(303) 499-7445 info@tandemcpas.com

Year-end Reminders

Retirement Plans

  1. Business Without Current Retirement Plan – If you do not have a plan in place for 2023, please consider your choices now. The options are very limited if you wait until after year-end. Contact our office if you have questions.
  1. Secure 2.0 Act Employer Credits
  • Credit for retirement administrative costs
    • Employers with up to 50 employees are eligible for a three-year start-up tax credit of 100% of qualified start-up costs for new plans.  The business must have a least one non-highly compensated employee (NHCE = < $150,000 in 2023 and not business owner).  Credit is based on the greater of $500 or $250/NHCE (capped at $5,000).
  • Credit for employer contribution
    • Employers offering a new plan are eligible for a tax credit for matching or profit-sharing contributions for the first five years. Maximum credit is $1,000/year/employee. The credit starts at 100% and drops to 25% in the fifth year.
  1. 401(k) Employee Contributions – 2023 contributions must be made through payroll by 12/31/23.
  • 2023 max contribution for individuals participating in 401(k), 403(b) and most 457 plans is $22,500 or $30,000 for individuals 50 and over.
  • 2024 max contribution for individuals participating in 401(k), 403(b) and most 457 plans is $23,000 or $30,500 for individuals 50 and over.
  1. SIMPLE IRA Contributions

2023

  • 2023 max contribution for individuals participating in a SIMPLE IRA plan is $15,500 or $19,000 for individuals 50 and over.
  • For 2023, employer is required to required to either make matching contributions on an employee’s elective deferrals up to 3% of compensation or an employer contribution of 2% of the employee’s compensation.

2024

  • 2024 max contribution for individuals participating in a SIMPLE IRA plan is $16,000 or $19,500 for individuals 50 and over.
  • For 2024, employers can make additional nonelective contributions of a uniform percentage up to 10% of compensation (limited to $5,000/employee for the year).
  1. SEP IRA
  • SEP IRA contributions are contributions by the employer to the employee’s SEP IRA, and the contribution limit is limited to 25% of the employee’s earned income.
  • If there are multiple employees, the same contribution percentage must be made for each employee.
  • It is best to wait to make SEP IRA contributions for tax year 2023 until after we have had a chance to calculate the maximum SEP IRA contribution allowable.
  • SEP IRA contributions for 2023 can be made as late as the extended tax return deadline of the employer’s tax return (e.g. 9/15/24 for extended 2023 S corporation tax return).
  1. Roth Accounts
  • SEP and SIMPLE IRA Roth options are available beginning in 2023, although are not required to be offered by employers.  If Roth options are offered, the employer must obtain elections from participants who want Roth contributions.
  • If Roth 401(k) option is available, beginning in 2023, employer match to employee’s Roth 401(k) can be a Roth matching contribution.  Employer matching contributions to an employee’s Roth 401(k) will be included in employee’s taxable income.
  1. Colorado Secure Savings Plan – All CO employers who have been in business for a least 2 years and have 5 or more employees and don’t offer a qualified retirement plan are required to facilitate Colorado SecureSavings.

(303) 499-7445

info@tandemcpas.com

287 Century Circle, Suite 200, Louisville, CO 80027

Tandem CPAs LLC  (Colorado firm license #FRM.5000548).

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