Authority given to doc pay of former feds that owe money to TSP

Posted ago by brianw

A new regulation will allow the Federal Retirement Thrift Investment Board to order a non-federal employer to withhold up to 15 percent of a former federal employee’s disposable income to pay a delinquent debt to the Thrift  Savings Plan.

Barring any other action, the new garnishment policy is slated to take effect May 27, according to the Federal Register notice that announced the rule

The new rule draws its authority from the 1996 Debt Collection Improvement Act, which authorizes federal agencies to use wage garnishment to collect debts owed to them. Before the law was enacted, agencies needed to obtain a court order to garnish the wages of non-federal employees.

Under the process, an agency is required to provide the debtor with at least 30 days’ advance written notice concerning the nature and amount of the debt, and of the agency’s intention to garnish wages to collect it. The debtor has the right to request a hearing concerning the debt and the terms of repayment.

An agency is not allowed to garnish wages of a former employee who has been involuntarily separated from employment until that person has been reemployed continuously for at least 12 months.

IRS releases guidance on same sex marriage and retirement plan rollovers

Posted ago by brianw

The IRS in April issued two notices that provide some long awaited guidance related to retirement plan administration. One addresses treatment of same-sex marriages after the Supreme Court ruling in United States v. Windsor ruling the Defense of Marriage Act unconstitutional and the other deals with rollovers by qualified retirement plans.

Notice 2014-19 clears up some of the issues related to the timing requirements for qualified retirement plans as they relate to the June 26, 2013 DOMA decision and the issuance of notice 2013-17 on Sept. 16, 2013, that formalized the IRS’s recognition of same-sex marriages. Some key points from this note:

  1. Plans are not required to recognize same-sex marriages prior to June 26, 2013.
  2. Plans are not required to have adopted the celebration rule until September 16, 2013. Plans that used the domicile rule prior to that will not be penalized.
  3. Plans are permitted to choose to recognize same-sex marriage prior to June 26, 2013, and can choose the purposes for which same-sex marriages are recognized for periods prior to that date.
  4. Plans with terms that are inconsistent with the DOMA decision must be amended by the later of (i) the date the plan otherwise would have to be amended for changes in applicable law or (ii) Dec. 31, 2014.

Revenue Ruling 2014-9 is a little more procedurally specific. Normally, distributions from tax-qualified retirement plans and individual retirement accounts are taxable as ordinary income to the recipient of the distribution unless it is an eligible rollover distribution. However, there is no requirement that plans actually permit inbound rollovers. And if they do, they can impose additional restrictions, such as not allowing rollovers of after-tax or designated Roth contributions. If a plan does permit rollovers, the plan administrator of the receiving plan must “reasonably conclude” that the rollover is an eligible rollover distribution. If the plan administrator later learns that the rollover was not, in fact, a valid rollover contribution, the plan administrator must distribute the rolled over amount (plus any earnings) back to the participant within a reasonable amount of time.

2014-9 provides two new due diligence safe harbor procedures that allow a plan administrator to reasonably conclude that a rollover into the plan is a valid rollover contribution. They are simpler and eliminate the need for the plan to obtain supporting documentation from the transferring plan for many rollovers. It also provides for payment of rollovers via wire transfer or other electronic means, so long as the necessary information is communicated to the receiving plan administrator, something many plans were already doing.

Sponsors and administrators of retirement plans are encouraged to review both of these notices to ensure appropriate compliance.

IRA Rollover Rule Changes On the way

Posted ago by brianw

For the approximately 50 million American households who hold one or more individual retirement accounts (IRA), a recent court decision is being called a major game-changer. The Tax Court’s decision in Bobrow vs Commissioner states that taxpayers are allowed only one tax-free, 60-day rollover between IRAs per year. This will be the rule no matter how many IRAs the taxpayer holds.

The IRS has stated that it will uphold this decision, but the new rule will only apply to rollover distributions occurring after January 1, 2015. This gives IRA trustees and custodians time to make changes to their procedures without penalty.
So what does this mean for IRA holders?


