2023 Retirement Changes to Know About

Planning for retirement is one of the most important financial tasks most Americans have to consider. Almost no one wants to work forever, but those who fail to plan adequately for their retirement will find themselves either working into their golden years or unable to afford the type of life they want as they grow old. While the basics of retirement are fairly simple — save money, invest it wisely, withdraw it strategically — there are a lot of moving parts retirement savers have to be aware of. To make things more complicated, there are frequent changes that you have to be aware of to make sure you’re getting the most out of your retirement plan. Here are five changes to the retirement landscape that you should be aware of in 2023.

Retirement Change 1: New 401(k) Limits

Workplace retirement plans like 401(k) accounts are the most popular ways for Americans to save. If you have access to one, it’s a very convenient way to put aside money for your later years. You decide a percentage of each paycheck to put into an account tax-free, and invest in a menu of options; later, you take the money in dispersals once you’ve retired, paying taxes on it as regular income at that time.

There are limits, though, to how much money you can put aside each year. The limit is adjusted each year. In 2022, the limit was $20,500; for 2023, that goes up to $22,500. Furthermore, those 50 and older can make special catch-up contributions over the total. In 2022 the catch-up amount was $6,500. In 2023 it will be $7,500, meaning those 50 and older can contribute a total of $30,000.

Retirement Change 2: IRA Limits

If you don’t have access to a workplace retirement plan, an individual retirement plan is another good option. You lose some of the benefits, such as the possibility of having your employer match contributions, but an IRA is still a good option if you don’t have a workplace retirement plan.

An IRA works similarly to a 401(k), except you open it by yourself with no involvement from your employer. The limit for IRA contributions in 2022 was $6,000, which goes up to $6,500 in 2022. The catch-up contribution total remains $1,000.

Retirement Change 3: IRA Income Phase-Out Range

Americans who make a certain amount of money start to see their IRA contribution limits go down, if they are otherwise covered by a workplace plan.

For traditional IRAs, the phaseout range for 2023 starts at $73,000 and ends at $83,000 for single taxpayers covered by a workplace retirement plan — meaning that single filers who earn more than $83,000 in 2023 cannot contribute to an IRA if they are covered by a workplace plan. In 2022, the range was $68,000 to $78,000.

For married couples filing jointly in 2023, the IRA phaseout range is $116,000 to $136,000 if the spouse making the contribution is covered by a workplace plan. In 2022 this range was $109,000 to $129,000.

If one spouse does not have a workplace plan but the other does, the spouse who does not have a plan has a 2023 phase-out range of $218,000 to $228,000. That range was $204,000 to $214,000 in 2022.

A married individual filing a separate return who is covered by a workplace plan has a phaseout range of $0 to $10,000, unaffected by annual adjustments.

Note that these limits only apply to savers with access to a workplace retirement plan.

Retirement Change 4: Roth IRA Income Phase-Out Range

Roth IRAs operate similarly to traditional IRAs, but money is put in after taxes and no taxes are applied when money is withdrawn in retirement.

For singles and heads of household, the 2023 phaseout range is $138,000 to $153,000 — up from $129,000 to $144,000 in 2022.

For married couples filing jointly, the 2023 range is $218,000 to $228,000. In 2022 it was $204,000 to $214,000.

For married couples filing separately the phase-out range remains $0 to $10,000.

Retirement Change 5: Social Security Changes

While Social Security is not generally going to be enough for anyone to retire on alone, it is an important part of many retirement plans. Social Security payments are also set to increase in 2023.

The cost-of-living adjustment (COLA) for Social Security payments in 2023 is 8.7%. On average, Social Security payments will go up by $140 starting in January.

Claiming an Employee Retention Credit in 2022

Small businesses can still claim an employee retention credit on their 2022 tax returns. In fact, you can file until 2024, for 2020 credits.

Here's what you need to know:

• You can still claim an employee retention credit if you own a small business and had to partially or fully close because of COVID-19
• Your business can claim a maximum credit of 50% of the wages paid to staff in 2020 and 70% in 2021
• However, they must be permanent, full-time employees on the payroll, which excludes suppliers and contractors
• The tax credit is deducted from the taxes you owe as a business and is refundable

• You can still claim an employee retention credit (ERC) if you own a small business and had to partially or fully close because of COVID-19. If you haven’t filed for this credit yet but want to relieve your financial burden for 2022, there’s still a window to save.

  Your business can claim a maximum credit of 50% of the wages paid to staff in 2020 and 70% in 2021.  However, they must be permanent, full-time employees on the payroll, which excludes suppliers and contractors.

  The tax credit is deducted from the taxes you owe as a business and is refundable. Here’s what we know about the current deadlines for ERC, eligibility, and whether we’ll see this tax credit again in the near future.

  Is it too late for me to claim the employee retention credit?  

  It is still possible for you to claim the ERC because the original program allowed businesses to claim this credit for 3 years. This means you can claim 2020 expenses until April 15, 2024, and 2021 expenses by April 15, 2025.

  There is one exception: recovery startup businesses had a January 1, 2022, deadline under the Infrastructure Investment and Jobs Act.

  Given the rapidly approaching deadline, it may be a good idea to get a jump-start on tax season with your tax professional to ensure that filing for the credit makes sense for your business.

  Am I eligible for the employee retention credit?

  Before you apply for an employee retention credit, you must check whether you are an eligible employer.

