The IRS is interested in helping Americans save for the future and has taken time to create some guidance that will enable taxpayers to better choose a retirement plan that suits their unique needs.
In a March 21, 2012 press release, the IRS detailed four ways they are helping Americans put their savings to better use:
- Automatic enrollment. The Treasury and IRS have issued more information on their retirement and savings initiatives which enable 401(k) plan sponsors to include automatic contribution increases. To help with this, the IRS provides sample automatic enrollment plan language and guidance to interested employers and other plan sponsors. For more information, visit the IRS.gov.
- Receive tax refunds as US Savings Bonds. While you and your clients may have received your tax refund weeks ago, it’s good to remember that IRS has enables taxpayers to buy up to $5000 in US Series I Savings Bonds with their income tax refunds.
- Save payments that would be received for unused vacation or similar leave. There are some employees that can choose to receive cash payments for unused vacation, etc. when they quit or even in the duration of their employment. These cash payments can be used as contributions to retirement plans for which the Treasury and IRS have issued guidance. Learn more here and here at IRS.gov.
- Roll over retirement distributions into IRAs or other plans. The press release explains, “A key risk to lifetime savings is when an employee spends his or her lump sum payment, instead of electing to roll over the payment to an IRA or other retirement plan.” The IRS refers to Notice 2009-68 in explaining how the rollover option works.
It’s important that you understand all the retirement options available, not only so that you can prepare for your own comfortable retirement, but so that you can help your clients do the same.
Universal Accounting Helps Tax Preparers Succeed
At Universal, we believe it’s important to prepare for the future, and we’re interested in seeing your future success as a tax preparer. Our online tax training, the Professional Tax Preparer Program, is designed to help professionals like you master tax preparation, become efficient in the completion of individual and business returns, and establish thriving home-based tax businesses. If you would like to learn more, visit Universal for a free video today!