ll need to update your will according to the state you live in when you pass away.
In your will, direct who receives which of your assets. There is no edict that says you must leave possessions to a relative. You can choose a friend, a group of people, or even one or more charitable organizations. You also should choose an executor of your will: someone you trust to carry out your wishes. This person can be an attorney or bank custodian of your assets. You should speak with whomever you choose to make sure they are willing to take on the role of executor. It is generally no small task and might entail distributing and even selling your possessions in order to make cash distributions to the beneficiaries.
If you have any pets, be sure to figure out during the planning process who is willing to take care of your animals after you pass or direct their care to a specific shelter.
Also, consider the beneficiaries you will designate for bank and investment accounts, as well as any insurance policies you own. Note that beneficiary designations you assign on these accounts will supersede your will instructions, even if they preceded when you wrote your will. For example, your employer might pay for a life insurance policy in your name that pays out proceeds equaling two to three times your salary. You might not even remember that you completed this paperwork years ago, naming your girl/boyfriend at the time as your beneficiary. If you don’t keep those designations up to date, you may end up leaving a substantial sum to a woman/man who broke your heart instead of the person who embraces it now.
It is also a good idea to name a “Transfer on Death” (TOD) designation on other types of accounts, such as your bank checking and savings accounts. This designation also supersedes will instructions and allows your money to be distributed once the beneficiary presents your death certificate and proper ID. It’s actually advisable to name the executor of your will as TOD, as he may need to access your funds quickly to pay for funeral and burial expenses. Other assets can take longer to distribute, so a TOD designation is a quicker way for your beneficiary to access cash.
Be aware that even if you have prepared a will, your estate will still be subject to probate, in which a judge makes the final determination of your assets. If you wish to avoid this step, you can fold all or a portion of your assets under one or more trusts, which will distribute them according to the trust directions and avoid probate altogether. A trust is particularly beneficial if you have a large estate or wish to leave a substantial donation to one or more charities.
Another estate planning consideration is what to do if, instead of dying, you become incapacitated and cannot make decisions for yourself. As part of the estate planning process, you should name a power of attorney to make financial decisions for you. This can be anyone – a friend or close neighbor or the person you name as executor of your will.
You should also establish a living will, advanced care directive, and/or healthcare proxy. A living will is a directive that states your wishes regarding medical care should you become incapacitated (e.g., permanently unconscious). An advanced care directive can be more specific, such as establishing a “do not resuscitate” (DNR) order if your breathing or heartbeat stops and if you would like to donate tissues or organs after you pass.
A healthcare proxy, which may be referred to as a medical or durable power of attorney, is the assignment of a person who will make all of your healthcare decisions when you no longer can. Note that with medical instructions as well, states have varying guidelines. It’s important to be familiar with your state’s requirements and update your medical care directives if you relocate to another state.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Respect for Marriage Act (HR 8404) – Introduced by Sen. Jerry Nadler (D-NY) on July 18, this Act replaces previous provisions that defined marriage as strictly between a man and a woman. It codifies marriage to state that a spouse may be a person of the opposite sex as long as the contract between the two individuals is valid under state law, and prohibits any state from denying out-of-state marriages on the basis of sex, race, ethnicity or national origin. The bill passed in the Senate on Nov. 29 and the final bill passed in the House on Dec. 8. President Biden signed the Act into law on Dec. 13.
James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (HR 7776) – This bill authorizes defense spending at $858 billion, an approximate 10 percent increase over last year and $37 billion more than President Biden requested in his budget. This bill is expected to increase pay for service members and civilians by 4.6 percent and include inflation bonuses for those earning less than $45,000 a year. The bill was initially introduced on May 16 and the final bill was agreed upon by a bipartisan committee comprised of Sens. Jim Inhofe (R-Okla.) and Jack Reed (D-R.I.), and Reps Adam Smith (D-Wash.) and Mike Rogers (R-Ala.) The bill first passed in the House on July 14. It was signed into law by the President on Dec. 23.
Help Find the Missing Act (S 5230) – This Act is designed to facilitate data sharing between the National Missing and Unidentified Persons System and the National Crime Information Center database of the Federal Bureau of Investigation, in order to improve efforts in finding missing persons. The bill was introduced by Sen. Chris Murphy (D-Conn.) on Dec. 8 and passed in the Senate on the same day. It passed in the House on Dec. 14 and is currently awaiting the President’s signature.
