The IRS has announced the 2007 cost-of-living adjustments (COLAs) to dollar limitations on benefits and contributions, annual compensation limits, and other dollar limitations applicable to retirement plans.

IRS issues 2007 retirement plan limits

The IRS has announced the 2007 cost-of-living adjustments (COLAs) to dollar limitations on benefits and contributions, annual compensation limits, and other dollar limitations applicable to retirement plans.

 Highlights of the 2007 maximum dollar limitations announced by the IRS include the following: 

• Annual defined benefit limit: $180,000 

• Annual defined contribution limit: $45,000 

• Annual compensation limit: $225,000 

• 401(k) elective deferral limit: $15,500 

• Highly compensated employee limit: $100,000. 

The full text of IRS New Release is available at

http://www.irs.gov/retirement/article/0,,id=96461,00.html

For more information on how start a 401k plan contact StaffScapes at 303-466-7864

See Also

• IRS Retirement Article
  IRS issues 2007 retirement plan limits

PEOs allow you the freedom to custom design a plan and eliminate the testing hassles of a plan that come along with having small business.

Are you looking to add a 40k plan to your business or do you have a plan in place and hate the expense or testing problems that come with having a 401K plan? Does your plan constantly fail testing year after year because you do not have enough employees participating in your 401K plan? If you answered yes to any of the above questions your company may be a good candidate to use the service of a PEO or Professional Employer Organization. Through the co-employment agreement with a PEO you can eliminate the cost and the testing problems associate with having a 401K plan. The IRS ruled that all PEOs must have a multiple employer plan in place. This arrangement allows the PEO to custom tailor the plan for your business. The 401k plan can be a basic plan with just simple 401k participation rules that only allow employee contributions or it can be a rich plan with certain safe harbor or employer matching provisions.  A plan also can be set up and change with out extra expense and paperwork. Eliminate some of the headaches that come along with having employees, benefits and 401k plans contact a PEO today.

StaffScapes provides PEO services in Colorado and across the nation. Contact our sales or benefit department to learn more about our 401K plan. We can be reached at 303-466-7864

Nearly half of small business owners are not confident about their own retirement savings; Only 17 percent say they feel an obligation to offer retirement benefits to employees.

A recent survey conducted by Harris Interactive on behalf of ShareBuilder 401(k) found that just 14 percent of America’s small business owners offer a 401(k) plan and 63 percent do not offer any form of retirement benefits to their employees. Nearly half (47 percent) indicated of small business owners are not confident that they are prepared for retirement.

Few small business owners consider it their responsibility to help their employees prepare for retirement. Only 17 percent of small business owners responded that they felt a strong obligation to offer retirement benefits (a 401(k) or other retirement plan), with 46 percent reporting that they felt no obligation at all.

When asked why they do not offer retirement benefits, 54 percent responded not having enough employees to make it worthwhile, and 28 percent cited the inability to afford a company match (though a company match is not mandatory). While costs appear to be a hindrance for some, 63 percent of respondents said they had no idea what a 401(k) plan would cost to administer.

Aside from helping America’s small business owners and their employees prepare for retirement, 401(k) plans are also considered a competitive advantage. Of those small businesses that do offer 401(k) plans, 70 percent reported they are important in attracting and retaining employees.

If you are interested in reducing the burden and cost of providing a 401(k) plan to your employees, contact a StaffScapes representative to discuss the benefits of partnering with us. You can contact StaffScapes at (303)466-7864 or info@staffscapes.com.

StaffScapes Benefits Available to all employees

StaffScapes offers a variety of benefits that assist small companies that may not meet enrollment requirements to offer additional benefits to employees.

Some of the additional benefits that StaffScapes offers include:

2 types of Dental programs, a discount plan and an indemnity plan.  Vision services, Life Insurance, AFLAC products and 401K options.  The 401K plan can be taylored to offer a plan that you design for your employees to meet your organizations needs.

We also offer small group medical plans that can be taylored to the benefits and costs that fits your needs.

For more information on additional benefit plans that can be offered to your employees, please contact the StaffScapes Benefits Department at 303-466-7864.

StaffScapes is a Denver based PEO that provides valuable HR services to organizations of any size.  Check us out at www.staffscapes.com.

Small business employees trail in retirement savings and preparedness, survey shows

Small business employees are at a disadvantage when it comes to retirement savings, according to the results from the Eighth Annual Transamerica Retirement Survey.