  • According to the Internal Revenue Code, once a taxpayer completes any tax-free IRA rollover, they cannot make another tax-free rollover using any account for the next 12 months.
  • The old rule, allowing one tax-free, 60-day rollover for distributions from each IRA held by a taxpayer, will continue to apply throughout 2014. It is important to remember that the old rule limits rollovers to one per IRA. Taxpayers who need to utilize rollovers to move funds between IRAs should do so now, before the end of 2014.
  • Roth conversions are counted separately from regular IRA rollovers, and are subject to a separate one-per-year rule. For example, a taxpayer could theoretically perform one tax-free IRA rollover and one Roth IRA conversion per year.
  • The new ruling does not impact unlimited direct transfers between IRAs. In many cases it is safer to use the direct transfer approach in order to avoid this particular tax problem altogether.

As with any complicated tax situation, unintended consequences can lead to both financial expenses and personal worries. Therefore, it is always advised that taxpayers consult a qualified professional before attempting IRA rollovers, conversions, or any other financial maneuver. A tax professional can advise the taxpayer on recent changes to tax law, as well as suggest alternate courses of action that may be more beneficial in the long run.

Guidance on FEHB and Insurance Exchanges

Posted ago by brianw

Guidance Issued on FEHB and Insurance Exchanges
OPM has issued guidance reiterating that the start of the Affordable Care Act insurance exchange program—also known as Obamacare—in January will have little direct impact on the FEHB program. Those eligible for FEHB can stay in it, with the exception of members of Congress and their personal staffs, who under a special provision will have to get their insurance coverage through the exchanges where they live. FEHB-eligible persons could voluntarily switch to the exchanges but there would be several strong reasons not to, OPM said: they would lose the employer contribution toward premiums; they would have to pay premiums with after-tax money; they would not be eligible for FEHB in retirement unless they were covered by it for the five years leading up to retirement; and if they died while an active employee, their survivors would not be eligible for FEHB coverage even if they would be eligible for survivor annuities. In addition, OPM said that all FEHB plans qualify as providing the level of coverage needed to avoid the tax penalties that will begin in January for those who do not have health insurance meeting certain standards.

Tax Payer Relief Act

Posted ago by brianw

2012 taxpayer relief act

Teens and money

Posted ago by brianw

Good article-click to read

Debt Relief Tips

Posted ago by brianw

Watch this video for a few easy to follow tips

Detail on Cliff deal

Posted ago by brianw

Fact Sheet: The Tax Agreement: A Victory for Middle-Class Families and the Economy

At this make or break moment for the middle class, the President achieved a bipartisan solution that keeps income taxes low for the middle class and grows the economy. For the first time in 20 years, Congress will have acted on a bipartisan basis to vote for significant new revenue. This means millionaires and billionaires will pay their fair share to reduce the deficit through a combination of permanent tax rate increases and reduced tax benefits. And this agreement ensures that we can continue to make investments in education, clean energy, and manufacturing that create jobs and strengthen the middle class.

In 2011, the President cut spending. In 2012, he kept his promise of asking the wealthiest 2 percent of Americans to pay more while protecting 98 percent of families and 97 percent of small businesses from any income tax increase—raising $620 billion in revenue. As we move forward to address our ongoing fiscal challenges, both spending cuts and continuing to ask the wealthy to do a little more will be part of a balanced approach. It is critical for our economy and future generations that we reduce the deficit. We cannot keep racking up this debt on our kids. And the President looks forward to working with Republicans to reduce the deficit in a balanced and bipartisan way.

Permanently extends the middle-class tax cuts and also extends credits for working families, with additional measures to protect families and promote economic growth.

Permanent extension of the middle class tax cuts: This will provide certainty for 114 million households including lower tax rates, an expanded Child Tax Credit, and marriage penalty relief—steps that together will prevent the typical family of four from seeing a $2,200 tax increase next year. In addition, it includes a permanent Alternative Minimum Tax (AMT) fix.

