Robin Edwards Financial Blog
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COVID19 has really stopped many people's lives and businesses abruptly. This is a huge health concern that is global without an existing treatment to help the affected people recover. As time has passed by since the emergency declaration by President Trump, COVID19 continues to be a concern in our live, but more and more businesses are able to connect with and serve their customers and clients through virtual portals. Due to this abrupt stop in business activity the Dow Jones industrial average and the stock market index of global markets have also declined rapidly over the past few weeks. This is time to continue planning for the future since this health concern from COVID19 is temporary. So here are few things to keep in mind for tax and retirement planning for small businesses. Here is a quick outline of what is allowed by the IRS and some general rules. Retirement plans for Small Business (SEP, SIMPLE, and Qualified plans)
Reference: IRS.gov/Pub560 Compensation Limits: The maximum compensation used for figuring contributions and benefits is $280,000 in 2019 and $285,000 in 2020. Elective deferral Limits: The limit is $19,000 for 2019 (other than catch up contributions) and increases to $19,500 in 2020. Limits apply for participants in SARSEPs, 401(k) plans (excluding SIMPLE plans), Section 403(b) plans and section 457(b) plans. Defined contribution limits on 2019 and 2020: For 2019: $56,000 (other than catch up contributions) and 2020: $57,000 Defined benefit limit: The limit on annual benefit for a participant in a defined benefit contribution is for 2019: $225,000 & 2020: $230,000 SIMPLE Plan Salary reduction contribution limit for 2019 and 2020: Limit on salary reduction is in 2019: $13,000 (other than catch up contribution): In 2020 $13,500 Catch up contribution limits for 2019 and 2020 A plan can allow a participant who are age 50 or over at the end of the calendar year to make catch up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. The Catch-up contribution limitation for defined contribution other than SIMPLE plans is $6000 in 2019 and $6500 in 2020. The Catch-up Contribution limit for SIMPLE Plan is $3000 for 2019 and 2020. If you have questions email at info@taxesdoctor.com
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