Employers: Find Out How You Can Contribute Tax Free Savings to Employees

With all of the various tax laws in place, untaxed savings accounts might seem too complicated to use. There are, however, several savings account options that can serve a two-fold purpose: providing tax free income that can grow uninhibited over the course of decades and providing a retirement program or health savings program that employers can add to and thus ensure that employees have a financial cushion for the future. Setting up the best tax free savings option is largely a matter of considering the employee’s situation and then counseling the employee about the savings plan that will be most beneficial.

401(k)

The 401(k) is probably the most common and most popular type of tax-free savings account that an employer can use for contributing to an employee. The 401(k) allows an employer to match an employee’s own contribution. Additionally, a 401(k) provides the opportunity for an employer to arrange for a variety of investment possibilities, including mutual funds and bonds. With this type of account, the income added to the account is untaxed in the year that it is contributed. What is more, the money in the account remains untaxed until it is removed from the account, unless the account holder leaves the money intact until he or she is almost sixty years old. Recent changes in income tax laws have also provided for the Roth 401(k), to which 401(k) holders can move funds without risk of taxation. Because of the changes, Roth 401(k) holders can also remove the money from the account with risk of taxation.

Employer Retirement Savings Account

The Employer Retirement Savings Account (ERSA) was created under the similar rules of the 401(k) but with the goal of simplifying the process in order to motivate employer contribution and encourage savings among the many Americans who do not currently have a retirement plan. In particular, the ERSA creates the opportunity for smaller businesses – which previously were unable to set up basic 401(k) plans for employees due to various regulations – to establish Employer Retirement Savings Accounts and thus give employees the chance to save money for retirement. Like the 401(k), the ERSA also creates tax-free income growth.

Health Savings Account

Created for those who are part of a High Deductible Health Plan, a Health Savings Account (HSA) allows employees to save for their health spending without taxation on the money that is saved. The rules for a Health Savings Account are fairly strict, in that the account must be created within the boundaries of an HSA trustee – which may be a bank or even an IRS-approved employer. Money contributed to an HSA is not taxed when it is deposited; and unlike in the Flexible Spending Account (also designed for health savings), the money is an HSA can be retained in the account from one year to the next.

Rural Property Defined by the Beholder

Defining rural property is a term relative to the person or organization you’re asking to define it. The United States Census, the United States Department of Agriculture (USDA) and the Office of Management and Budget (OMB) and real estate professionals, for example, all have slightly different interpretations of what rural means in respect to their individual areas of coverage.

Real Estate Professionals

The most popular use for the term rural is when talking about the area where a piece of real estate is located. Rural property in this case is used to describe a home, vacant land or piece of real estate that is located in the country. The country is a less densely populated area than cities. When talking about rural property in this instance, it may also include agricultural or farming areas. In essence, rural is the direct opposite of the city or urban property.

United States Census Bureau

The Census Bureau offers its own set of definitions to describe rural property. Since the Census Bureau is involved in population statistics, it defines rural property areas in terms of population density. The U.S. Census Bureau states that rural property is such that there is open country and less than 2,500 residents populate the area. In terms of people per square mile, this equates to areas that have anywhere from one to 999 people per square mile of land.

United States Department of Agriculture

The United States Department of Agriculture (USDA) is the agency that oversees the Office of Rural Development, so it defines rural property by the thresholds of population an area meets. Therefore, the USDA and the Office of Rural Development define rural property as a city or town that has a population of less than 50,000 people.

Office of Management and Budget (OMB)

Office of Management and Budget defines rural areas as those areas that fall outside of metropolitan areas. Rural areas are broken down further into areas that have clusters of people that range from 10,000 to 50,000 residents.

National Center for Education Statistics (NCES)

The National Center for Education Statistics works in conjunction with the U.S. Census Bureau and the Office of Management and Budget to classify areas by population in order to determine the educational needs of the area. One of the classifications is rural property, which is broken down further into those areas that are on the fringe of an urban area, distant rural properties and remote rural properties. Ultimately, the National Center for Education Statistics considers rural areas to be the areas that are outside of an urban.

Federal Grants for Mortgage Borrowers in Default

Especially in a turbulent housing market, where default and foreclosure are rather commonplace, some borrowers seek assistance. For mortgage borrowers that are facing default on their mortgage or foreclosure on their home, there are some home mortgage assistance grants that are available on a federal government level. Each grant has its own eligibility requirements and amounts of assistance can vary greatly, so be sure to consult with the federal government, local entities and nonprofit organizations that oversee these programs for the details on how to qualify for and how to apply for the grant.

