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LITTLE ROCK, Ark. – The Arkansas Department of Finance and Administration (DFA) has told some 80,000 employers in the state that income tax withholding tables will change effective January 1 2021. As a result, the Arkansans could see an increase in the amount of their paychecks.

This is the second change recently made by DFA to the withholding tax tables. The first adjustment took place on March 1, 2020. This adjustment put $ 15 million every month in the pockets of the Arkansans via increased paychecks. The January 2021 adjustment will put an additional $ 7 million each month in paychecks.

The change in withholding tax is not an increase or reduction of tax, but with the amendment of the law that reduces the highest tax rate of personal income tax by 6 , 6% to 5.9% next month, the change in withholding will put this reduction in paychecks from January 2021. Without this change, many Arkansans would not see the bulk of their tax reduction until. to have received it in their tax refund in 2022.

“Due to three significant income tax cuts established by the Legislature and Governor Hutchinson, it is again appropriate to adjust the withholding tables to match lower tax rates,” said Charlie Collins, DFA Revenue Commissioner. “Employees who wish to maintain a higher annual tax refund can simply ask their employer to adjust the AR4EC form to increase the amount withheld from each paycheck. This gives the Arkansans the option of a larger annual payback compared to a raise in salary. “

Employers can find the new tables at http://ar.gov/WithholdingTaxTables.

Additional information on DFA is available at www.dfa.arkansas.gov.

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The IRS announced Monday that the income brackets for determining whether taxpayers are eligible to make deductible contributions to traditional individual retirement plans (IRAs), to contribute to Roth IRAs, and to claim the savings credit will all increase for 2021 from 2020 (Notice 2020-79). Most of the other employee pension plan contribution limits will remain the same.

Taxpayers can deduct contributions to a Traditional IRA if they meet certain conditions, including income limitations. If during the year the taxpayer or his or her spouse were covered by an occupational pension plan, the deduction may be reduced, or gradually, above certain levels of adjusted gross income until it is deleted. If neither is covered by an occupational pension scheme, the phasing out of the deduction does not apply. Here are the phase-out ranges for 2021, most of which have increased from 2020:

• Single taxpayers covered by a workplace pension plan are subject to a phase-out range of $ 66,000 to $ 76,000, up from $ 65,000 to $ 75,000.
• Married couples who file jointly, where the IRA contributing spouse is covered by a workplace pension plan, are subject to a phase-out range of $ 105,000 to $ 125,000 from $ 104,000 at $ 124,000.
• For an IRA contributor who is not covered by a workplace retirement plan and who is married to a covered person, the deduction is phased out if the couple’s income is between $ 198,000 and $ 208,000 $, compared to $ 196,000 and $ 206,000.
• For a married person who files a separate return and is covered by a workplace pension plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains at $ 0 to $ 10. $ 000.
• The income limit for the savings credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $ 66,000 for married couples filing jointly, compared to $ 65,000. ; $ 49,500 for heads of household, compared to $ 48,750; and $ 33,000 for singles and married people filing separately, compared to $ 32,500.
• The income phase-out range for taxpayers contributing to a Roth IRA is $ 125,000 to $ 140,000 for singles and heads of households, from $ 124,000 to $ 139,000. For married couples who file jointly, the income phase-out range is $ 198,000 to $ 208,000, compared to $ 196,000 to $ 206,000. The phase-out range for a married person filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains at $ 0 to $ 10,000.

Most other employee contribution limits remain unchanged from 2020 to 2021

The limit on contributions of employees participating in Sec. 401 (k), s. 403 (b), most Sec. 457 plans, and the federal government’s savings plan remains unchanged from 2020 at $ 19,500.

The catch-up contribution limit for employees aged 50 and over also remains unchanged at $ 6,500.

The limit for SIMPLE retirement accounts remains unchanged from 2020 at $ 13,500.

For IRAs, the annual contribution limit remains unchanged from 2020 at $ 6,000. The additional catch-up contribution limit for people aged 50 and over is not subject to an annual cost of living adjustment and remains at $ 1,000.

