Roth IRA, 401
Roth 401(k) and a Roth IRA sound similar — and they are. Contributions are made after taxes and earnings can be taken out tax-free after either five years or at age 59½. But the 401(k) version of the Roth has a couple of key differences from its IRA cousin.Ch. 2: All about IRAsCash out, leave 401(k) or roll over?Differences between a Roth IRA, 401(k)7 steps to a Roth IRA conversion4 steps to undo a Roth conversion3 ways to pay for a Roth conversionBoomer dilemma: traditional or RothRoth conversion investment strategiesPenalty-free IRA, 401(k) withdrawalsChapter1234ALLContribution amountsThe most distinguishing characteristic of 401(k)s, whether Roth or traditional, is the high contribution limit, allowing employees to squirrel away up to $16,500 per year. For workers over 50, the ceiling is $22,000.
Limits for individual retirement accounts are $5,000, and workers over 50 may contribute up to $6,000 per year. [Read the full article]
Businesses in Hawaii are getting immediate relief from the nation’s largest increase in unemployment taxes after Gov. Linda Lingle signed the tax help into law Thursday.
The new law will save businesses an average of $440 per employee in annual taxes paid to keep unemployment benefits flowing to laid-off workers.
“It’s the best result we could hope for,” said Carol Pregill, president of the Retail Merchants of Hawaii. “This will help stabilize most businesses because everyone was budgeting for a huge increase.”
Lawmakers and the governor rushed to pass the law before businesses’ first quarterly tax bills were mailed out later this month. Lingle’s administration had set a Friday deadline to get a law approved, or else businesses would have been stuck having to pay much more in taxes due next month.
After paying an average of $90 per employee last year, taxes would have increased to $1,070 per employee. [Read the full article]
The state Council on Revenues, which predicts how the economy will influence tax collections, left its forecast unchanged for the current fiscal year ending in June, but it toned down its prior optimism about next fiscal year.
The result is that lawmakers must find ways to save about $50 million more by cutting services and raising taxes, in addition to the previously estimated $1.2 billion shortfall through June of next year.
House Finance Committee Chairman Marcus Oshiro said tax hikes already being considered by lawmakers should raise enough money without having to resort to a broad increase in general excise taxes. Those measures would eliminate tax exemptions, raise liquor taxes, defer credits, hike rental car fees and increase businesses’ permitting fees.
“We hope that the exemptions, the loopholes, the deferments of the credits, the capping of the deductions will do the trick,” said Oshiro, D-Wahiawa-Poamoho. [Read the full article]
Utah Gov. Gary Herbert says he drew a line in the sand his first year in office to oppose any new tax increases.
But now that the legislative session is over, the Republican appears ready to cross the line he drew.
Herbert has indicated he’ll let an increase in the tobacco tax become law, defending the action as necessary in a year lawmakers were willing to cut public education funding more than he was willing to stomach.
The tax hike is just one example of how a tough budget year made it difficult for Herbert to make significant progress on his top three priorities — improving education, rebuilding the economy by avoiding tax hikes and supporting energy development.
“The budget is the No. 1 issue — it is about the money,” Herbert said Thursday as lawmakers prepared to pass an $11.1 billion budget that is about $300 million less than the current year’s. [Read the full article]