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To make it possible for voluntary retirement savings to keep up with inflation, the various numerical limits embedded within qualified retirement plans are indexed for inflation. However, for 2021 the IRA contribution limit stays at $6,000 if the individual is younger than age 50, and $7,000 if he or she attains age 50 or older in 2021. Other limits are shown in the following table:
|
Item |
2021 limit |
|
401(k) and 403(b) employee deferral limit |
$19,500 |
|
457 employee deferral limit (most plans) |
$19,500 |
|
Catch-up contribution limit |
$6,500 |
|
Defined contribution dollar limit |
$58,000 |
|
Defined benefit dollar limit |
$230,000 |
|
Compensation limit |
$290,000 |
|
Highly compensated employee income limit |
$130,000 |
|
Key employee in a top-heavy plan |
$185,000 |
Catch-up contributions are permitted by those employees who are 50 years of age or older during the calendar year.
Personal saving for retirement never has been more important. These tax benefits make saving a bit less painful.
Article ©2020 M.A. Co. All rights reserved. Used with permission.
This actually happened to an acquaintance of ours who we will call Jim.
A few years ago, one of Jim’s credit cards from a major card issuer stopped working. He called the issuer and was told that his card had been suspended when it was observed to purchase meals in two states hundreds of miles apart, a sure sign the card numbers had been stolen. The bogus charges were erased, and Jim’s confidence in the card issuer went way up, given their diligence.
About a month ago, Jim received a robocall from the card issuer, saying that his card had been compromised again. Instead of replying to the call, he went online to check his purchases. Sure enough, there were several bogus charges. Jim called the issuer to have his card cancelled and a new one issued.
Jim only had the new card for about a week when he got the same robocall again, exactly the same except for the return call number. Unbelievable! He almost replied to the call but decided to first check out how his card had been misused.
There were no bogus charges.
The second robocall warning that his card had been compromised was a scam. A scam that managed to use the nearly identical warning call that the legitimate card issuer used!
Was this just a coincidence, getting a scam call so soon after getting a replacement card? Or did the scammers have some inside information on who is getting a new card, and using familiarity with the robocall warning to put victims at ease, making them more vulnerable?
We do not know the answer to that question. What we do know is that constant vigilance is always required. Although some robocalls are legitimate, some may not be. The better practice is to call a card issuer’s number provided on the credit card, rather than responding to the telephone number provided in any robocall.
Article ©2020 M.A. Co. All rights reserved. Used with permission.
DEAR TRUST OFFICER: I immigrated to this country from Norway as a child, and I have relatives there with whom I remain close. One of my children lives in Oslo now and may be settling there permanently. For several years, I’ve helped fund some family reunions. The get-togethers alternate between the U.S. and Oslo, and I help plan the trips and side tours. I also cover the cost of airfare. It’s been a great thing for cementing the bonds of the extended family. We had to suspend this family tradition in 2020 with the pandemic and all, and everyone really missed it—especially me. What I’m wondering is, can I add something to my will to keep this tradition going after I’m gone?—FAMILY TRAVELER
DEAR TRAVELER: I suggest that you consider an irrevocable trust in your will, with the express purpose of providing financial support for travel for your heirs. The trust will likely include other provisions related to the financial security of your heirs. The trustee can be given some discretion in these matters, but only within the parameters that you and your attorney set out in the trust agreement.
If you choose a corporate fiduciary, such as us, your trust will have the additional benefit of professional investment management. We are well-versed in all aspects of fulfilling fiduciary duties.
Article ©2020 M.A. Co. All rights reserved. Used with permission.
According to estate planner Maurice R. Kassimir, Esq., the present moment has provided a “perfect storm” for wealthy families to meet with their estate planners and implement some wealth transfer strategies. In a November webinar, Mr. Kassimir pointed to three factors that make these times unique:
Implicit in these examples is an assumption that most asset values will return to normal after a vaccine brings the pandemic to an end. The other problem planners may face is that in times of severe economic uncertainty, even those with $20 million in assets may not feel rich enough to part with a substantial portion of them simply to save taxes for their heirs.
Article ©2020 M.A. Co. All rights reserved. Used with permission.
Most importantly, it shows you care about their future. These types of benefits are especially important to millennials. Most companies already provide a 401(k) benefit, so you’ll be competing with these companies for good talent. Research shows that employees tend to stay longer if their company offers retirement benefits. And it will save you money on your taxes. You can deduct your employer contribution to your team’s 401(k). For small businesses with less than 100 employees, there is an additional credit for the first three years to offset the cost of administration fees.
Yes, this is known as a trustee-to-trustee 401k rollover. All you have to do is request the distribution 401k rollover forms from your old employer. Once your former employer has given them to you then you can transfer your 401k to an IRA. There are no penalties for a trustee-to-trustee transfer. If the former employee sends the funds to you directly then there will be a deduction and 20% will be remitted to the IRS.
