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Week of October 9, 2009 • Issue No. 053
This Week in the iNews:
▲ RETIREMENT PLANNING
▲ WHEN TAXPAYERS WITH EXTENSIONS SHOULD FILE
▲ TECHNOLOGY – TODAY AND FOR TOMORROW
▲Retirement Planning
From the Desk of John Mack, CPA, MBA
What is your 2009 retirement plan contribution limit?
Under age 50
Traditional and ROTH IRA’s - $5,000
401(k)s, 403(b)s, 457’s and SARSEPS - $16,500
Simples – $11,500
Age 50 and Older
Traditional and ROTH IRA’s - $6,000
401(k)s, 403(b)s, 457’s and SARSEPS - $22,000
Simples - $14,000
Because of the tax advantages, contributing to an employer sponsored retirement plan is usually the best first step in retirement planning:
- Contributions are generally pre-tax, so they reduce your taxable income.
- Plan assets can grow tax deferred – meaning you pay no income tax until you take distributions.
- Your employer may match some or all of your contributions – also on a pre-tax basis.
If you are facing severe financial challenges this year, it may be tempting to make withdrawals from your retirement plans. But this generally should be a last resort. With a few exceptions, retirement plan distributions made before age 591/2 are subject to a 10% penalty, in addition to income tax.
Required minimum distribution (RMD) rules were suspended for 2009. The new law give taxpayers otherwise subject to the RMD rules the option to keep funds in their plans for another year without incurring a tax penalty to build up account balances.
▲ Taxpayers with Extensions Must File Returns, and Taxpayers with Offshore Accounts Must Make Voluntary Disclosures by October 15, 2009
The IRS issued a reminder to taxpayers that requested extensions that income tax returns must be filed by October 15. The Service expects approximately 10 million returns to be filed by taxpayers who timely filed Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
And, the IRS reminded taxpayers that the program to voluntarily disclose offshore accounts ends on October 15. Taxpayers that fail to voluntarily disclose their offshore accounts will face harsh civil, and possible criminal, penalties.
▲ TECHNOLOGY – TODAY AND FOR TOMORROW
From the desk of Marty Grausam, CPA, CFE, CISA
Cloud Computing – Web-based Applications Soaring (Continued)
The Good-Side and The Bad-Side
To recall from The Good-Side recent article: “Cloud computing” was first deployed by a web-based company, Salesforce.com in 1999 to provide software to customers via the Internet. The idea of also delivering hardware, i.e. additional server or storage capacity, in the same way became more widely-desirable especially when it was implemented for Amazon and others.”
Now For (Some of) the Bad-Side
Because cloud computing does not allow users to physically possess their data, (i.e. unless the user does its own backup of data to their on-site hardware) it does leave the responsibility of data storage and control in the hands of the provider.
Users now have to consider the additional responsibility to be able to understand the services being offered in order to effectively react to changes in contracted services, compatibility to competing services, and to be able to perform their fiduciary responsibilities for business continuity (e.g. disaster recovery, interruption of service.)
Cloud computing has been criticized for limiting the freedom of users and making them dependent on the cloud computing provider, and even as far as only being able to use the applications and services that the provider is willing to offer.
Cloud computing has even been accused of endangering liberties because users sacrifice their privacy and personal data to a third party.
And on and on . . . . .
In the end, user organizations must be fully aware and informed of all of the goods and bads when considering and/or deciding on going into “cloud computing.”