Investing Information

Shielding the tax improvement of your overdue compensation - investing


The American Jobs Concept Act of 2004 compulsory authoritarian new rules on non-qualified postponed compensation plans. Establishment in 2005, delayed compensation programs that are not in agreement with the new rules may be taxed as wages, slapped with a 20% erase tax, plus electric an appeal penalty.

Given the potentially huge tax cost for non-compliance with the rules, you ought to consult with your organization's allowance specialist and your tax professionals to assume how your compensation might be exaggerated by these new rules.

Deferred compensation plans are often used to bestow for the deferral of salary, incentive compensation (i. e. , commissions or bonuses), or supplemental compensation for top executives, detached corporate directors, and character board members. The new rules apply to nonqualified late compensation plans at chargeable and tax-exempt organizations.

An opportunity for detached corporate directors and characteristic board members who catch 1099 earnings for their armed forces may believe is to freeze their nonqualified plan and adopt a capable plan such as the "one being distinct assistance plan", called the Solo-DB Plan. Capable retirement plans are exempt from the chuck of the American Jobs Concept Act.

The Solo-DB plan allows the peak deductible charity achievable in a authorized retirement plan. For exemplar in 2005 one can be a factor up to $170,000 of compensation into a tax-deferred Solo-DB plan.

Defined remuneration plans have been about for a long time. But, current boarding house legislation has raised the giving and deductibility confines as well as simplified plan fund requirements. Thus, definite allowance plans like Solo-DB have develop into much more charismatic to upper-income those with self-employment income. The Solo-DB plan will allow you to antagonistically fund your retirement while acerbic your taxes significantly.

Individuals who lessen for the Solo-DB plan comprise sole proprietors, autonomous contractors, and small commerce owners age 45 or older who can add more than $41,000 annually to the plan for at least three years.

For more about Solo DB plans visit Lamaute First city at: http://www. InvestSafe. com.

About The Author

Daniel Lamaute, CEO of Lamaute Capital, Inc. (www. InvestSafe. com) specializes in background up retirement plans. You may visit http://www. investsafe. com to admittance a free calculator that will help you assessment what your ceiling donation might be under assorted plans.


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