It is not big news to hear that most people are not saving enough for retirement.  To help solve this problem the President has created a new MyRA that will offer retirement savings options to those without a 401K or other retirement plan at work.
I think it will offer a new vehicle for retirement contributions, but I don't anticipate too many people signing up.  It offers one investment option (government bonds) and otherwise operates just like a Roth IRA (except getting the original contributions out may be more restrictive).  So why would anyone choose this re-branded Roth IRA with fewer options and more restrictions rather than just go with the regular Roth IRA?  I can't answer that, unless you just want to put more than 5,500 into the account in one year.  Roth IRA's are limited to 5,500 in 2014, while this new MrRA would allow up to 15,000 per year it appears.  This may appeal to a minority, but for those just getting started with retirement savings this is not practical.
One benefit I see, it could offer a vehicle for putting away a lot of Roth money in one year, and then roll it over or transfer it to a true Roth IRA that offers reasonable investment options.

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The following insurance notification applies to many employers and is a new notification that needs to be supplied to employees.  This applies to employers that have (a) one or more employees who are engaged in commerce and (b) gross annual sales of $500,000 or more.

The required written notices must be provided to the employees by October 1, 2013.

Employers must notify all employees (a) of the existence of an insurance marketplace, (b) that the employee may be eligible for premium assistance and a subsidy under the marketplace, and (c) that if the employee purchases a policy through the insurance marketplace, he or she may lose the employer contribution to any health benefits offered by the employer.
• October 1, 2013 (for employees employed before October 1, 2013).
• On date of hiring, for employees hired on or after October 1, 2013. However, for 2014, a notice provided within 14 days of an employee's start date will be considered provided at the time of hiring

Employers (including those who do not offer health coverage to their employees) must distribute the appropriate notice to all employees (regardless of plan enrollment status or part-time or full-time status). For all employees who are employed before October 1, 2013, the notice must be provided by October 1, 2013. For employees hired after September 30, 2013, the notice must be provided at the time of hiring; however, for 2014, a notice provided within 14 days of an employee's start date will be considered provided at the time of hiring (EBSA Technical Release 2013-02). Informally, the Department of Labor (DOL) has indicated that for October-December 2013, new employees should receive the notice as soon as possible but no longer than 14 days after their start date. A separate notice does not need to be provided to employees' dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees. The DOL issued two model notices in May 2013 that may be used for current and new employees. One model is for employers who offer employer-provided health insurance coverage to some or all of their employees and the other model is for employers who do not offer employer-provided health insurance coverage.

The model notices must be revised by employers to include identifying and contact information. In addition, employers who offer health insurance coverage must provide information on which employees are offered coverage, eligibility requirements, and a statement as to whether the coverage meets the minimum value standard and whether the cost of the coverage to the employee is intended to be affordable based on the employee's wages.

The state of NC has made significant changes to their tax code, and the following is a breakdown (put together by the law firm Parker, Poe, Adams) of some of the major changes:

• Replaces the multi-tiered income tax regime with a flat tax. The Act reduces income tax for individuals from current rates (6 – 7.5%) to a flat tax of 5.8% in 2014. For subsequent years, the Act further reduces the rate to 5.75%.
• Eliminates the personal exemption, but increases the standard deductionfrom $3,000 to $7,500 for single taxpayers or married taxpayers filing as single; from $4,400 to $12,000 for single taxpayers filing as head of household; and from $6,000 to $15,000 for married taxpayers filing jointly.
• Maintains the exemption of social security income from state taxes.
• Eliminates the deduction of retirement income and severance wages.  [note that page four of the full text states that Bailey/Patton state retirement benefits will still be deducted and not taxable in NC.  This will be a relief to many state retirees.]
• Caps the mortgage interest and property tax deduction on primary residences at $20,000.
• Maintains the unlimited deductibility of charitable contributions.
• Eliminates the $50,000 business income deduction beginning in 2014.
• Eliminates numerous credits (child care, disability and educational expenses), but extends the child tax credit and increases the value of such credit [to $125] for individuals earning less than $40,000.
• Allows the long-term care insurance credit, earned income refundable tax credit and adoption expenses credit to sunset in 2014.
• The deduction for NC 529 Savings Plan contributions is eliminated (source-NC SECU Grassroots).
• Caps the gas tax until June 30, 2015 at 37.5 cents per gallon.
• Expands the sales tax to include “entertainment activities,” which include admissions charges for live performances, movies and museums.
• Imposes a sales tax on certain service contracts, specifically warranty agreements, maintenance agreements, repair contracts or other contracts to maintain or repair tangible personal property.

