Posted on

RMDs Return for 2021

After being suspended for 2020 via the CARES Act, required minimum distributions (RMD) are back for 2021.

RMDs are required for everyone with a traditional IRA or employer-sponsored plans like 401(k)s or Roth 401(k)s starting at age 72. If you’re turning 72 in 2021, you have until April 1, 2022, to make your RMD. But in each subsequent year, you’ll need to take your RMD by December 31. So that means if you delay taking your first RMD until April 1, you’ll have two withdrawals in 2022 and that could create a higher tax liability.

RMDs are taxable, so plan to have taxes taken out of your distribution to avoid underpayment penalties.

Failing to take your RMD by the due date comes with a 50% penalty. And if you don’t need the money, consider investing the distributions in a taxable account for continued growth or giving the RMD to a qualified charity.

Posted on

Financing Your New Small Business

You’ll have to make a lot of decisions when starting a new business. One of the bigger ones will be how you’ll fund it. The financing option you choose may have a significant impact on your company’s success.

BANK ON IT

Traditional bank loans may be the first place you look, especially if you have good personal credit. Start with your current bank. They can help you figure out what documents you’ll need to qualify and what options you have.

If you have a local community bank or credit union, check with them about borrowing. Their lending requirements might be more lenient because they have a strong interest in economic development within the community.

ANOTHER AVENUE

If a traditional bank loan isn’t an option, consider a loan backed by the Small Business Administration (SBA). The SBA offers traditional banks a federal guarantee on your loan. This makes it less risky for the bank to lend you start-up money. In addition, SBA loans often come with favorable interest rates and payment terms. Some loans come with continued support to help you start and run your business.

PUT YOUR FUTURE FIRST

Starting your business means starting your own retirement plan. Consider creating a solo 401(k) or SEP plan and roll over balances from other 401(k) plans or IRAs. Don’t be tempted to take funds out of your retirement plan to help start your business. Assuming your business idea is sound, you’ll be able to obtain funding elsewhere.

GRANT MONEY

Check into small business grants available in your community. Grants offer a way to finance your new business without worrying about repaying a loan. Grants are usually provided by nonprofit organizations or government agencies, which sometimes focus on serving specific companies, like minority, women or veteran-owned businesses. Although competition for grants can be fierce, the time you invest in searching and applying for grants can pay off in the long run.

DON’T USE CREDIT CARDS

With high interest rates and costly late fees, don’t be tempted to to use credit cards to fund your new venture.

Posted on

September 2021 Client Line

Financing Your New Small Business – one of the bigger decisions when starting a new business is how you’ll fund it.

RMDs Return for 2021 – required minimum distributions are back for 2021.

What to Know About 401(k)s – make sure you understand the basics so you can capitalize on plan options and determine how your 401(k) fits into your overall strategy.

September 2021 Client Profile

Cryptocurrency Basics – cryptocurrency is an alternative form of payment and works through a technology called blockchain.

Employee vs Independent Contractor: What’s the Difference? – consider income taxes when you need to hire help for your business.

September 2021 Questions & Answers

September 2021 Short Bits