IRS Updates Contributions to 401(k) Plans and IRAs

By: Michael P. Sawicki. Esq.

On November 1, 2023, the Internal Revenue Service announced that that the amount individuals can contribute to their 401(k) plans has increased from $22,500 for 2023 to $23,000 for 2024.

The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment of $1,000 for 2024.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in such plans who are 50 and older can contribute up to $30,500, starting in 2024.

The income ranges for determining eligibility to make deductible contributions to traditional IRAs and Roth IRAs each increased for 2024. Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. If neither the taxpayer nor the spouse is covered by a workplace retirement plan, the phase-outs of the deduction do not apply. The phase‑out ranges for 2024 are as follows:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to $77,000 – $87,000, up from $73,000 – $83,000.
  • For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to $123,000 – $143,000, up from $116,000 – $136,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to $230,000 – $240,000, up from $218,000 – $228,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

The deductible limit on charitable distributions for 2024 increased from $100,000 to $105,000.

Details on these and other retirement-related cost-of-living adjustments for 2024 can be found in Notice 2023-75, available on IRS.gov.

If you have any questions regarding these updates from the IRS, please contact Batoff Associates. P.A. at 410-864-6211.

Filed Under: Corporate Law, Employee Benefits
Tagged With: , , , ,
Leave a Comment

Does Your Company Have a Record Retention Policy? 

By: Alina Pargamanik, J.D.

Does your company have a record retention policy? If not, you could be putting your company at risk of significant legal repercussions.

What Is a Record Retention Policy?

Record retention policies specify the business’s processes and procedures for managing documents. A well-drafted record retention policy provides guidelines and procedures for the storage, organization, retrieval, and destruction of documents in accordance with both legal requirements and inter-company policy. Any record retention policy must provide a provision for the suspension of the policy in the event of litigation or upon the company’s notice of an investigation.

Depending on your company’s industry and the matter involved, there are various regulatory and legal standards for record retention. For example, the Internal Revenue Service requires organizations to retain employment tax records for a minimum of four (4) years; the Occupational Health and Safety Administration requires businesses to retain records on workplace injuries for five (5) years; and the Equal Employment Opportunity Commission requires employers to retain all personnel or employment records for one (1) year. The following federal laws also set forth specific record retention requirements:

  • Sarbanes-Oxley (SOX) Act: SOX created financial record keeping and reporting requirements for corporations to protect investors from fraudulent activity, including a five (5) year retention period for customer invoices, a seven (7) year retention period for tax returns and receivable or payable ledgers and an indefinite retention period for payroll records and bank statements.
  • Gramm-Leach-Bliley Act (GLBA): GLBA requires financial institutions to be transparent with consumers about their information-sharing practices and to make an additional effort to secure consumer data. GLBA does not require a specific retention period, but the general rule is to retain all financial records for a period of seven (7) years, in line with SOX.
  • Health Information Portability and Accountability Act (HIPAA): HIPAA is a regulation designed to protect patients’ private data against fraud and theft, but it does not set specific retention periods of medical records. It does, however, specify how long healthcare organizations must retain HIPAA-related documents. Healthcare organizations (or “Covered Entities”) are required to retain HIPAA compliance documentation for a minimum of six (6) years from when it was created or, in the event of a policy, from when it was last in effect.

Why Is It Important to Have a Record Retention Policy?

Having and implementing an appropriate and well-drafted record retention policy could prevent your business or organization from experiencing legal troubles should a government investigation or threat of litigation arise.

In 2005, the Supreme Court overturned the conviction of Arthur Anderson, a former Big Five accounting firm, for destroying documents related to a case involving Enron, an energy, commodities, and services company. Several weeks before the SEC launched an investigation into Enron’s accounting practices, Arthur Anderson destroyed approximately two tons of Enron work papers. The Supreme Court ruled that companies may destroy documents in the “normal course of business” and in compliance with a valid document retention policy. The destruction of documents in accordance with a record retention policy is permissible as long as the action is taken in “good faith” without any knowledge that the company is on notice of pending or anticipated litigation or a government investigation.

Even if your company has an existing record retention policy, it is important to regularly review and, if needed, revise the policy. Record retention laws and regulations are ever-changing, so it is critical to have an attorney confirm that your policy is in compliance and that your company is adequately implementing and enforcing the policy.

If your company or organization needs assistance in drafting or reviewing a record retention policy, please contact Batoff Associates. P.A. at 410-864-6211.

Filed Under: Corporate Law, Employment Law, M & A
Tagged With: , , , , ,
Leave a Comment

Watching the Sunset: Planning for the 2026 Tax Law Sunset

By: Alina Pargamanik, J.D.

Several provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 are set to sunset, or expire, at the end of 2025. Without the proper planning, you may face some shocking tax consequences.

The TCJA set forth sweeping tax changes for businesses and individuals, particularly high-net-worth individuals, through permanent tax cuts to corporate profits and lower individual tax rates with a restructured tax bracket. The TCJA reduced the top business tax rate from 35% to 21% permanently, so businesses will not experience much of an impact in 2026. Nevertheless, the top individual, estate and trust income tax bracket would increase back to 39.6% from the current 37% rate.