Most progressive income tax code in decades: By raising income tax rates on the wealthiest and keeping taxes low for the middle class, the agreement will ensure we have the most progressive income tax code in decades.

Extension of Emergency Unemployment Insurance benefits for 2 million people: The agreement will prevent 2 million people from losing UI benefits in January by extending emergency unemployment insurance benefits for one year.

Extension of tax cuts for 25 million working families and students: The deal extends President Obama’s expansions of the Child Tax Credit, Earned Income Tax Credit, and the President’s new American Opportunity Tax Credit, which helps families pay for college. The President fought hard to extend these credits, overcoming Republican insistence that income taxes go up by an average of $1,000 for 25 million working families and students. The agreement would extend them for five years.

Extension of renewable energy incentives, the R&E tax credit and other business incentives: The agreement extends tax relief for businesses through the end of next year. This means extending the Production Tax Credit, a key incentive for renewable energy that many Republicans had been trying to end, as well as the Research & Experimentation tax credit. In addition, the agreement extends 50 percent bonus depreciation, a cost-effective temporary measure to support investment and growth. All of these would be extended through the end of 2013.

Fixes the SGR (“doc fix”) with no cuts to the Affordable Care Act or to beneficiaries: The agreement avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year (the “doc fix”). The President stood firm against Republican proposals to pay for this fix with cuts to the Affordable Care Act or the beneficiaries.

Postpones the sequester for two months, paid for with $1 of revenue for every $1 of spending, with the spending balanced between defense and domestic: The agreement saves $24 billion, half in revenue and half from spending cuts which are divided equally between defense and nondefense, in order to delay the sequester for two months. This will give Congress time to work on a balanced plan to end the sequester permanently through a combination of additional revenue and spending cuts in a balanced manner.

Raises $620 billion in revenue according to Congress’ Joint Committee on Taxation by achieving the President’s goal of asking the wealthiest 2 percent of Americans to pay more while protecting 98 percent of families and 97 percent of small businesses from any income tax increase.

Restores the 39.6 percent rate for high-income households, as in the 1990s: The top rate would return to 39.6 percent for singles with incomes above $400,000 and married couples with incomes above $450,000.

Capital gains rates for high-income households return to Clinton-era levels: The capital gains rate would return to what it was under President Clinton, 20 percent. Counting the 3.8 percent surcharge from the Affordable Care Act, dividends and capital gains would be taxed at a rate of 23.8 percent for high-income households. These tax rates would apply to singles above $400,000 and couples above $450,000.

Reduced tax benefits for households making over $250,000 (for singles) and $300,000 (for couples): The agreement reinstates the Clinton-era limits on high-income tax benefits, the phaseout of itemized deductions (“Pease”) and the Personal Exemption Phaseout (“PEP”), for couples with incomes over $300,000 and singles with incomes over $250,000. These two provisions reduce tax benefits for high-income households. This sets the stage for future balanced approaches to deficit reduction, which could include additional revenue through tax reforms that reduce tax benefits for Americans making over $250,000.

Raises tax rates on the wealthiest estates: The agreement raises the tax rate on the wealthiest estates – worth upwards of $5 million per person – from 35 percent to 40 percent, in contrast to Republican proposals to continue the current estate tax levels.

The agreement’s $620 billion in revenue is 85 percent of the amount raised by the Senate-passed bill, if that bill had been enacted and made permanent: The agreement locks in $620 billion in high-income revenue over the next ten years. In contrast, the bill passed by Democrats in the Senate achieved approximately $70 billion through one-year provisions; these same provisions could have raised a total of $715 billion over ten years if Congress acted again to extend it permanently. However, the Senate bill itself locked in only one year’s worth of savings so would have required additional extensions to achieve those savings.

Part of a balanced process of deficit reduction and stronger growth.