  Eligible businesses are defined as:

  1. Your business needed to be partially or fully non-operational because of the COVID-19 pandemic.
  2. Your business experienced a decline in gross receipts. This is often referred to has the “gross receipts test” and it’s critical for determining your ERC eligibility. The 1st day of the 1st 2020 calendar quarter is marked as the beginning of the decline in gross receipts, which there are 50% less than in the same period during 2019. The decline then ends in the following calendar quarter, and here the receipts needed to be more than 80% of the previous calendar quarter in 2019. The same applies to gross receipts drops for your 2021 return.
  3. Another qualification is your supply chain and vendors were affected by the pandemic, meaning production and productivity were heavily slowed down.
  4. You were unable to offer the same number of services or products as you used to.
  5. Another qualification is that you could not visit your clients on-site due to the restrictions imposed by government order.
  6. You could not travel for business because of the restricted by government order.
  7. Business operating hours were heavily affected during either 2020 or 2021.

  It’s important to note that having experienced a lockdown is not a marker of ERC eligibility. Business operations must have been affected by a government order.

  What wages qualify for the employee retention credit? 

  Your business or organization size is what will determine the wages that qualify for the credit. For instance, if your business had more than 100 permanent employees during the 2020 period, qualified wages can be as high as $10,000 for each employee laid off.

  In 2021, the employee count was expanded to 500 employees or less. And you can earn up to 70% of wages. With that said, the amount will include only what you would pay the employee during the last 30 days before business closure. This includes both salaries and healthcare costs.

  There are some exceptions to consider:

  • If you are an employer that is currently a loan recipient of the Paycheck Protection Program provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, you will not be eligible. If you have been granted a tax credit for paid sick leave under the Families First Coronavirus Response Act, you are no longer eligible for ERC. This also applies to employees that receive a Work Opportunity Tax Credit under section 51 of the Internal Revenue Code.

  What does the application process entail? 

  The employee retention tax credit must be filed through Form 941-X. This is a quarterly form that should be submitted the month after a each fiscal quarter. However, you can add this form as an amendment for underreporting or overreporting estimates based on the credit with your annual federal returns.

  If you’re eligible, there are 3 simple steps to apply the tax credit to your 2022 taxes:

  Collect your payroll data

  Because the ERC caters to full-time employees, you must collect your payroll data.

  Information you need includes:

  1. Current eligible employees who qualify for the ERC
  2. Those who left the company and details regarding when they left to determine whether it was during the COVID-19 pandemic
  3. Collect all PPP loan papers, which include the date that the loan was given and the amount. You cannot use the same wages listed under the PPP loans. However, the loan does not disqualify you from claiming an RTC.

  Compile the 2019 full-time employee information

  Having collected the payroll data, you’ll have to gather information on all the full-time workers that worked 20 hours per week in 2019. Information you need regarding the employees includes:

  1. Workplace name and address
  2. When your employee started and last worked for the company

  Collect 2019 and 2020 sales and revenue

  The employee retention credit requires money from sales collected from 2019 to 2020. Remember that your net income, loss, and the number of permanent employees determine the amount of credit computation.

  IT’S ESSENTIAL TO ENSURE THAT YOU COLLECT AS MUCH ACCURATE INFORMATION AS POSSIBLE TO BENEFIT THE MOST FROM THE ERC.

  It’s essential to ensure that you collect as much accurate information as possible to benefit the most from the ERC.

  How do I calculate the ERC amount that will be granted? 

  The total qualified wages and health plan expenses paid for each employee amount to the ERC granted.

  ERC for 2020 = 50% of 2020 qualified wages

  ERC for 2021 =70% of 2021 qualified wages.

  Currently, the maximum credit amount in the year 2021 is $10,000 in 1 quarter. In addition, wages used for PPP loan forgiveness are not eligible.

  Will the ERC be reinstated?

  The ERC may be making a comeback with the Employee Retention Tax Credit Reinstatement Act — H.R.6161. A bipartisan group of congressional representatives has introduced this act, sponsored by Senator Margaret Wood Hassan.

  But the draft is still in its early stages. The proposed bill still needs to pass the Senate, House, and the President.

  If this bill passes, eligible businesses may be able to continue to claim an ERC refund on their 2023 taxes or later.

• - Doug Myrick

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Hay! What About Horses?

New farm or ranch venture? People are buying farmland left and right, no two properties are the same. Fire and theft are the largest threats to horse safety. Some best risk management practices to keeping equine animals safe:

No smoking. Barns are full of flammable material, so make sure a non-smoking policy is in place for your barn areas and that cobwebs and dung piles are frequently removed.

Fire extinguisher. Have one, or several, onsite and stored properly. Easy enough.

Varied timetables. To thwart off thieves, visit the stable at different times and mix up your schedule; make the yard constantly look busy.

Security lights. Use sensor-operated lights on the grounds to make intruders more visible.

Burglar alarms. An acoustic alarm can signal when someone has entered the stable. This can also help alert others in the area. Become acquainted with neighbors so you can provide additional eyes on one another’s facilities.

Warning signs. Post signs around the property like ‘keep out” or directly mention that there is a security system in place.

Keep items out of sight. Tools, ladders and other possessions should be put away when not in use. Out of sight, out of mind.

Horse identification. Evidence of identification tags make thieves think twice, as they might dismiss taking a microchipped horse due to the ability to track it. Like dogs, it is wise to have your horses chipped in case they are lost or stolen.

- Myrick