Medical Marijuana and Cannabidiol Research Expansion Act (HR 8454) – This legislation was introduced by Rep. Earl Blumenauer (D-Ore.) on July 21. The purpose of the bill is to increase the supply of marijuana that may be used in government studies. It expands the number of registered entities (e.g., academia, practitioners, manufacturers) that may manufacture, distribute, dispense or possess marijuana or cannabidiol (CBD) for the purposes of medical research. The bill also enables physicians to discuss with patients the potential harms and therapeutic potential of marijuana and its derivatives (such as CBD). Going forward, the Department of Health and Human Services will report on marijuana’s impact on various conditions, such as epilepsy; its impact on adolescent brains; and on the ability to operate a motor vehicle. The bill passed in the House on July 26 and in the Senate on Nov. 16. It was signed into law by the President on Dec. 2.
Equal Pay for Team USA Act of 2022 (S 2333) – This bill was introduced by Sen. Maria Cantwell (D-Wash.) on July 13, 2021, and was passed in the Senate on Dec. 8. The legislation would require equal compensation and benefits for all athletes representing the United States in international amateur athletic competitions, regardless of gender. The bill would require each sport’s national governing body to submit annual compliance reports pertaining to this requirement. The bill’s fate currently lies in the House.
To provide for a resolution with respect to the unresolved disputes between certain railroads represented by the National Carriers’ Conference Committee of the National Railway Labor Conference and certain of their employees (HJ Res 100) – Passage of this bill was successful in averting a nationwide strike of rail workers, but it did not satisfactorily address all of their demands. The Act provides improved healthcare benefits and a 24 percent pay raise, as well as the ability to take limited unpaid sick leave without being subject to penalties. However, the bill failed to provide the five days of paid medical leave sought. The bill was introduced by Rep. Donald Payne Jr (D-N.J.) on Nov. 29, passed in the House on Nov. 30 and the Senate on Dec. 1. It was signed into law on Dec. 2.
Safe Connections Act of 2022 (HR 7132) – Introduced on March 17 by Rep. Ann Kuster (D-N.H.), this bill instructs cell phone service providers to waive separation of contract service fees when requested by survivors of domestic violence, human trafficking and related harms. The Act requires that the requestor present verifying documentation that a cosigner of thecontract committed or allegedly committed an act of domestic violence, trafficking or a related criminal act against the survivor. The requestor must assume financial responsibility for services after a line separation. The bill passed in the House on July 27, in the Senate on Nov. 17 and was signed into law on Dec. 7.
Expanding Options for Marriage, Defense, Medical Marijuana, Amateur Athletes and Rail Workers
January 1, 2023 · Blog, Congress at Work, News
⏱ 4 min read
Respect for Marriage Act (HR 8404) – Introduced by Sen. Jerry Nadler (D-NY) on July 18, this Act replaces previous provisions that defined marriage as strictly between a man and a woman. It codifies marriage to state that a spouse may be a person of the opposite sex as long as the contract between the two individuals is valid under state law, and prohibits any state from denying out-of-state marriages on the basis of sex, race, ethnicity or national origin. The bill passed in the Senate on Nov. 29 and the final bill passed in the House on Dec. 8. President Biden signed the Act into law on Dec. 13.
James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (HR 7776) – This bill authorizes defense spending at $858 billion, an approximate 10 percent increase over last year and $37 billion more than President Biden requested in his budget. This bill is expected to increase pay for service members and civilians by 4.6 percent and include inflation bonuses for those earning less than $45,000 a year. The bill was initially introduced on May 16 and the final bill was agreed upon by a bipartisan committee comprised of Sens. Jim Inhofe (R-Okla.) and Jack Reed (D-R.I.), and Reps Adam Smith (D-Wash.) and Mike Rogers (R-Ala.) The bill first passed in the House on July 14. It was signed into law by the President on Dec. 23.
Help Find the Missing Act (S 5230) – This Act is designed to facilitate data sharing between the National Missing and Unidentified Persons System and the National Crime Information Center database of the Federal Bureau of Investigation, in order to improve efforts in finding missing persons. The bill was introduced by Sen. Chris Murphy (D-Conn.) on Dec. 8 and passed in the Senate on the same day. It passed in the House on Dec. 14 and is currently awaiting the President’s signature.
Medical Marijuana and Cannabidiol Research Expansion Act (HR 8454) – This legislation was introduced by Rep. Earl Blumenauer (D-Ore.) on July 21. The purpose of the bill is to increase the supply of marijuana that may be used in government studies. It expands the number of registered entities (e.g., academia, practitioners, manufacturers) that may manufacture, distribute, dispense or possess marijuana or cannabidiol (CBD) for the purposes of medical research. The bill also enables physicians to discuss with patients the potential harms and therapeutic potential of marijuana and its derivatives (such as CBD). Going forward, the Department of Health and Human Services will report on marijuana’s impact on various conditions, such as epilepsy; its impact on adolescent brains; and on the ability to operate a motor vehicle. The bill passed in the House on July 26 and in the Senate on Nov. 16. It was signed into law by the President on Dec. 2.
