November 2021 Client Newsletter

Stephen Merritt, CPA, PC  |  Certified Public Accountants  |  (757) 420-5778
233 Business Park Drive, Suite 104, Virginia Beach, VA 23462

Louis says, “Don’t forget to treat yourself!”

What’s Inside

• What You Should Know About Required Minimum Distributions
• The Power of Thank-You Notes
• Happenings at SMCPA
• Hours of Operation
• COVID-19

What You Should Know About Required Minimum Distributions

With all the legislative changes related to retirement distributions over the last couple of years, it’s important to have a clear understanding of what to expect for the current year. In particular, it’s critical to know what to expect with Required Minimum Distributions (RMDs) for tax year 2021. RMDs are required distributions investors over a certain age must take out every year from their retirement savings accounts.
As part of the SECURE Act of 2019, the age when RMDs are required was increased from 70 ½ to 72 years. Furthermore, as part of the CARES Act passed in 2020, the RMD requirement was temporarily waived. So, what should you expect for 2021?

Unfortunately, there is no longer an RMD waiver for tax year 2021. Therefore, anyone age 72 or older as of December 31, 2021 must take their RMD by year-end to avoid a penalty. The only exception to this is if 2021 is the first year an individual is subject to the RMD requirement, in which case the due date is April 1, 2022. The RMD rules apply to traditional IRAs, inherited IRAs, and employer-sponsored plans.

For inherited IRAs, the RMD rules for beneficiaries depend on when the original owner passed away as well as the type of beneficiary. While non-spouse beneficiaries are generally required to withdraw the entire account balance of the inherited IRA within 10 years, spousal and other certain eligible beneficiaries may be allowed to take RMDs over their life expectancy. The taxation of the distributions depends on the type of account – no taxes will be owed on inherited Roth IRA distributions (assuming the original account owner held the account for at least five years), while distributions from an inherited traditional IRA account would be subject to taxation.

It is important to understand the various rules surrounding RMDs to avoid the steep 50 percent penalty that kicks in if you don’t comply with the rules and/or handle your distributions accurately. But what if you don’t need the funds? While you are still required to take the distributions when you meet the requirements, there are some options available if you don’t depend on the money to meet your spending needs, including reinvesting the proceeds in another allowable account (to take advantage of continued growth) or taking qualified charitable distributions (QCDs) that allow for gifting of up to $100,000 annually to a qualified charity (the latter of which are excluded from your taxable income and not subject to tax).

Be sure to work with a tax or financial professional so you know what to expect and can plan withdrawal strategies that put you in the best situation possible!

The Power of Thank-You Notes

As we approach the holiday of giving thanks, it’s the perfect time to think about how we can use thank-you notes in our businesses and lives to express our gratitude to others.

When to Say Thank You

There are many opportunities in business to say thank you:

• When a client or associate sends you a referral that results in business
• When an employee goes out of their way to fix a problem or make a customer happy
• When a customer makes a large purchase
• When a vendor over-delivers
• When someone sends a gift
• After a speaking engagement or an event when someone has hosted you
• When someone provides advice that has been helpful, whether face to face or in a book or article
• When someone does a favor or something nice that you’d like to reward

Keeping thank-you notes top of mind will help you think of more opportunities to use them.

What to Say in Your Thank-You Note

You don’t have to be a professional writer to make a thank you note sound good. Just write from the heart. Let the recipient know what you are thanking them for. Express a detail about the item or activity involved. And then thank them again.

If you are unsure about what to say, write a draft first that you can edit. Then transfer the version that you are happy with to your stationery. It’s far better to hand-write your thank-you note than to use a computer-generated one.

Personalized stationery for thank-you notes is definitely recommended. They add a formal and professional touch to your thank-you note, enriching the experience for the recipient.

Sending gift baskets can be a good idea, but sending a hand-written thank-you note alone can be the most powerful action you can take, especially if it is not expected.

While many businesses send holiday cards each year, thank-you notes can be far more powerful. If your budget is limited, you might want to replace your holiday mailing with thank-you notes instead.

One more thing to consider NOT doing is making your thank-you note into an advertising event for your company. If you want to send promotional items such as t-shirts, mugs, or other items, do NOT do it with your thank-you card. Sending thank-you notes is not a marketing event; it’s a time for gratitude. Sending clients promotional items can be very welcome; just don’t do it at the same time.

Helping others feel gratitude is the fastest way to experience happiness. Sending thank-you notes is not only good business, it’s good for our health and wellness, too.

Happenings at SMCPA

Louis wants to know that you’re thankful for this holiday season!

Hours of Operation

Our Current Hours of Operation are:

Monday – Thursday
8 AM to 5 PM

Coronavirus Disease (COVID-19)

Stephen Merritt, CPA, P.C. understands the challenge the impact COVID-19 has on our community.

Fully-Vaccinated individuals are not required to wear a mask while in our office.

Unvaccinated or not Fully-Vaccinated individuals must wear masks and follow COVID-19 protocol, such as social distancing, while in our office to stop the spread of COVID-19.

Tax documents may be mailed, FAXed, emailed, or dropped off.

Final Returns can be picked up or mailed out.

As always, please call, we are happy to assist.

Stay safe and healthy!