Changes Are Coming to Your 401(k) Statements

Changes Are Coming to Your 401(k) Statements

A new information policy will soon impact your 401(k) statements, thanks to the Secure Act, which was passed in 2019. The legislation requires special disclosures be added to your quarterly statements issued after June 30.

In addition to the basic information about your investments and the size of your savings, you’ll now also see “lifetime income illustrations.” This information is meant to help you gain a “big picture” view of how long your nest egg may last when you retire. This will be illustrated by showing approximately how much income you would receive each month for the rest of your life if you were to buy an annuity with your current 401(k) savings at age 67.

There will be two examples shown on your statement:

  • A “single life” annuity, which pays income to an individual buyer for life.
  • A “qualified joint and survivor” annuity, which pays income for an individual and a surviving spouse for life.

Keep in mind that the estimates:

  • Are based on your current 401(k) balance.
  • Don’t include projections on how your savings may grow and affect your future nest egg.
  • Don’t account for Social Security or other retirement savings.
  • Assume your full balance will be fully “vested.”

Start Saving More Now

If you’re getting close to retirement age, the new disclosures will give you a clearer picture of your current financial situation. If retirement is still a ways off, however, the estimates will give you a better idea of how much more you should start saving now — while you still have time.

For example, you can better formulate a retirement plan now if you know how much you will have to spend when the time comes. Seeing it on your statement might inspire you to increase your 401(k) contribution — especially if your employer offers a 401(k) match that you haven’t maxed out yet.

Be sure to check with your plan administrator to see if they offer online resources that can help you determine your future income needs. Organizations like AARP and the American Institute of Certified Public Accountants also offer free online retirement calculators.

Did You Know?

Google offers digital training courses and tools to help your small business adapt, grow and better serve your community. Visit Grow With Google for information on improving your online presence, including:

  • Setting up an online business
  • Getting listed on search & maps
  • Using YouTube to grow your business
  • Learning about Google tools
  • And more

Mid-Year Mileage Rate Increase

Due to rising fuel costs, the IRS is increasing the standard mileage rates for the rest of the year. Beginning July 1, the new business mileage rate will be 62.5 cents per mile, up 4 cents from the current rate. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents, up 4 cents. The 14 cents per mile rate for charitable organizations remains unchanged.

Enhanced Business Meal Deduction Still Available

Don’t forget that, through the end of the year, you can continue to take advantage of the enhanced business meal deduction. For 2021 and 2022 only, businesses can generally deduct the full cost of business-related food and beverages purchased from a restaurant. Otherwise, the limit is usually 50% of the cost of the meal.

To qualify:

  • A business owner or employee must be present when food or beverages are provided.
  • Meals must be from restaurants (i.e., businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption).
  • Payment or billing for the food and beverages (including taxes & tips) must occur before January 1, 2023.
  • The cost of food and beverages must be billed separately from any entertainment
  • The expense cannot be lavish or extravagant.
2022 Calendar: Know Your Tax Dates & Deadlines

2022 Calendar: Know Your Tax Dates & Deadlines

We will be developing a new Tax Checklist to help you pull together your tax preparation materials for 2021. We hope to have that ready in our next newsletter. Until then, please take note of these important tax-related dates for the new year:

Tuesday, January 18:

  • Pay estimated taxes for 4th quarter 2021.

Monday, January 31:

  • File Form W-2s and other wage statements if you are an employer.
  • Provide Form W-2s to employees, and Form 1099-MISC, Miscellaneous Income and Form 1099-NEC, Nonemployee Compensation to the appropriate recipients. (Note: If we are filing these forms for you, please get your information to us ASAP.)

Friday, April 1:

  • First RMD due if you turned age 72 in 2021

Monday, April 18*:

  • File your 2021 federal tax return and pay any tax due, or request a 6-month extension.
  • Pay estimated taxes for 1st quarter of 2022.
  • Contribute to your IRA for 2021.
  • Contribute to your HSA for 2021.
  • Contribute to your 401(k) or SEP for 2021 if self-employed.

Wednesday, June 15:

  • Pay estimated taxes for 2nd quarter 2022.

Thursday, September 15:

  • Pay estimated taxes for 3rd quarter 2022.

Monday, October 17:

  • File your 2021 federal tax return if you requested an extension.

 *April 15th is Emancipation Day, a legal holiday in Washington, DC.

 

Important Letters Coming Your Way

If you received advance payments of the Child Tax Credit last year, keep an eye out for Letter 6419 from the IRS. The letter includes the total amount of Advance Child Tax Credit payments you received, if any, in 2021. Note that if you chose NOT to receive advance payments, you can claim the full child tax credit when you file your 2021 tax return. 

If you didn’t qualify for the third Economic Impact Payment (EIP or “stimulus check”), or you didn’t receive the full amount, you may be eligible for the Recovery Rebate Credit when you file your 2021 tax return. The IRS will soon send you Letter 6475, which contains the total amount of the third stimulus payment you received.

We will need a copy of these letters to prepare your 2021 tax return.

Tax Appointments

We’re taking tax appointments now if you’re a new client or have major changes to your taxes. Plan ahead and call 706-632-7850 to reserve your spot. Note that you do NOT need an appointment for us to handle your tax preparation — you can just drop off your files when you’re ready.

2022 Mileage Rates

The IRS updated mileage rates for 2022 based on rising fuel prices and other costs:

  • 58.5 cents per mile for business use (up 2.5 cents per mile).
  • 18 cents per mile for either medical or moving purposes for qualified active-duty members of the Armed Forces (up 2 cents per mile).
  • 14 cents per mile in service of charitable organizations (no change from 2021).

Note that if you choose to use the standard mileage rate, you must opt to use it in the first year the vehicle is available for business use. Then, in later years, you can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period if the standard mileage rate is chosen.

Corporate Registration Due by April 1

If you own a business in Georgia, you must renew your corporate registration each year between January 1 and April 1. To do so, simply visit the registration page. Beware of misleading notices you may receive that offer to file your corporate registration for a higher cost than doing so yourself. It’s a quick process you can handle easily online.