StaffScapes, Inc. a Denver based PEO or Professional Employer Organization helps small businesses owners by providing them with all the tools to provide a 401k retirement program to their employees. By partnering with Transamerica StaffScapes has been able to allow small business owners the opportunity to have a full 401k program that they could not otherwise afford.  StaffScapes handles all the enrollment and fiduciary liability for its clients. Instead of worrying about the operation of a 401k plan the owner is better able to run his or her business.

For more information on 401k plans and employee benefit program contact StaffScapes, Inc.

See Also

• Eighth Annual Transamerica Retirement Survey
  Transamerica Survey Results

Benefit of using a PEO for your Business, for your Employees and for the Government. 

For your business, a PEO:

· Provides experienced professionals in HR, benefits, payroll and risk management.

· Assumes certain employment related liabilities.

· Delivers professional assistance with compliance (payroll, OSHA, EEOC).

· Provides secure Internet access to payroll, benefits and personnel data.

· Provides access to professional HR guidance and materials.

· Manages claims.

· Supplies clear, easy-to-read and professionally written employee handbooks, policies, procedures and practices.

· Improves cost control.

· Delivers access to better benefits.

· Reduces turnover.

· Provides quality benefits and recruiting assistance to attract and retain the best employees.

· Provides you more time to focus on your bottom line.

· Gives you the opportunity to grow your business faster.

For your employees, a PEO:

· Provides access to comprehensive benefits often previously unavailable - 401(k), Section 125 plan, comprehensive insurance benefits, Flexible Spending Plan.

· Delivers on-time and accurate payroll.

· Provides professional assistance with employment-related issues.

· Supplies easy-to-read employee handbooks, policies, procedures and practices.

· Enables more employees to receive statutory protection.

· Improves communication among and between employees.

· Offers up-to-date information on labor regulations, workers’ rights and worksite safety.

· Processes claims efficiently and responsively.

· Enables employees who move from one PEO client to another to avoid loss of eligibility for benefits.

· Provides improved access to payroll information, benefits, personnel data, vacation and sick time accrual, and specialized reports.

· May offer credit union membership and banking privileges.

· Frequently offers exclusive employee discounts and rates on travel, entertainment and services.

For government, a PEO:

· Consolidates several companies’ employment tax filings into one.

· Provides more professional preparation and reporting.

· Accelerates collection of taxes.

· Extends access to medical benefits to more workers.

· Provides access to 401(k) retirement savings opportunities to more employees.

· Improves the communication of government requirements and changes to small businesses and their employees.

· Reduces litigation by resolving many problems before they reach court.

· Allows government agencies to reach businesses through a single-employer entity.

Section 406(a) states that a plan fiduciary may not engage the plan in an activity or transaction if he or she knows, or should know that the action directly or indirectly involves the:

• Sale, exchange, or lease of any property between the plan and a party in interest
• Lending of money or extending of credit between the plan and a party in interest
• Furnishing of goods, services, or facilities between the plan and a party in interest
• Transfer of a plan asset to a party in interest
• Use of assets by, or for the benefit of, a party in interest
• The acquisition or holding on behalf of the plan of any employer security or employer real property in excess of ERISA Section 407 limits

The Benefits of Investing in a Retirement Savings PlanOne of the many benefits a PEO provides to it’s clients and employees is a 401k retirement plan. Transamerica is the provider of the StaffScapes, Inc 401k plan. What are the benefits of investing in a retirement program?  Transamerica web site has many tips and education materials about starting, investing, and managing a retirement program. Click on the link below to learn more about Transamerica and retirement planning.

See Also

• The Benefits of Investing in a Retirement Savings Plan
  Why should I invest?

Saving for retirement may have become more affordable for some of your employees

On August 17, 2006 President Bush signed the Pension Protection Act of 2006, making the Saver’s Credit permanent. First introduced as part of the Economic Growth and Tax Relief Reconciliation Act of 2001, the Saver’s Credit is targeted at promoting qualified retirement savings for low to middle income Americans.

The Saver’s Credit helps eligible employees pay less federal income taxes when they save for retirement. By providing an incentive for your employees to save for their retirement, Uncle Sam may also be helping you increase both participation and deferrals in your 401(k) retirement savings plan—as well as increasing your chances of passing ADP testing.

Taking the Credit
Depending on tax filing status and income level, employees who contribute to a qualified retirement account may qualify for a credit of up to $1,000 annually (or $2,000 if filing jointly) on their federal income taxes. Generally speaking, the more an employee saves for retirement, the less they may have to pay in federal income taxes. Important note: The IRS refers to the Saver’s Credit as the “Retirement Savings Contributions Credit” in its publications.

