Obama Budget Proposes Cap on Retirement Plan Balances

Originally posted on CUInsight.com.

Guest post written by Dennis Zuehlke, Compliance Manager, Ascensus.

Ascensus is the NAFCU Services Preferred Partner for IRA, Retirement Plan, and Health Savings Account (HSA) Solutions Software, Training, Documents and Consulting.

The Obama Administration has proposed a cap of $3 million on IRAs and retirement savings plans in order to raise $9 billion of additional revenue over the next 10 years. This is the first time that the Obama Administration has proposed a cap on the total amount of assets that can be accumulated in IRAs and retirement savings plans held by individuals. It comes on the heels of the Administration’s proposals in last year’s budget to reduce the tax incentives for making retirement plan and IRA contributions.

The Administration released details of the proposal in the Fiscal Year 2014 Revenue Proposals. Under this new proposal, contributions to tax-advantaged retirement savings plans (such as IRAs, 401(a) plans, 403(b) plans, and funded section 457(b) governmental plans) would be prohibited for individuals who have accumulated assets past a certain threshold. That threshold is the amount necessary to provide the maximum annuity permitted for a tax-qualified defined benefit plan (currently $205,000), which, for an individual age 62 in 2013, would be approximately $3.4 million.

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Saved By the “Fiscal Cliff” Bell

Originally posted on CUInsight.com

Guest post by Dennis Zuehlke, Compliance Manager, Ascensus

As most Americans were ringing in the New Year, the Senate was holding an early morning roll call vote on a bill to avoid hurtling off the “fiscal cliff” that would have resulted from the expiration of the Bush-era tax rates and spending cuts mandated by the Budget Control Act of 2011. The compromise bill, hammered out over the weekend by Senate Minority Leader Mitch McConnell (R-KY) and Vice President Joe Biden, passed the Senate by a vote of 89-8. The House passed the measure by a vote of 257-167 later on New Year’s Day, pulling us back from the brink, and saving us from falling off the fiscal cliff.

President Obama then signed into law the American Taxpayer Relief Act of 2012 (ATRA), making permanent the Bush-era tax rates (except for individuals with incomes above $400,000 and families above $450,000), postponing for two months the automatic across-the-board spending cuts mandated by the Budget Control Act of 2011, and extending a host of other expiring individual and business tax provisions.

As one would expect, the bill contains something for everyone, including those who are saving through retirement and education savings plans. Credit unions offering IRAs and Coverdell education savings accounts (ESAs) will benefit from three provision of the bill.

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Credit Union Industry Experts: What’s in Store for 2013

Originally posted on CUInsight.com

I like to say that one of a visionary leader’s most important functions is seeing over the horizon and recognizing opportunities and threats before anyone else does, and then shaping the strategy and tactics of the organization accordingly.

So for our year-end blog post I asked our Preferred Partners to tell us what they see coming over the horizon, from their perspective, that credit union executives need to be focused on and/or prepared for as we head into 2013. Looking back a year, I see some common themes—revenue issues, economic uncertainty, regulatory uncertainty, and political uncertainty. From that perspective, not much has changed as we look forward to 2013. Here is what a few of them said:

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It’s the End of the World as We Know It, and I Feel…Fine?

Originally published on CUinsight.com.

No, I’m not talking about the fiscal cliff, although some here in Washington, DC are calling it the end. Worse. The Mayan calendar ends on December 21, 2012 and if you’re into certain doomsday theories, that day marks the end of the world. Which means I need to quit my job today, right now, and enjoy my remaining time on earth (T-minus 30 days) lounging on a faraway tropical island.

For the most part I’m joking, but fantasizing about cashing out to live on an island makes me wonder—will I be ready to retire when I want to?

Although retirement seems like a lifetime away (at least twenty years), and I have a background in financial services, I’m not so sure that I’ll be ready when the time comes. I have a 401(k)—several actually—as well as IRAs, brokerage accounts, and a rainy day fund. I even participate in direct stock purchase plans. It would seem like with my knowledge of financial planning (and a predisposition towards frugal living, thank you Mom) that I would be well on my way to a secure retirement. The uncertainty of the market over the past few years has left me questioning my ability to ever retire. Unfortunately, quite a number of people feel the same way.

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Does Your 401(k) Have ‘Fee Vampires’?

Originally published on CUinsight.com.

We’re big into energy conservation in my household, and it wasn’t until we began looking more seriously into why we were using so much electricity that we discovered the dark side of all those ‘instant on’ appliances and electronics. Plugged in all the time, they act like little energy vampires, sucking what is individually a small amount of electricity out of the grid for our convenience. Problem is, all those small amounts add up to a big chunk of our monthly utility bill.

We all want the best for our employees when it comes to their retirements.  We encourage, cajole, and practically order them to participate in our 401(k) programs to take maximum advantage of the tax benefits and any matching program we might have. And then we often provide education about investment options to give every employee the opportunity to select a pattern of investment that fits their personal style and time of life, to maximize the value they are going to receive from the program.

But just like we went through an energy audit, you need to go through a fee audit for your 401(k) to make sure that superfluous fees aren’t sucking a chunk of the potential return away from your employees.

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