Retirement savings has become a key issue when trying to recruit talent. The deflation of many 401(k)s has left many employees wanting to make sure they are covered. CNN Money.com reports on one unusual plan, cash balance pensions, that has captured the attention of many small business owners.

The plans, which involve mandatory annual contributions, work best for small business owners with fewer than 20 employees and excess profits of more than $50,000 per year that they can afford to sink into funding a pension , says Richard Jensen, president of BRS Consulting in Little Rock, Ark. If your company fits the bill, you can enjoy these benefits:

 

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The IRS recently released new Roth IRA conversion rules that provide any person, regardless of income level, with the opportunity to convert their individual IRAs to Roth IRAs in 2010. This conversion may be done by recognizing the entire Roth account value in 2010 or by dividing the income between the 2011 and 2012 tax years. For years after 2010, the Roth conversions will be allowed but will not have the two-year recognition opportunity for 2011 and 2012.

The rules also govern eligible rollover distributions from qualified employer retirement plans to Roth IRAs. An IRS notice (IRB 2009-39) outlines the specific requirements for the conversions and eligible rollovers from employer plans, such as pensions, profit sharing, and 401(k)s to Roth IRAs. The terms are summarized as follows:

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America’s small business owners are becoming more bullish on the economy. According to the Discover Small Business Watch, fewer small business owners feel the economy was getting worse and more are seeing signs of growth over the near term.

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The number of small business owners who think the economy is getting worse was down to 49 percent from 53 percent in November; while 24 percent of small business owners see the economy staying the same, up from 16 percent in November; 25 percent see the economy getting better, down from 28 percent in November; and 2 percent are not sure.

As 2009 closes in just a few days, there are some important tax changes that will help you save money and prepare to file your 2009 tax return in the spring. We have summarized many of the major changes in our blog post, “Tax Planning Strategies & Year-End Considerations” in November, and since it has been one of our most popular posts, we’ve reposted it here and encourage you to review this information again before starting the process for your 2009 tax return.

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An IPO has become a far less viable option for business funding during the economic recovery. The Wall Street Journal reports on a funding method, the Employee Stock-Ownership Plan (ESOP), that is making a return to popularity among business owners.

An ESOP is highly regulated by the Employee Retirement Income Security Act, involving several entanglements for corporate liability. If you are considering an ESOP, we highly recommend consulting your Compensation and Benefits professional.

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Investor confidence has been thoroughly shaken in the past year, but an ING Institute for Retirement Research survey has found that employee-sponsored defined contribution plans have seen steady and continued support since the Fall of 2008. 84 percent said their employer’s plan was a “very important” part of their retirement strategy, while nearly all (92 percent) said the best way to contribute to these plans is through direct deductions from their paycheck.

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As the end of the year approaches, now is the time to evaluate your business and your personal tax strategies. By taking the time to prepare now, using this checklist, you will be able to develop a clearer picture of what your tax picture will look like while there’s still time to maximize current-year savings.

Retirement Planning

Look to maximize tax-deductible retirement plan contributions. The following table provides the maximum amounts that can be deferred under several popular retirement plan options during 2009.

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Every year, the IRS issues new limits for the following year that apply to retirement plan contributions. On October 15th, they announced the cost of living adjustments for 2010 that apply to all the various plans, and for the first time in memory there were virtually no changes from 2009. This also will apply to recipients of Social Security benefits. Below is a brief list of the 2010 limits, noting whether or not there will be an increase applied:

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The current economic climate, with a flagging stock market and depressed asset prices, can be a great time to transfer wealth. Taxpayers can take advantage of reduced asset values to transfer wealth with considerably more future value tax-free than was possible even a year ago. Simply utilizing annual gift tax exclusions ($12,000 in 2008; $13,000 in 2009) and federal lifetime gift exemptions ($1,000,000 in 2008) to transfer assets with decreased current values allows the giver to avoid taxes on the value that gifted assets will regain as economic conditions improve. There are several possible ways to maximize gift giving in current economic conditions.

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In today’s turbulent economy, many businesses are struggling with financing, cash flow and administrative concerns. As signs continue to point toward recovery, there are a number of opportunities available to help the business owners ensure that their companies are better positioned to emerge stronger than before.

Join us for an evening of networking and discussion about the challenges and opportunities facing today’s business owners. Topics will include the following:

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