Strengthens our recovery next year by cutting taxes for the middle-class: The independent, non-partisan Congressional Budget Office (CBO) estimated that allowing the full effect of the “fiscal cliff” would cause our economy to enter a recession and actually shrink next year primarily as a result of higher taxes on the middle class and across-the-board spending cuts. The final agreement prevents taxes from rising on the middle class and delays the across-the-board “sequester.”

Temporary measures to support consumer spending and business investment: Extending unemployment insurance is one of the more effective ways to encourage consumer spending. And bonus depreciation will give companies incentives to invest.

Provides greater economic certainty for families and businesses: The agreement will make it easier for families and businesses to plan and will help our economy grow.

Cuts the deficit and reduces the debt as a share of the economy over the next five years: Since April last year, the President has signed into law 1.7 trillion in deficit reduction, including $700 billion in spending cuts from enacted appropriations bills in 2011 and 2012, and $1 trillion in the Budget Control Act. This tax agreement not only further reduces the deficit, but raises $620 in new revenue from high-income households. Together with a strengthening economy these steps will bring down the deficit as a share of the economy over the next five years.

Establishes a foundation for additional balanced, pro-growth deficit reduction through tax and entitlement reform: The agreement leaves substantial scope for reducing tax expenditures for high-income households, reforming corporate taxes to broaden the base and cut the rate to make America more competitive, and to take further steps to reform entitlements.

Extends the farm bill through the end of the fiscal year, averting a sharp rise in milk prices at the beginning of 2013.

July meetings while in different parts of IN

Posted ago by brianw

I will be returning to Hammond In with Manny on the 9th of July. Then I will spend Tues & Wed the 10th & 11th in South Bend IN. I will return to South Bend for a limited number of appointments on the morning of July 20th and will then head to Fort Wayne IN for the afternoon on the 20th. I will then be in INDY on the 23rd-25th. Please feel free to contact me at 262-537-2933 if you need to set an appointment while I am in your area.

Changes for New FED EE’s starting after 12/31/12

Posted ago by brianw

Congress on Feb. 17 passed a bill to extend the payroll tax cut that includes a measure requiring new federal employees to pay more into their pensions. President Obama is expected to sign the bill.

The bill, which passed 293-132 in the House, and 60-36 in the Senate, will continue the tax cut and provide funding for unemployment insurance through the end of the year, as well as prevent cuts to Medicare reimbursements paid to physicians.

Under the legislation, new federal employees who are hired after Dec. 31, 2012—and who have less than five years of creditable service at hiring—must contribute 3.1 percent of salary to their pensions—2.3 percent more than the 0.8 percent that current feds contribute to the defined benefit component of the Federal Employees Retirement System. Existing federal employees will not be affected by the new requirement.

Before the vote, Democratic Whip Steny H. Hoyer (D-Md.)—whose district is home to thousands of federal employees—expressed his frustration with the bill in a statement on the House floor.

“Nobody else in this bill, not a millionaire, not a billionaire, not a carried interest beneficiary, not an oil company, nobody in this bill other than federal employees is asked to pay,” Hoyer said in his comments.

“They’ve already paid $60 billion, and by the way, your side of the aisle is not going to give them that half percent the president asked for, so that will be an additional $30 billion,” Hoyer told Republicans.

Colleen Kelley, president of the National Treasury Employees Union, also blasted supporters of the bill for singling out federal workers.

“It is difficult to fathom the rationale for making one group of workers pay benefits to other middle-class families when the wealthy, along with the corporations that helped significantly to create joblessness, are not being asked to share in the cost,” Kelley said in a statement.

Another capital-area lawmaker, Rep. Gerry Connolly (D-Va.), in announcing he would vote against the bill, blamed supporters of the legislation for making it tougher for the government to attract high-quality job candidates.

“They want to create an environment where nobody will be interested in federal service because the pay and benefits are so far below those in the private sector,” Connolly said.