Youth Sports League Fraud

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Who would defraud a kids’ organization? The answer, unfortunately, is that trusted adults sometimes steal from not-for-profits benefiting children. Youth sports leagues and teams, for example, are ripe for fraud. Cash transactions are common, and coaches and board members usually are volunteers with little accountability. If you or your children are involved in a youth sports league, here’s what you can do to ensure that its funds support the kids, not thieves.  

How to Withdraw Cash from your Corporation

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Do you want to withdraw cash from your closely held corporation at a low tax cost? The easiest way is to distribute cash as a dividend. However, a dividend distribution isn’t tax-efficient, since it’s taxable to you to the extent of your corporation’s “earnings and profits.” But it’s not deductible by the corporation. Fortunately, there are several alternative methods that may allow you to withdraw cash from a corporation while avoiding dividend treatment.  

College Tax Credits

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The latest figures from the College Board show that the average annual cost of tuition and fees was $10,230 for in-state students at public four-year universities — and $35,830 for students at private not-for-profit four-year institutions. These amounts don’t include room and board, books, supplies, transportation and other expenses that a student may incur. Fortunately, the federal government offers two sizable college tax credits for higher education costs that you may be able to claim.  

Cash Balance Plans

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With a cash balance plan, the employer commits to adding a fixed percentage of participants’ compensation to an “account” that’s, strictly speaking, more of an accounting device than an actual account as used in 401(k) plans. In addition, the sponsor credits earnings to those accounts. The interest crediting formula can be fixed, linked to an index or a combination of the two. Previously, most plans pegged their rate to rates on long-term Treasury bonds. Sponsors have more recently been using an “actual rate of return” crediting formula (subject to certain floors). Most employers offer cash balance plans in conjunction with 401(k) plans, and not on a stand-alone basis.  

HRAs and Business Owners

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Many companies now offer Health Reimbursement Arrangements (HRAs) in conjunction with high-deductible health plans (HDHPs). HRAs offer some advantages over the perhaps better-known HDHP companion account, the Health Savings Account (HSA). If you’re considering adding an HRA, you might assume that, as a business owner, you can participate in the HRA. But this may not be the case.  

Health Care Fraud

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Even if you haven’t heard much about it lately, know this: Health care fraud is alive and well in the United States. Here’s a roundup of recent stats, law enforcement initiatives, common fraud schemes and how you can help prevent these crimes.  

OK to Truncate SSNs

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The IRS recently issued final regulations that permit employers to voluntarily truncate employee Social Security Numbers (SSNs) on copies of Forms W-2 furnished to employees. The purpose of the regs is to aid employers’ efforts in protecting workers from identity theft. 

IRA Distributions

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If you’re like many people, you’ve worked hard to accumulate a large nest egg in your traditional IRA (including a SEP-IRA). It’s even more critical to carefully plan for withdrawals from these retirement-savings vehicles. Knowing the fine points of the IRA distribution rules can make a significant difference in how much you and your family will get to keep after taxes. Here are three IRA areas to understand:  

Will Advice

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Understanding the contents of a will. You probably don’t have to be told about the need for a will. But do you know what provisions should be included and what’s best to leave out? The answers to those questions depend on your situation and may depend on state law.  

Safe Harbor 401(k) Plans

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Many growing businesses and other types of employers want to offer a 401(k) plan but don’t want to deal with the stress and administrative challenges of following the IRS’s nondiscrimination testing rules for elective deferrals and matching contributions. One potential solution may be to set up a “safe harbor” 401(k). Such plans aren’t subject to nondiscrimination testing if they satisfy certain contribution, vesting and notice requirements. Here are a few basics on this intriguing retirement benefits option.