For itemized deductions, according to the Tax Policy Center, “Under [the TCJA,] itemizers could claim deductions for all state and local property taxes and the greater of income or sales taxes (subject to overall limits on itemized deductions).” This policy is set to change upon the sunset of the TCJA. Although the TCJA repealed personal exemptions, the standard deduction almost doubled under the TCJA from approximately $13,000 to $24,000, but this amount is set to revert back in 2026. The TCJA also restricted itemized deduction for total state and local taxes to $10,000 per year. This cap will be eliminated after 2025.

Additionally, the TCJA doubled the lifetime gift and estate tax exemption from $5.5 million to $11.2 million. In 2026, the estate and gift exemption will revert back to pre-TCJA levels and is expected to be about $6.5 million per individual or $14 million for a married couple. When planning for the TCJA sunset, you should discuss various estate planning options such as annual gifting and Spousal Lifetime Access Trusts (SLATs) with your estate planning attorney.

Unless a significant legislative change occurs between now and 2026, taxpayers should stay vigilant of the upcoming 2026 tax law sunset. Having a plan for your financial affairs is the key to financial success. It is important to speak with your estate attorney and financial advisor to ensure that your tax and estate planning needs are in order.

If you would like to get more information on the 2026 tax law sunset and speak to an attorney about your estate planning needs, please contact Batoff Associates, P.A. at 410-864-6211.

Filed Under: Corporate Law, Estate Planning
Tagged With: , , ,
Leave a Comment

Potbelly Signs Multi-Unit Development Agreement with Company Founder Bryant Keil

Potbelly signs deal with founder for 27 stores in Md.

Bryant Keil was represented by Justin Batoff and Alina Pargamanik of Batoff Associates, P.A. in Baltimore, Maryland.

27 Unit Deal Includes 15 New Shops and 12 Refranchised Locations in Maryland
CHICAGO, July 19, 2023 (GLOBE NEWSWIRE) — Potbelly Corporation (NASDAQ: PBPB), the iconic neighborhood sandwich shop, today announced that it has finalized a 27-shop agreement in Maryland with the company’s founder Bryant Keil and his son Hampden.
The agreement grants Mr. Keil exclusive territory rights in seven Maryland counties – Washington, Frederick, Montgomery, Prince George, Charles, Calvert, and St. Mary’s – to develop 15 new Potbelly shops in the next eight years. Additionally, Potbelly will refranchise 12 existing restaurant
locations as part of the transaction.
“The Potbelly brand we know and love was shaped by Bryant’s leadership. He has a keen understanding of the Potbelly vision and deep appreciation for the brand and what sets us apart,” said Bob Wright, President and CEO of Potbelly. “He oversaw years of incredible expansion for our brand, and we look forward to him accelerating our growth momentum in Maryland as we continue to execute our strategic franchise and growth strategy across the U.S. Along with refranchising several of our existing shops, this agreement will extend Potbelly’s presence in central and southern regions of the state over the next decade, giving residents and visitors more access to our delicious food.”
“For nearly three decades, I’ve believed in the strength of the Potbelly brand and the company’s growth potential,” said Mr. Keil. “I’m thrilled for this new partnership and the opportunity to open and operate additional shops on the East Coast. I’m especially excited to partner with my son Hampden to develop the market and our family business. He grew up in Potbelly and has significant restaurant experience. We are both very excited to join the system.”
Mr. Keil first purchased Potbelly in 1996, when it was a single antique shop in the Lincoln Park neighborhood of Chicago whose owners served sandwiches to their customers. As CEO, he leaned into the differentiated Potbelly business model – creating shops that serve delicious, craveable food in an environment prioritizing good vibes – and successfully expanded the company to 250 locations by 2008. Today, there are more than 425 Potbelly locations in cities around the U.S. Potbelly has a long-term goal of reaching 2,000 shops over the next 10 years, with at least 85% of those locations being franchised, as part of the company’s Franchise Growth Acceleration Initiative.
You can learn more about franchise opportunities with Potbelly at https://www.potbelly.com/franchising-why-potbelly.
About Potbelly
Potbelly Corporation is a neighborhood sandwich concept that has been feeding customers’ smiles with warm, toasty sandwiches, signature salads,
hand-dipped shakes and other fresh menu items, customized just the way customers want them, for more than 40 years. Potbelly promises Fresh, Fast & Friendly service in an environment that reflects the local neighborhood. Since opening its first shop in Chicago in 1977, Potbelly has expanded to neighborhoods across the country – with more than 425 shops in the United States including approximately 53 franchised shops in the United States. For more information, please visit www.potbelly.com.

Filed Under: Franchise Law, M & A
Tagged With: , , , , ,
Leave a Comment

Tomson Reuters Announces 2023 Maryland Super Lawyers

Batoff Associates, P.A. is pleased to announce that attorney Justin Batoff has been named to the 2023 Maryland Super Lawyers list for the 6th consecutive year. Additionally, Justin was recognized as a “Rising Star” by Super Lawyers in the corporate law practice field.
Published by Thomson Reuters, Super Lawyers recognizes only the top 2.5% of all Maryland attorneys as Rising Stars who embody excellence in the practice of law.
The 2023 selections have now been published in the Maryland Super Lawyers Magazine as well as in the January 2023 edition of Baltimore magazine

https://digital.superlawyers.com/2023selections

Filed Under: Accolades
Tagged With: , ,
Leave a Comment