If you are an individual who is considered a high earner, on your retirement plan or 401k plan, than you have reasons to be happy. The IRS has raised its limits for 2009 through the new Pension Protection Act. You may also be exempt from further payments during this year.
Every year, companies are needed to execute testing on their retirement account, thus determining whether their employees will be getting a refund on their retirement plan contributions.
If you are a high earner, you would have previously had to wait until the audit is done to receive any refund. The new law has made contributions taxable within the same financial year. This means that you won’t need to wait to file your income tax forms.
The PPA, is an act that was signed a few years ago. Over the last years, employers have been underfunded due to government or management executives playing around with the pension funds, such that due benefits were exceeding the actual available funds, leaving the companies tight for cash and causing financial problems.
Moreover, you will also be able to receive tax refunds more rapidly. The rule also allows individuals to defer any increase in taxable income, to the following year. Thus you are going to be able to think of a better tax tactic for the year 2010.
This law is basically targeted towards the people. You can now plan better your taxes, and also defer taxable income, and also you don’t have to wait unnecessarily long to get your refunds on retirement plan contributions.
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