2014 Retirement Plan Year End Deadlines

This post is for you if you are the owner of a business,  self-employed, or a decision maker on your company's retirement plan. Now that summer is behind us (according to the work/school calendar), end of the year deadlines are fast approaching. 

DEADLINES

October 1 

-This is the deadline to establish a new  Safe Harbor 401k plan for 2014. The plan must be in effect for 3 months in the first plan year. 

-If you currently have a SIMPLE IRA and want to start a 401k , you must give your employees notice of 60 days(see below). Therefore, you need to handle operational items prior to November 1.

November 1

-If you have SIMPLE IRA plan and you are ending this to start a 401k plan in 2015, you must notify your employees at least 60 days in advance of change.

December 1

-If you already have a 401k plan but want to add a Safe Harbor provision to the plan, proper notices must be delivered to plan participants at least 30 days prior to change

BENEFITS OF STARTING A 401K

-If you are starting a retirement plan for the first time, you may be eligible for a $500 tax credit (available for the first 3 plan years to cover administrative fees)

- 401k plans offer a number of design options to maximize the deferrals for business owners, key employees, or anyone else in the company. 

-In 2014 a participant can put away up to $52,000/year into the plan (plus $5,500 in "catch-up" contributions for those over age 50)

Essential Financial Steps for Young Workers

Now that graduations season is over, hopefully your recent college grad is starting their first job in the real world.  There's a great article in the WSJ for those in their first 5 years on the job, with 6 things to make sure you are doing. Click here to read the entire article.

Here's the CliffsNotes (with our own thoughts sprinkled in) if you don't want to click on the article to read the entire thing:

1) Set a budget: (There is a lot of great free software out there to help track your expenses & budget.  Check out mint.com to start).

2) Save for emergencies:  Establish 3-6 month reserved of living expenses (in my opinion 6-12 isn't a bad idea).

3) Take stock of debt: This is especially important to pay attention to if you have student debt.  There are a number of relatively new debt repayment options for graduating students that have been put in place under the Obama administration.  The issue is you need to spend the time to understand the options and analyze which is best for you.

4) Think about Retirement:  Consider a Roth IRA if no plan is available through work.  Plan to increase savings % as you get raises.

5) Manage Risk: Evaluate insurance coverage (of particular note: renters, auto, health, disability).

6) Manage Taxes: Adjust your withholdings to avoid a big tax due, and to avoid a big refund. Track tax deductible expenses (charitable donations, student loan interest).