– Sally P. Schreiber, JD, ([email protected]) is a JofA senior editor.

I want to earn inflation adjusted income of Rs 3 lakh per month for the next 15 years. What should my corpus be and in what instruments should I invest to have a reasonable certainty of getting this amount after forecasting inflation and tax (assuming the highest tax bracket).
– Nripjit Singh Chawla

You will need a corpus of Rs 4.45 crore for your inflation adjusted income requirement of Rs 3 lakh per month for the next 15 years. We have considered a long-term inflation rate of 6% per annum and an after-tax weighted average return on investments at 8.85% per annum. The asset allocation should be 70 percent debt (7.5 percent annual return) and 30 percent equity (12 percent annual return).

The rate of return (and therefore the corpus) will change if the asset allocation is modified according to the risk profile of the investor. We recommend that you allocate a larger amount for debt investment because you need regular income with reasonable certainty. Plus, stocks will help beat inflation in the long run.

Generally, retirement income is provided by the payment of dividends and interest. However, all interest income is taxable at the applicable tax base rate. Even in terms of dividend income, the tax on dividend distributions is 28.84% on the
dividend distributed by debt mutual funds. Providing income in the form of interest and dividend income is a very tax-inefficient strategy.

For the first three years: We recommend that you invest the amount equivalent to the income requirement of the first three years in arbitrage funds and liquid plus funds with dividend reinvestment option. You can then save a Systematic Withdrawal Plan (SWP) of the same monthly income requirement.

From the fourth year: Record a Systematic Withdrawal Plan (SWP) of long-term debt funds (more than three years). Since the investments will be long term, you will get the benefit of indexation on redemption and therefore the capital gains tax will be minimal.

I expect Rs 10 lakh from the sale of my ancestral property next month and I want to invest it safely. My wife and I are retired government employees together and together we get a monthly pension of Rs 50,000. This covers our monthly expenses. I was thinking of putting the money in a debt fund. What type of debt fund should I turn to? All our other savings are in FD, around Rs 50 lakh.

– Sandeep Bhasin

Since you and your wife are retired and the main goal of your investments is preservation of capital, we recommend that you invest in good quality debt-focused funds. Debt funds ensure portfolio stability. Plus, they’re better investments than term deposits because you get a higher after-tax return from debt funds. When selecting a debt fund, you need to consider two factors. First, the credit quality of the debt securities in which the fund invests and second, the current interest rate scenario in the economy. In the current scenario, we recommend that you invest in good quality short- and medium-term debt mutual funds (AA / AAA rated papers) where the portfolio typically contains papers with a maturity of two to three. years.

The author is the founder and CEO of My Financial Advisor.

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The Houston-based MD Anderson Cancer Center reported a 76.9% drop in its adjusted income for the 10 months ended June 30, a drop it attributes largely to its planned Epic EHR implementation. .

In his agenda book and the calendar of events for the University of Texas board meeting held on Wednesday and Thursday, the healthcare system reported a $ 405 million decline in adjusted income from the same period the previous year.

“The $ 405.0 million (76.9%) decrease in adjusted income… was mainly due to an increase in expenses combined with a decrease in patient income following the implementation of the new patient record system. Epic electronic health, “according to the diary.

The finance committee indicated that expenses had increased due to a higher number of full-time employees, which necessitated an increase in salaries, wages and salary costs; salary increases and increase in bonus sharing rates; depreciation charges related to the completion of several major projects; and other facilities and software management projects.

Additionally, the agenda mentions an increase in consulting expenses “primarily related” to its commissioning Epic, such as professional fees and services.

This isn’t the first time MD Anderson has pointed to his planned Epic implementation as a big part of the financial downturn. At a board meeting in May, the healthcare system said the costs of implementing Epic resulted in a 56.6% drop in adjusted revenue over the seven-year period. month that ended on March 31.

In both cases, the health system said it anticipated a “material impact on income and expenditure” as a result of the implementation.

“The post-implementation strategy will focus on clinical productivity and operational efficiency to return to normalized operations by the end of the year,” according to the report.

MD Anderson uploaded his Epic EHR in March.

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