Fill Your IRA & 401(k) to the Brim

Tax and Financial News

Some people say that 50 is the new 30. Living longer and healthier lives might make you feel young if you are 50, but your retirement account begs to differ. Anyone who’s turning 50 or older on or before Dec. 31 is allowed to make retirement catch-up contributions starting that year. Catch-up contributions can yield big tax savings, so let’s look at how they work and some ways you can take advantage of the rules.

401(k) plans limit people younger than 50 to a maximum contribution of $18,000 per year on a pre-tax basis. Catch-up contributions work by allowing those 50 and older to stash away extra money in a 401(k) or IRA – as much as an additional $6,000 per year pre-tax. This means that someone 50 or older can save up to $24,000 per year in their 401(k), all of it shielded from taxes. Note that the catch-up provision isn’t limited to 401(k) plans. It also applies to 403(b) accounts for nonprofit employees, 457 plans for government workers and for self-employed solo 401(k) plans.

Solo 401(k) plans for self-employed persons have the same limits as regular 401(k) plans, but they also have the added benefit of allowing the owners to save part of their profits pre-tax in their retirement plan. Businesses can make a profit sharing contribution of up to 25 percent (only 20 percent for sole proprietors and single member LLCs), creating the potential for a total deferral of up to $60,000 ($18,000 401(k) contribution + $6,000 catch-up + $36,000 in profit sharing).

Keep in mind that in order to put $36,000 away in profit sharing, your business would have to make $144,000 in profit per owner, but obviously there is huge potential here. With $60,000 tax deferred, assuming a 35 percent combined federal and state tax rate, means you just kept $21,000 instead of giving it to the government. Now take that and compound market returns on it and watch your retirement plan grow.

You might be wondering about Roth 401(k) plans, the type of plan where your contributions are not tax deductible but your withdrawals are tax free. Roth 401(k) plans also allow the catch-up contribution so you can stash all or part of the $6,000 catch-up into this type of plan as an option.

The retirement plan catch-up provision is not limited to employer-sponsored plans; they also are available for Roth IRAs and traditional IRAs. The same age rules apply, but the amounts are different. Both Roth IRA and traditional IRA accounts have a catch-up limit of $1,000 per year. Various other less common retirement plans also have their own catch-up contribution limits. SIMPLE IRAs have a catch-up limit of $3,000, while SEP-IRAs have no catch-up provision. Don’t forget that IRA accounts have their own set of rules regarding eligibility, which are beyond the scope of this article.

Retirement plan catch-up provisions can help you reach your retirement goals and save significant amounts of taxes. Consult with your tax advisor to see if this strategy makes sense for your situation.

General Business News

What Matters More: IQ or EQ?

When it comes to hiring the right candidate, a lot goes into the selection process. It’s important to evaluate a candidate’s qualifications to make sure he would make a good fit. This includes evaluating how prepared he is to handle the hard and soft skills the role will entail, which is something human resources departments can struggle with during candidate selection.

Understanding Intelligence Quotient and Emotional Quotient

Before looking into which characteristic matters more, it’s necessary to understand how the two differ. An individual’s Intelligence Quotient or IQ describes his or her ability to reason, how well the person remembers new concepts in the short term and his or her ability to integrate new (and existing) information into job tasks.

When it comes to an individual’s Emotional Intelligence Quotient (EQ), we’re talking about his or her ability to empathize with and take into account others’ feelings. It also demonstrates how well a person can manage and regulate his own emotions within work or social environments.

Why EQ Matters

One example of someone with a low Emotional Intelligence Quotient is a project manager who is impatient with deadlines and constantly berates his staff. Others include indifference to coworkers through demeaning words; showing signs of irritability when colleagues are attempting to clarify misunderstandings; managers who lack self-awareness; and the inability to empathize with colleagues or subordinates.

How IQ and EQ Work Together in the Workplace

Hiring for a particular position generally requires a compatible level of demonstrated intelligence. Even though an employee may have a track record of progressive academic and work performance, not having an appropriate level of emotional intelligence made impede optimal performance.

Measuring the social proficiencies of a candidate can have a direct impact on a business’ initial and ongoing profitability. Looking at a sales call for life insurance, a representative with emotional intelligent might initiate small talk about why a client needs a policy in order to develop a personal relationship with the caller. In addition to inquiring about how many assets the client wants to protect and other routine underwriting questions, taking an interest in the customer beyond the sale helps increase call satisfaction.

Another dimension of an employee’s EQ is self-awareness about her role within the organization and how well she takes responsibility for performing her job. Examples of a higher EQ include recognizing one’s own strengths and weaknesses, taking the initiative to work with supervisor to complete tasks on time, and volunteering for additional responsibilities. High levels of patience and persistence when dealing with difficult co-workers or customers are signs of strong emotional intelligence.

While there’s no perfect system to guarantee a candidate is the right fit for the job, hiring an employee with a high EQ along with demonstrated job competency can increase the chances of a better outcome. New candidates are more likely to get along with coworkers and customers and can help make the organization better-rounded.

What’s New in Technology

Technology: Smart Suitcases for Tech Savvy Travelers

What is Smart Luggage?

There are several brands of smart luggage out there. The brands you might encounter more frequently are Raden, Bluesmart and Away. Other brands include Horizn and Néit. There are some differences in features and price points, but most offer the following:

Apps that connect to your luggage using Bluetooth; and
Features that include proximity alarms to warn you if you are at a specific gate and your bag is somewhere else, distance indicators, the ability to weigh contents and the means to charge your portable electronics on the go.

Depending on how much time you spend traveling each week and how much use you would get out of the various apps, this new smart technology might appeal to you.

Most brands offer checked bag and carry-on sized bags. They feature TSA-approved battery packs to allow you to charge your device on the go. This might be helpful if you dash frequently from the plane to a taxi, or if crowds make finding a charging station impossible. There is a charging cable in the bag in many models – Raden offers USB ports next to the bag’s handles, which is very handy. Some products have battery packs that can be removed from the suitcase, allowing you access when your bag is stashed in the hold or baggage compartment.
Many offer a weight sensor, which is especially handy if you check your baggage frequently and need to know if your bag meets the airline’s weight limits. To use this feature, you calibrate it with the bag empty, pack and pick it up to have the sensor give you a weight reading.
Some offer a companion app for flight information (gate, departure time, weather alerts, etc.), which also includes a sensor that lets you know how far away the bag is located. The sensor might be helpful if you are waiting at a luggage carousel hoping your bag made a tight connection. Most frequent fliers have a slew of apps on portable devices that can deliver flight information, and so this particular app might be redundant for many business travelers.
Drawbacks include the price and potential issues with TSA. You will pay about $300 or more for a carry-on and $400 and upward for larger pieces. Although TSA has approved these bags, there is always the chance that this new type of bag may puzzle some TSA workers.

Summary

Smart luggage can offer some handy features to busy travelers. You might wish to check out the possibilities if you like exploring the latest in personal tech – and if you are willing to pay significantly more for your luggage. Also consider that if you usually travel with carry-ons only, many of the bells and whistles smart bags offer duplicate those on your smart phone or tablet. Airlines have made it easier to recharge electronics in-flight, so the battery pack features are less important than they might have been a few years ago. Also, the location finder feature is redundant if your bag is a carry-on and is stowed close at hand.

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