Definition of a Grant
The most popular form of a grant and the type of grant that most consumers are familiar with is an educational grant to cover college education tuition and expenses. Educational grants lend the meaning to the term "grant" that consumers tend to think that it implies it is free money that does not have to be paid back (as is the case with the term loan, where people pretty much know that they have to pay the money back to the lender). When it comes to federal mortgage grants, it depends on the grant as to whether or not you have to repay the money given to you. Some grants do not have to be paid back while other grants are meant to temporarily assist homeowners until they can get back on their feet.

Where Grants Come From
Federal grants for mortgage defaults come from the U.S. government, but the grants may be overseen or distributed to recipients through various programs or organizations. Some of the top agencies or segments of the federal government that issue mortgage default grants include the U.S. Housing and Urban Development (HUD), which oversees federal mortgage grants that fall under the jurisdiction of the American Recovery and Reinvestment Act (ARRA).

Grant Distribution
Even though the grant money stems from the federal government, local government, municipalities or non-profit organizations may distribute the grant funds these organizations may also be directly involved in the grant application, approval and denial process. For example, of the $13.61 billion allocated from ARRA, a portion of these funds were distributed to states, counties, municipalities and non-profit organizations to assist mortgage borrowers currently in default or heading for default on their mortgage.

How to Convert a 401(k) into a Roth IRA

The 401(k) is one of the most popular employee retirement plans offered by employers across the county. 401(k) plans allow pre-tax contributions to be made and the growth in the account grows at a tax-deferred rate. Withdrawals from the plan are taxed at the individual’s income tax rates. A Roth IRA, on the other hand, is the direct opposite, so contributions are made after-tax dollars, the account grows on a tax deferred basis and withdrawals from the account are not taxed (because the money was taxed before it was put into the account). The more optimal tax treatment of Roth IRAs urges many 401(k) plan holders to convert to a Roth IRA.

Contact the 401(k) financial institution. In order to initiate a conversion from a 401(k) plan to a Roth IRA, use the 401(k) statement to identify and contact the financial institution that holds the account.

Roll over your 401(k) to a Traditional IRA. Since funds cannot be directly transferred from a 401(k) plan to a Roth, you first have to convert your 401(k) to a Traditional IRA. Tell the financial institution that you want to convert the funds in your 401(k) account to cash and then transfer the cash into a Traditional IRA.
Convert the traditional IRA to a Roth. After the Traditional IRA account is funded with the cash from your 401(k), contact the financial institution again and request that the Traditional IRA account be converted to a Roth.

Invest in the Roth account. Since the cash from the Traditional IRA is used to fund the Roth account, once the cash is sitting in the Roth account, work with the investment advisor at the financial institution that holds your account to make investment decisions.

Pay taxes. When you convert the Traditional IRA into a Roth, this act generates a tax liability for the current tax year. You have to pay the taxes on this amount with your own cash – not cash from the retirement account.

Tips

Before you convert a 401(k) or a Traditional IRA to a Roth, speak with your tax advisor to make sure this is a financially sounds decision for your personal financial situation. The tax advisor can also help you calculate the amount of tax liability you will incur when you transition to the account. It’s important that you can afford to pay the taxes out of your own pocket because you are not allowed to use cash from the retirement account to pay for the tax liability.

How to Start a Florida Title Insurance Company

Title insurance protects against loss from problems related to the title on a property. These problems can stem from liens, unrecorded easements, building permit violations from previous owners, forgery, and human error, among other things. All mortgages require the protection of title insurance, so as long as homes are being sold, there is a need for title insurance companies. As with any business, regulations are specific to the state and/or county. Below you will find how to start a title insurance company in Florida.

Step One:
Identify the title insurance companies in your area. It may be beneficial for you to know what kind of competition you will face. Seek out a successful title insurance business owner with whom you can talk. It may be best if this person is out of town. Ask for tips in starting the company, gaining business, trouble-shooting, and basic business needs. Keep your eyes and ears open for things that may make this business owner rise to the top of the field.

Step Two:
Establish your business entity. Businesses are set up as corporations, sole proprietorships, partnerships, or limited liability companies. The legal structure of your business will be dependent on your entity. Complete online research to determine which structure fits your business best, and then file the appropriate forms with the Federal Government/IRS, and the Florida Department of State.

Step Three:
Obtain a Title Agency License package from the Florida Department of Insurance: Bureau of Agent and Agency Licensing. In this package will be the Title Agency Insurance Application Form; fill out the form in its entirety. Also in the package will be information on completing a fingerprint card, obtaining a surety bond, and fees. Send all completed information back to the Florida Department of Insurance.

Step Four:
Make sure your own license is complete and up to date. For the original license, you must complete a 40 hour insurance classroom course in title insurance and work for at least one year in title insurance duties under a licensed title insurer or complete three semester hours in real estate or real property law. You must also take the insurance examination. After your initial license, you will have to complete the prescribed hours of continuing education courses as approved by the Florida Department of Financial Services.

Step Five:
Hire a business attorney or consultant to review all paperwork and guide you through any additional necessary steps.