Monthly Archives: July 2014

FSA Plans: Employers, Have You Amended Your Plans to Allow Rollover?

FSA Flex Spending MedicalHealth care Flexible Spending Accounts (FSAs) allow employees to redirect pretax income to an employer-sponsored benefit plan that pays, or reimburses them for, qualified medical expenses not covered by health insurance. A maximum employee contribution limit of $2,500 went into effect in 2013. (Employers can set a lower limit, however, and there will continue to be no limit on employer contributions to FSAs.)

Employers that haven’t yet done so must amend their plans and summary plan descriptions (SPDs) to reflect the $2,500 limit (or a lower one, if they wish) by December 31, 2014.

Allowing a $500 FSA Rollover – FSA Plan Amendment

While you’re making those amendments, you may want to consider another amendment: allowing a $500 rollover.

Generally, an employee loses any FSA amount (referred to as “use it or lose it”) that hasn’t been used by the plan’s year-end. But last year, the IRS issued guidance permitting employers to amend their FSA plans to allow up to $500 to be rolled over to the next year.

Eliminating the 75-Day Grace Period to Permit Rollover

However, if your plan was previously amended to allow a 2½-month grace period for incurring expenses to use up the previous year’s contribution, you cannot add the rollover provision unless you eliminate the grace period provision.

Do you have questions about amending your FSA plan, or adding FSAs to your employee benefits plan? Then contact John Troyer at 216-831-7171 or jtroyer@cp-advisors.com. You can also leave us your contact information here, and we will contact you as soon as possible. We’d be pleased to answer these and other questions related to taxes and employer-sponsored benefit plans.

Other posts relating to employee benefits plans:

Short-term ACA relief now available for midsize and large employers

Do an Employee Benefit Plan Audit Before the IRS or DOL

 

Tax Relief – Make the most of your Net Operating Loss

Turn your business loss into a tax gain!

401(k) 403(b) audit SSAEIf during the income tax return filing year, you found that your business had a net operating loss for the year, the news at tax time won’t be all bad.  Even though nobody enjoys being unprofitable, a net operating loss does have an upside – it can generate tax benefits for your company.

In a nutshell, a net operating loss occurs when a company’s deductible expenses exceed its income. But of course the specific rules are more complex.

When a business incurs a qualifying net operating loss, there are a number of options.  Here are two of them:

  1. Carry the loss back up to two years, and then carry any remaining amount forward up to 20 years.  The carryback can generate an immediate tax refund, boosting cash flow immediately.
  2. Elect to carry the entire loss forward.  If cash flow is fairly strong, carrying the loss forward may be much more beneficial.  After all, it will offset income for up to 20 years.  Doing so may be especially savvy when business income is expected to increase substantially over the years.

In the case of flow-through entities, owners might be able to reap individual tax benefits from the net operating loss.

If you have questions about the net operating loss rules or would like assistance in determining how to make the most of a net operating loss, Ciuni & Panichi can help you start planning now.  For more information, or on tax reporting requirements, please contact Jim Komos at 216.831.7171 or jkomos@cp-advisors.com.

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Affordable Care Act – Pay or Play

Internal Controls for Business Owners to use Today

© 2014

Tax Deduction: State and Local Sales Taxes

 Could the Tax Deduction of State and Local Sales Taxes Save You Money?401(k) 403(b) audit SSAE

For the last several years, taxpayers have been allowed to take an itemized tax deduction for state and local sales taxes in lieu of state and local income taxes. Although this break hasn’t yet been extended to 2014, it is still available for 2013.

It can be valuable if you reside in a state with no or low income taxes or if you purchase major items, such as a car or boat.  So, see if you can save more by deducting sales tax on your 2013 return.  If you’re contemplating a major purchase, keep an eye on Congress to see if the break will be revived for 2014.  You may want to factor the deduction’s availability into your purchase decision.

Ciuni & Panichi, Inc. can help you determine whether deducting sales tax makes sense for you.  We will also keep up to date on the status of the deduction for 2014.  Please contact Jim Komos at 216.831.7171 or jkomos@cp-advisors.com for additional information and with any questions you may have regarding this tax deduction.

You may also be interested in:

Pay Professional Fees Now and Reduce Your Tax Bill

College Tax Breaks Help Save You Money

 

 

Flexible Spending Accounts Must Be Amended by Year-End

Update Your Flexible Spending Account Now

AACA Health Care ReformHealth care Flexible Spending Accounts (FSAs) allow employees to redirect pretax income to an employer-sponsored plan that reimburses them for qualified medical expenses not covered by their insurance.  The most an employee can contribute is $2,500.  This amount went into effect in 2013.  Employers can set a lower limit and there will continue to be no limit on how much an employer can contribute to FSAs.

Employers that have not yet done so must amend their plans and summary plan descriptions to reflect the $2,500 limit or a lower one, if they want, by the end of 2014.

While you’re making those amendments, you may want to consider adding another amendment and allowing a $500 rollover.

Generally, an employee loses any FSA amount that hasn’t been used by the plan’s year-end.  But last year, the IRS issued guidance allowing employers to amend their FSA plans to allow up to $500 to be rolled over to the following year.  If your plan was previously amended to allow a 2½-month grace period for incurring expenses to use up the previous year’s contribution, you cannot add the rollover provision unless you eliminate the grace period provision.

Questions about amending your Flexible Spending Account plan, or adding a Flexible Spending Account to your benefits offering?  Then contact John Troyer  Partner-in-Charge of our Employee Benefits Group at 216.831.7171 or jtroyer@cp-advisors.com.

At Ciuni & Panichi, Inc., we are experts in employee benefit plans.  From setting up a new plan to auditing and taxes, we would be pleased to assist you with any questions you have.

You may also be interested in:

Audit Your Retirement Plan Before the Government Does

Internal Controls for Business Owners to Use Today