In order to take advantage of the Saver’s Credit, your employees should:

#1. Check Eligibility
To qualify, your plan participants must be 18 or older by the end of the tax year. They cannot be a full-time student or be claimed as a dependent on another person’s tax return. There also are annual income limits. The 2006 adjusted gross income (“AGI”) limits are $25,000 for singles, $37,500 for the head of a household, and $50,000 for those who are married and file a joint return. After 2006, the AGI limits increase by $500 annually to allow for inflation.

#2. Defer Then Subtract
In general, for every dollar contributed to your qualified retirement plan, up to the lesser of the plan or IRS limit, your participants defer that amount from their current overall federal taxable income. This lowers their current federal taxable income.

The Saver’s Credit then helps them further reduce their federal tax bill. How? They calculate the amount of the credit and subtract it from what they owe in federal taxes. To determine the amount of Saver’s Credit that a plan participant may qualify to take, use the table below to identify the appropriate tax credit rate based on the participant’s tax filing status and AGI.

For example, if a participant makes a $2,000 contribution to a 401(k) for a given year and qualifies for a 50% credit rate, that participant may qualify for a $1,000 non-refundable credit that can be used to reduce their federal income taxes for that year.

#3. Claim The Credit
If your participants use a professional tax preparer, remind them to ask their tax professional about the Saver’s Credit, called “Retirement savings contributions credit” on Forms 1040, 1040A and 1040 NR. Or, if they use tax preparation software, direct them to use Form 1040, Form 1040A or Form 1040NR when filing their return. The Saver’s Credit is not available with Form 1040EZ.

Lastly, if they prepare their own tax returns, suggest that they start with Form 8880, “Credit for Qualified Retirement Savings Contributions” to determine their credit rate and corresponding credit amount. Then use Form 1040, Form 1040A or Form 1040NR for filing their return. Transfer the amount of their Saver’s Credit from Form 8880 to line 51 of Form 1040, line 32 of Form 1040A or line 46 of Form 1040NR. If they have questions, direct them to IRS publication 590 or to log onto the IRS Web site at www.irs.gov.

One of the many choices you may have to make when changing jobs or retiring is deciding what to do with your hard-earned money that’s invested in your previous employer’s 401(k) plan. There are many options available to you when you leave your employe

Maintain your tax-deferred benefits by moving your money into an IRA

An excellent way to preserve the tax-deferred benefits of your investment from your previous employer’s 401(k) plan is to transfer or “rollover” your money into an IRA. By moving your money into a Rollover IRA, you gain the following benefits:

• Avoid Paying Federal Taxes and IRS Tax Penalties
  “Cashing out” or taking out all of your money from your previous employer’s 401(k) plan has negative financial consequences. 20% will be immediately withheld for federal taxes. Depending on your tax bracket, other federal taxes may apply when you file your income taxes (additional state and local taxes may apply). In addition, you must pay a 10% IRS penalty if you are under the age of 59 ½ (additional state penalties may apply). By moving your money into a Rollover IRA, you pay no taxes or penalties.

• Investment Flexibility
  You have the freedom to reallocate and diversify your investments as you see fit. You can take this opportunity to rebalance your retirement portfolio to conform your investment strategy.  You also have the possibility of moving your money into a future employer’s plan. In addition, you can consolidate other retirement money into the Rollover IRA.

Leave your money in your previous employer’s 401(k) plan.

Keeping your money in your previous employer’s 401(k) plan will help you maintain the tax-deferred benefits of your retirement savings, but you typically have less control of your investment options, will not be able to consolidate with other retirement accounts and may not be able to borrow money from your plan.

Transfer your money into your new employers plan.

If your new employer offers a 401(k) retirement savings plan, you may be eligible to roll over your money into the new plan. There are often different rules and requirements with each plan. You also may not be eligible to participate in your new employer’s 401(k) plan upon hire and may have to wait many months before you are able to participate.

Take cash from your 401(k) plan.

You may take all of your money out of your 401(k) plan by taking a lump sum distribution, but you may lose a substantial amount of your savings in the process. Once you take all of your money out of your 401(k), you lose your tax-deferred investment benefits.

Here’s what you can expect if you cash out:

1. 20% will be immediately withheld for federal taxes.

2. 10 % Early Withdrawal penalty for IRS if you are under the age of 591/2 (additional state penalties, where applicable, may apply).