 For C Corporations:

• Reduces the corporate tax rate from 6.9% to 6% in 2014 and 5% in 2015. In addition, if North Carolina meets certain revenue targets, the corporate tax rate may drop to 4% in 2016 and 3% in 2017.
• Maintains the current franchise tax rate ($1.50 per $1,000 of the largest of three bases: (i) capital stock, surplus and undivided profits, (ii) investment in tangible property in North Carolina; or (iii) appraised valuation of tangible property in North Carolina).
• Caps non-profit refund claims to $45 million in a given year.
• Extends the research and development credit to January 1, 2016, but allows other incentive tax credits to sunset as scheduled, including the credit for investment in renewable energy property (January 1, 2016).

How may the Act affect my personal estate planning?

The IRS has announced that instead of tracking actual expenses for your home office, beginning with your 2013 tax return (filed in Spring 2014) you can take a standard deduction for your home office.  It is calculated at $5/square foot of home office space.  While this will simplify the calculation and relieve some of the record keeping requirements, some have expressed concern that this understates the value of the home office and you would likely get a larger deduction if you stick with the old method of actual expenses.  Those who own their homes free and clear and don't have mortgage interest may also be the ones who would benefit under this rule change.

Congress has passed a bill extending most of the 2012 tax code into the future for most Americans.  Those earnings more than 400,000 will see tax increases.  This bill kept the tax rates and many credits, including the  tuition and child tax credits, the same for the future.  Personally I am excited to see a permanent fix to the AMT.  This is an annoyance each year that Congress has to fix and it finally has been given a long term solution.

Note that the 2% payroll tax cut that we have enjoyed the last two years was not extended, so all workers will see a tax increase with your first 2013 paycheck.  It could have been much worse I guess.

Details of the tax bill:

• Raises the top marginal rate to 39.6% for single filers with taxable income over $400,000 and joint filers over $450,000.
• Raises the capital gain rate to 20% for taxpayers subject to the 39.6% rate, but retains the 15% top rate for other taxpayers.
• Permanently “patches” the alternative minimum tax retroactive to 2012.
• Permanently extends the $5 million estate tax extension, including the transfer of the unused exemption of a deceased spouse, but increases the estate tax rate to 40% (from 35%)
• Re-enacts the phase-outs of personal exemptions and itemized deductions for taxpayers with AGIs exceeding $250,000 (single filers) or $300,000 (joint filers), providing a hidden and dishonest rate increase for taxpayers under the $400,000/$450,000 thresholds.
• Extends 50% bonus depreciation and the $125,000 Section 179 deduction limit through 2013.
• The special exclusion for income from cancellation of qualified mortgage debt (through 2013)
• The optional deduction for state and local sales taxes (through 2013)
• The exclusion from income of IRA donations to charity (through 2013).  This one allows a “do-over” for IRA distributions received in December 2012, if they are transferred to charity before February 2013.
• Educator expenses above-the-line deduction
• Private mortgage insurance (PMI) itemized deduction
• Tuition and fees above-the-line deduction
•  Many tax credits were extended for five years, including the American Opportunity Credit, the Earned Income Credit, and the child tax credit (at a higher level than in the past).
• The adoption credit was also permanently extended at a much higher rate than it was planned to drop to.  The amount is still uncertain but will be at least 10,000 and is indexed to inflation  Source

Another year means new inflation adjustments to some of the key IRS figures.  Here are the most popular ones that may affect you:

401K max 17,000 to 17,500
IRA (Roth or Traditional) 5,000 to 5,500
Gift tax exclusion 13,000 to 14,000
Kiddie tax exclusion 950 to 1,000
SS Wage base 113,700 to 110,100
Per Diem Limit adjustments

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Source 2

Some ministers who are approaching retirement or in retirement may be interested in this article about the different housing options available to retired ministers.  Keep in mind that housing allowances are not taxable income to the minister, so this can be a very good benefit to these individuals.

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