Understanding the new IRS catch-up limit increase.

BCG ahead of the curve on new IRS policy.

Understanding new IRS withdrawal rules.

In 2023, employees will be able to contribute up to $22,500 a year, up from $20,500 to 401(k), 403(b) and other tax-advantaged employer savings plans. The limit on catch-up contributions for people 50 or older also rose to $7500 from $6500. That means a worker over 50 years old can contribute a maximum of $30,000 next year. The total contribution limit, which includes employer contributions, increased from $61,000 to $66,000. So, for those over 50 years old who take advantage of the catch-up contribution, that’s a maximum total of $73,500. Employee compensation limit for calculating contributions will rise from $305,000 to $330,000 and the HCE’s (Highly Compensated Employees) threshold for nondiscrimination testing will increase from $135,00 to $150,000. We have not seen these large increases in decades, we can thank inflation for that! Employers should convey these changes to their employees to encourage increased participation. To understand how these changes may affect your plan contact your pension consultant here . To see the full chart of the 2023 Plan Limits, click here .

The SECURE ACT and "lifetime income illustrations"

It is now tax season so business owners are huddling with their accountants to get the bad news. Accountants are looking for ways to lessen the pain. That is where Qualified Retirement Plans (401(k), Profit Sharing, Defined Benefit and Cash Balance Plans) come in. For over 30 years accountants have come to us for ways to reduce the check to Uncle Sam and for over 30 years the answer has always been the same. Yes, you can do it, but not for last year. This year that has all changed. For the first time you can set up a qualified retirement plan AFTER the end of the year but use it to reduce your tax burden for LAST year. That is right. 2020 is the first year you do not have to take action by December 31! And you can make contributions to the plan all the way up to the due date of your tax return, even the extended due date, and still take the deduction on your 2020 return. And, by the way, do not miss the tax credit for setting up a new plan. That is TAX CREDIT , not tax deduction. Call us for details.

As Jonathan Kimble Simmons says in the Farmers Insurance commercials; “We know a thing or two because we’ve seen a thing or two.” Well, you can’t service as many retirement plans as we have, for as long as we have, without seeing a thing or two. At The Benefits Consulting Group we’re steeped in retirement plan expertise. So it’s not surprising that when an expert is needed, we get the call. You might think we’re all 5500’s and discrimination testing. But The Benefits Consulting Group get’s called upon to provide expert testimony for disputes ranging from retirement plan servicing to divorce settlements. Our actuarial expertise combined with our knowledge of the operation of retirement plans makes us ideally suited to provide expert testimony.  Contact us here to learn more.