There is still time to reduce taxable income for 2012 and reduce taxable income in future years
On November 7, 2012 California votes approved Proposition 30, a constitutional amendment aiming to raise a $6 billion-a-year for the next seven years by (1) raising the sales and use tax by ¼ percent effective January 1, 2013 and (2) increasing incremental income tax rates for individuals with income in excess of $250,000 for seven years retroactive to January 1, 2012.
There is still time to combat impact of this tax increase. More than ever, a conversation about a qualified retirement plan is in order:
1) No retirement plan in place: consider implementation of a new retirement plan before December 31, 2012 to reduce taxable income effective 1/1/2012. Plan can be funded up to the due date of the employer’s tax return including extensions. Options: Solo(k), 401(k), Profit Sharing, Defined Benefit, Cash Balance.
2) Need to increase deductible contributions: if there is a plan in place in 2012, and your client is looking to increase deductible contributions, consider (1) redesigning a plan to enhance funding (e.g. activating a profit-sharing component), or (2) adding a side car defined benefit or cash balance plan to increase funding
Your First Allied Retirement Services subject matter experts are ready to assist and answer any questions regarding this important development. We will assist with a discovery meeting, proposal preparation and presentation. Call us at (888) 926-0600 or send a message to pensions@firstallied.com .
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