3. Depending on what tax bracket you are in, you may have to pay additional taxes when you file your yearly income taxes. For example, if you are in the 28% tax bracket, you will have to pay an additional 8% when you file your income taxes (20% was already taken in advance when you cashed out). Additional state and local taxes may also apply. If your tax rate is lower than 20%, you may receive money back from the federal government when you file your yearly taxes. 

4. You no longer have a retirement savings! You no longer have a nest egg and your money is no longer earning interest! Long-term investment strategy is sacrificed for short-term gain.

Do the math

If you decide to take a lump sum distribution from your 401(k) plan and you are under the age of 59^1/2, and you fall within the 28% tax bracket, here’s what will happen to your savings balance:

Original Account Balance:                                                           $30,000

20% immediate Federal Tax Withholding                  - $6,000  

8% Additional Federal Taxes Due at Filing                               - $2,400  

10% IRS Early Withdrawal Penalty                                            - $3,000  

What’s left …                                                                                $18,600

Not including any additional state penalties or state and local taxes you may have to pay, it would cost you $11,400 to take all your cash out of your plan! If you rollover your $30,000 into a Transamerica Premier Funds Rollover IRA, you get to avoid paying all those taxes or penalties.

StaffScapes, Inc. 401(k) Profit Sharing Plan is undergoing fund changes in 2008.

The investment choices shown below will be undergoing changes effective February 15, 2008:

The investment manger will change.

The name of the investment choice will change to reflect new investment management company.

The asset category and long-term investment style of these investments choices will remain the same.

Diversified Investors Small -Cap Value Ret Opt will change to Diversified Investment Adv. Inc.

Janus Small Cap Value Ret Opt. will change to Janus Capital Group.

Balances in the above investment choices will not be transferred; the new managers will begin managing the investment choices effective February 15, 2008. These changes do not require any action on your part.

Why should I consider using a PEO?

Professional Employer Organizations (PEO) are quickly becoming one of the best ways to handle employment for small to medium sized businesses. Previously called employee leasing, these firms have become more professional and are widely accepted by regulators. 

A PEO takes over all the administrative aspects of being an employer. This includes hiring, progressive discipline, firing, payroll, employee manuals, handling complaints, employee benefits, safety, and workers compensation. The small business retains the ability to keep or remove persons from their staffs and the culture of that small business stays the same, but without the headaches associated with employment. 

A PEO acts like your very own Human Resources Department. They offer employee benefits previously reserved for Fortune 500 companies. Complete health & dental, 401k retirement, section 125 cafeteria plans and disability plans are just some of the offerings.   

StaffScapes, Inc. has been serving Colorado and surrounding areas for over 12 years. Contact our office to learn more at 303-466-7864 or email info@staffscapes.com.

Offering 401K plans to enhance your benefits.

401K Benefits are available through StaffScapes.  Employees can use 401K plans to save money for retirement and can reduce the amount of money you pay for federal and state taxes. 

Contact StaffScapes today to see how to get your plan started today.  StaffScapes is a Professional Employment Organization (PEO) that can provide large benefits for small companies.  Find out how you can save money now.  303-466-7864 or visit our website at www.staffscapes.com

Tax Treatment of Refunds Changing for 2008

Beginning with the 2008 plan year, ADP and ACP refunds attributable to the 2008 plan year are taxable in the year of distribution. Therefore, for the 2008 plan year, refunds distributed between January 1, 2009 and March 15, 2009 are taxable in 2009, the year distributed (as opposed to the year contributed). Also beginning with the 2008 plan year, gap period earnings (earnings from the last day of the plan year to the date of distribution) are no longer required on ADP and ACP refunds and for refunds of Excess Deferrals.

StaffScapes provides and manages a 401k retirement plan for its PEO clients with Transamerica 401k services. Employers can participate in the traditional 401k plan as well as the new ROTH 401k plan.

The IRS has amended it’s rules on Safe Harbor contributions to allow employers to terminate the match during these hard times.On May 18 the Internal Revenue Service (IRS) published proposed regulations that could provide relief to employers whose plans provide for safe harbor non-elective contributions. The relief allows employers to amend their plan to reduce or suspend future safe harbor non-elective contributions without terminating the plan if the employer is encountering a "substantial business hardship" (as set forth in certain criteria established by the IRS). While the suspension of employer contributions may potentially have an impact on employee morale and the perception of the employer’s benefits program by potential employees, employers who meet the criteria may find that these regulations provide welcome and necessary relief from future safe harbor non-elective contribution funding requirements and a viable alternative to terminating the plan.