By Joe Cicchinelli, IRA Technical Expert
Follow Me on Twitter: @JoeCiccEdSlott
The retirement plan rules are constantly changing. They can be complex. Often, taxpayers are looking for good, free sources of information. While Internet searches can be helpful, caution should be used because there is no guarantee that the information you have found is timely or accurate.
So where can you get accurate information on retirement plans? One source is publications from the IRS. Even some CPAs, attorneys, and financial planners who don’t specialize in retirement plans will also use IRS Publications to help them get up-to-speed on the basic retirement plan rules.
If you own a small business, you might be looking for information about employer retirement plans. IRS Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) for use in preparing 2012 tax returns, has recently been updated and posted on the IRS website.
Publication 560 is a good source of basic information on employer retirement plans such as a simplified employee pension (SEP), savings incentive match plan for employees of small employers (SIMPLE) and qualified retirement plans.
The “What’s New” section of the publication highlights the increased contribution limits for various employer plans for 2012 and 2013 as a result of cost-of-living adjustments (inflation). For example, for 2012, the maximum SEP contribution limit is 25% of up to $250,000 of compensation, limited to a maximum annual contribution of $50,000. The limit increases to $51,000 of up to $255,000 of compensation for 2013. It also describes the new options for in-plan Roth rollovers in a company retirement plan (not including SEP and SIMPLE plans) under the American Taxpayer Relief Act of 2012 (ATRA).
Be careful though. While IRS publications are a good source for general information, they can never be used as a substitute for the information contained in the law, IRS regulations, or a competent, educated adviser. Mistakes can be costly, so it’s better to work with a good advisor.
• IRS Publications are a good source of basic information, but are not a substitute for competent tax advice
• IRS Pub. 560, Retirement Plans for Small Businesses, has been updated for 2012
• New employer plan limits apply for 2012 and 2013