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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

March/April 2019

One BIG Last-Minute Tax Break

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While some of us may worry about getting our tax payments out on time or refunds back, most of us don’t use this time to figure out ways to minimize taxes and plan for future financial goals. If you are self-employed or own a business, a Simplified Employee Pension IRA (SEP-IRA) can be one way to accomplish these twin goals. You have until your business’ tax filing deadline plus extensions to open and make tax-deferred contributions to SEP-IRAs for tax year 2018.


A SEP-IRA Primer
Whether you have a few employees or work for yourself, a SEP-IRA may be right for you. While virtually any business is eligible to contribute, this particular retirement account is well-suited for smaller businesses. That’s because qualified employees must be allowed to participate in the plan, to which employers make contributions.


Any employee who is at least age 21 and was an employee of your business in three of the last five years is eligible to participate in the SEP plan. You don’t have to contribute to the plan every year but when you do, everyone who qualifies must receive contributions, which immediately vest to employees.


By the Numbers
In tax year 2018, employer contributions are based on the first $275,000 of compensation. Every eligible employee must receive the same percentage of their compensation up to the smaller of $55,000 or 25% of compensation.


Self-employed individuals must make a separate calculation to figure how much they can contribute. If you are self-employed, your compensation is net earnings less one-half of your self-employment tax, less contributions made to the SEP-IRA.


The Total Package
Compared to most other types of qualified retirement plans, a SEP-IRA is easy to set up and administer, with no tax filing required. It also allows larger contributions than most qualified retirement plans do, which is a big draw for business owners looking to defer more income and minimize taxes.


If, for instance, you own a business and are in the 25% combined tax bracket, contributing $20,000 to a SEP-IRA before your tax filing deadline will reduce your taxes by $5,000. Potential earnings grow tax-deferred until withdrawal, which may trigger a 10% tax penalty if taken before age 59 1/2, with some exceptions.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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