Equal Pay for Team USA Act of 2022 (S 2333) – This bill was introduced by Sen. Maria Cantwell (D-Wash.) on July 13, 2021, and was passed in the Senate on Dec. 8. The legislation would require equal compensation and benefits for all athletes representing the United States in international amateur athletic competitions, regardless of gender. The bill would require each sport’s national governing body to submit annual compliance reports pertaining to this requirement. The bill’s fate currently lies in the House.
To provide for a resolution with respect to the unresolved disputes between certain railroads represented by the National Carriers’ Conference Committee of the National Railway Labor Conference and certain of their employees (HJ Res 100) – Passage of this bill was successful in averting a nationwide strike of rail workers, but it did not satisfactorily address all of their demands. The Act provides improved healthcare benefits and a 24 percent pay raise, as well as the ability to take limited unpaid sick leave without being subject to penalties. However, the bill failed to provide the five days of paid medical leave sought. The bill was introduced by Rep. Donald Payne Jr (D-N.J.) on Nov. 29, passed in the House on Nov. 30 and the Senate on Dec. 1. It was signed into law on Dec. 2.
Safe Connections Act of 2022 (HR 7132) – Introduced on March 17 by Rep. Ann Kuster (D-N.H.), this bill instructs cell phone service providers to waive separation of contract service fees when requested by survivors of domestic violence, human trafficking and related harms. The Act requires that the requestor present verifying documentation that a cosigner of thecontract committed or allegedly committed an act of domestic violence, trafficking or a related criminal act against the survivor. The requestor must assume financial responsibility for services after a line separation. The bill passed in the House on July 27, in the Senate on Nov. 17 and was signed into law on Dec. 7.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
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The Roth IRA is a retirement savings account in which you invest only after-tax dollars. Subsequently, all earnings grow tax-free and may be withdrawn tax-free. However, there are limits to who can contribute and how much they can contribute to a Roth IRA.
Investing in Main Street Act of 2023 (HR 400) – Introduced by Rep. Judy Chu (D-CA) on Jan.20, this bill would permit certain financial institutions to increase investments in small business investment companies (SBICs). The current cap is 5 percent; if passed, the amount would rise to up to 15 percent of their capital and surplus. The bill passed in the House on Jan.25 and is now under consideration in the Senate.
Customer loyalty is critical to any successful business strategy in today’s digital age. With emerging technologies such as the internet of things (IoT), companies are now leveraging a new approach called the internet of behavior (IoB) to gain deeper insights into their customers’ behavior and preferences.
The College Savings 529 plan offers a way for modest-income families to save and invest for college expenses for their children as early as birth up to college age. When invested 529 funds are used to pay for the beneficiary’s qualifying education costs, earnings are distributed tax-free.
To rescind certain balances made available to the Internal Revenue Service (HR 23) – Introduced by Rep. Adrian Smith (R-NE) on Jan. 9, this bill would rescind funds allocated to the Internal Revenue Service by the Inflation Reduction Act of 2022. The bill is designed to “defund” specific enforcement activities, operational support, enhancement to the e-file tax return system, and allocations to the U.S. Tax Court and other Department of the Treasury tax agencies. The bill passed in the House on Jan. 9 and has moved to the Senate, 
Natural language processing (NLP) is a technology that allows computers to understand and process human language. Processing of natural language is necessary when you want an intelligent device to follow your instructions. NPL is an artificial intelligence (AI) component with many real-life applications.
Apart from the spike in inflation, 2023 ended the year with a relatively strong economy, boasting an unemployment rate of 3.5 percent (below the market forecast of 3.7 percent) with increases in wages, corporate profits, and economic growth over the past two quarters. Despite the positive data, a slate of companies, including Microsoft, Google, Amazon, Goldman Sachs, and Bed Bath & Beyond, have all announced significant layoffs planned for this year.
Technology advancement has brought about great digital transformation. Unfortunately, this has come with a global tech talent shortage. IT executives highlight the shortage as a huge barrier to the adoption of emerging technologies, as reported by this 
Even if you have no heirs, you should have an estate plan. Otherwise, the state will determine the fate of your worldly possessions. In fact, if you pass away “intestate” (without a will), the state can even keep all of your assets for itself – if no heirs are found.
Respect for Marriage Act (HR 8404) – Introduced by Sen. Jerry Nadler (D-NY) on July 18, this Act replaces previous provisions that defined marriage as strictly between a man and a woman. It codifies marriage to state that a spouse may be a person of the opposite sex as long as the contract between the two individuals is valid under state law, and prohibits any state from denying out-of-state marriages on the basis of sex, race, ethnicity or national origin. The bill passed in the Senate on Nov. 29 and the final bill passed in the House on Dec. 8. President Biden signed the Act into law on Dec. 13.