The RI Department of Labor and Training has announced that the 2012 Unemployment Insurance taxable wage base will be $19,600 for most employers in Rhode Island. This represents a $600 increase from the current year. By law, the Unemployment Insurance taxable wage base represents 46.5 percent of the average annual wage in Rhode Island.
While the wage base limits the amount of wages that are taxable, tax rates for individual employers vary according to their experience with the Unemployment Insurance system. These rates range from a minimum of 1.69 percent to a maximum of 9.79 percent. Employers will be notified of their new individual tax rates in December. The 2012 rate for new employers will be 2.64 percent in 2012, an increase of 0.18 of a percentage point from the 2011 rate for new employers.
The 2012 taxable wage base for those employers in the highest Unemployment Insurance tax rate (9.79%) group will be $21,100-$1,500 greater than the taxable wage base for all other employers, per RI law. This higher wage base, which impacts approximately 19 percent of RI experience-rated employers, is intended to help offset the large drain these employers have on the Employment Security Trust Fund. Last year, 44.5 percent of all Unemployment Insurance benefit payments were attributed to the top 19 percent of RI experience-rated employers.
The tying of the taxable wage base to the average annual RI wage and the increasing of the wage base for employers in the highest tax rate are the result of recent legislative action to help restore solvency to the RI Employment Security Trust Fund.
The Employment Security Fund, financed by assessments from 30,600 private businesses in the state, covers the cost of Unemployment Insurance benefits for RI workers. The fund's taxable wage base represents the maximum amount of an employee's earned wages that are subject to taxation in any given year.
The Department also announced that the employee contribution rate to the Temporary Disability Insurance Fund will drop to 1.2 percent in 2012, a 1/10th of a percentage point decrease from 2011. The contribution rate is calculated by dividing total adjusted fund disbursements for a 12-month period by taxable wages for a 12-month period.
Also in 2012, the TDI taxable wage base will be $60,000, an increase of $1,600 over last year's taxable wage base. The maximum TDI contribution will be $720.00 next year, a decrease of $39.20 from the 2011 maximum contribution of $759.20.
Temporary Disability Insurance provides benefit payments to insured RI workers for weeks of unemployment caused by disability. Last year, approximately 391,500 workers contributed to the TDI fund.
As always, should you have any questions, please feel free to contact your trusted advisor at DiSanto Priest & Co.
401.921.2000
Tuesday, December 27, 2011
Tuesday, December 6, 2011
Your Pension Plan - Inflation Adjustments for 2012
For 2012, there are a few cost of living adjustments for pension plans and other retirement-related items. Check out what to expect in the new year....
· The contribution limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government's Thrift Savings Plan, increases to $17,000 in 2012, from $16,500 in prior years.
· The catch-up contribution limit in those plans for those aged 50 and over remains unchanged, at $5,500.
IRA contributions and catch up limits remain unchanged for 2012 at $5,000 and $1,000 respectively.
· The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000-$66,000 in 2011.
· For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $92,000 to $112,000, up from $90,000 to $110,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple's income is between $173,000 and $183,000 in 2012, up from $169,000 and $179,000 in 2011.
· The AGI phase-out range for taxpayers making contributions to a Roth IRA is $173,000 to 183,000 for married couples filing jointly, up from $169,000 to $179,000 in 2011. For singles and heads of household, the income phase-out range is $110,000 to $125,000, up from $107,000 to $122,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
· The AGI limit for the saver's credit (also known as the retirement savings contributions credit) for low- and moderate-income workers is $57,500 for married couples filing jointly, up from $56,500 in 2011; $43,125 for heads of household, up from $42,375; and $28,750 for married individuals filing separately and for singles, up from $28,250.
As always, should you have any questions, please feel free to contact your trusted avisor at DiSanto, Priest & Co. 401.921.2000
· The contribution limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government's Thrift Savings Plan, increases to $17,000 in 2012, from $16,500 in prior years.
· The catch-up contribution limit in those plans for those aged 50 and over remains unchanged, at $5,500.
IRA contributions and catch up limits remain unchanged for 2012 at $5,000 and $1,000 respectively.
· The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000-$66,000 in 2011.
· For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $92,000 to $112,000, up from $90,000 to $110,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple's income is between $173,000 and $183,000 in 2012, up from $169,000 and $179,000 in 2011.
· The AGI phase-out range for taxpayers making contributions to a Roth IRA is $173,000 to 183,000 for married couples filing jointly, up from $169,000 to $179,000 in 2011. For singles and heads of household, the income phase-out range is $110,000 to $125,000, up from $107,000 to $122,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
· The AGI limit for the saver's credit (also known as the retirement savings contributions credit) for low- and moderate-income workers is $57,500 for married couples filing jointly, up from $56,500 in 2011; $43,125 for heads of household, up from $42,375; and $28,750 for married individuals filing separately and for singles, up from $28,250.
As always, should you have any questions, please feel free to contact your trusted avisor at DiSanto, Priest & Co. 401.921.2000