Two Benefit Plans All Veterinary Practices Should Consider Offering

Two Benefit Plans All Veterinary Practices Should Consider Offering

Among the many factors that contribute to stress in the Veterinary field, student loan debt is a big one. With the average student loan debt for vets reportedly ranging from upwards of $150,000 – and sometimes as high as $400,000, veterinary practices looking for ways to attract and retain talent may want to explore education assistance programs and defined contribution savings plans. Here’s why…

Under Section 127 of the IRS code, employers can use an educational assistance program – commonly used to help employees pay tuition, fees, and other costs of going to school while working — to help employees pay student loan obligations through December 31, 2025 (unless it’s extended via legislative actions).

To set up a program, an employer must put it in writing and adopt related administrative processes. The IRS recently provided sample language for a program making it even easier for employers to get started.

Under a program, an employer can offer $5,250 per year in total benefits. An employer can pay principal and interest on an employee’s qualified educational loan, up to the annual maximum. Best of all, the benefit is tax-free to the employee and a tax deduction for the employer. The IRS recently issued FAQs with more details.

In addition, thanks to the SECURE 2.0 Act, employers that offer a 401(k), 403(b), SIMPLE IRA or 457(b) qualified retirement plan can opt to include a student loan matching contribution feature. Put simply, when an employee makes payments for a qualified higher education student loan, the employer can make matching contributions to the retirement plan in their name. This way, the employee can continue paying student debt and, at the same time, build income for retirement.

According to recent IRS guidance, a qualified student loan payment can be for the employee, a spouse, or a child, providing greater flexibility and opportunities to pay down student loan debt. Limitations may apply.

Making this an even sweeter deal, certain employers (with fewer than 100 employees) may be eligible for a tax credit of up to $5,000 for each of three years when they start a qualified plan like a 401(k) or SIMPLE IRA.

If you have questions or need assistance getting started, RBT CPAs and its affiliates are here to help.

Our Spectrum Pension and Compensation professionals specialize in designing and administering retirement plans like 401(k)s or SIMPLE IRAs.

Our Visions Human Resources Services professionals can help you set up an educational assistance program (and address any other HR needs you may have).

Your RBT CPAs contact can help you navigate accounting, tax, and audit implications and compliance.

To get started, email slhowell@rbtcpas.com to set up a meeting with representatives from all three of our organizations (Spectrum, Visions Human Resource Services, and RBT CPAs) and experience firsthand what we mean when we say you and RBT CPAs can be Remarkably Better Together.

Please note: The preceding information contains highlights only. It’s a good idea to speak with a benefits professional, HR advisor, or benefits legal council to understand all of the implications and requirements of adopting and administering benefit plans.

Tax Liabilities that Pass Onto Estates and Heirs

Tax Liabilities that Pass Onto Estates and Heirs

One of the primary considerations when developing an estate plan is the taxes that will be due upon a person’s passing. With this knowledge, an estate plan can – and should – proactively include actions to help ensure more of a decedent’s assets go to the people and causes they care about, rather than taxes. This is even more critical when a family business is involved.

Following a person’s passing where there is no surviving spouse but there is an estate, taxes may be due. The most common type of taxes due are on income earned up to the date of death. For example, if a person passes on June 15, 2026, a final tax filing must be made by the following April 15 for any earnings between January 1, 2026 and June 15, 2026.  The executor is responsible for making sure individual income tax returns are prepared and filed, and related taxes are paid.

Income taxes due come from assets remaining in an estate before any distributions are made. Any individual income tax refund owed to the decedent gets added to the estate and distributed with other assets.

Federal and state estate taxes may also be due. Federal estate taxes are due when an estate, including prior taxable gifts, is valued at more than $13,610,000 (this is scheduled to decrease to an estimated $7 million starting January 1, 2026). Estate values above this exemption amount are taxed at 40%.

New York estate taxes are due if an estate is valued at 100% or higher than the state’s exemption amount ($6,940,000 in 2024). For purposes of calculating the estate value, any gifts made within three years of death are clawed back and considered part of the estate. If an estate is valued at:

  • More than 105% of the exemption amount (more than $7,287,000 in 2024), state taxes are due on the entire value of the estate – not just amounts above the exemption.
  • 100% to 105% of the exemption amount, the exemption phases out and an additional portion of an estate is taxed based on a sliding scale, with the top rate being 16%.

An estate plan should address who bears the burden of estate taxes. If a person’s will or revocable trust is silent on this matter, the person who receives an asset is responsible for paying estate taxes on that asset. If a will states estate taxes are to be paid out of the residuary of the estate, then the estate pays the taxes and distributes any remaining assets.

It’s important to remember that certain assets pass onto a named beneficiary and bypass a will. Two examples are life insurance and individual retirement accounts. In this case, the will or revocable trust should specify how taxes will be paid for these assets.

A third type of tax to consider is the tax due on the income earned on estate assets, such as interest earned on an estate bank account; dividends and interest on an estate brokerage account; and a 401(k), 403(b), or traditional IRA distribution.

In addition, when an individual passes away, their assets are revalued, generally as of their date of death.  If an estate sells assets, the selling price reduced by the date-of-death value generates a gain or a loss. If there is a gain, taxes are due. The federal and state governments want their tax revenues. If no distributions are made, the income taxes become the responsibility of the estate. If distributions are made, the income tax burden may end up being passed to the beneficiary.

If the decedent owned a business, it gets more complicated (which is why every business owner should have an estate and succession plan) and is governed by varying rules depending on whether the decedent operated as a sole proprietor, a partnership, an S-Corporation, or a C-Corporation.

For example, if the decedent owned a sole proprietorship, it may stop operating on the date of death and its assets and debts become part of the estate. For a partnership, an agreement usually spells out whether other partners can buyout the decedent’s share or whether the decedent may leave their partnership interest to beneficiaries. In either case, the partnership is an asset of the estate and needs to be valued.

S-Corporations and C-Corporations are similar to partnerships in that they are considered estate assets that must be appraised. If there are other shareholders of the business, there should be an agreement that details how shares of stock may be handled – whether sold to other shareholders, sold to outsiders, or distributed to beneficiaries.

As mentioned above, a family business is also considered an asset that must be valued for estate tax purposes. If the value of the decedent’s estate exceeds Federal and state estate tax exemptions, taxes will be due. Careful planning is needed to determine how these taxes will be funded. Frequently life insurance, owned by an irrevocable life insurance trust, is used to fund the estate taxes.

I have only provided highlights in this article. There are numerous different scenarios that play out based on each individual situation. Two key thoughts I would like to leave you with:

  • You need a will or, even better, an estate plan that clearly defines your wishes and beneficiaries; otherwise, what happens to your estate may be decided by state law.
  • When creating or updating your estate plan, be sure to account for tax liabilities following your passing to ensure your legacy remains intact.

If you have any questions about estate taxes or you would like to get started creating or updating your estate plan, RBT CPA trust, estate and tax professionals are available to help. To get started, email mtorchia@rbtcpas.com or call 845-567-9000 and ask for Michael Torchia. We would consider it a privilege to show you how we can be Remarkably Better Together.

Government Procurement Challenges, Priorities & Trends

Government Procurement Challenges, Priorities & Trends

Procurement is in the spotlight on global, federal, state, and local stages. Driven by rising costs, supply chain fragility, the beyond-fast evolution of technology, social and environmental concerns, ever-changing legislation, staffing challenges, and more, all levels of government are being challenged like never before to modernize procurement with a keen eye toward cost savings, sustainability, and compliance.

One survey identifies the complexity of systems and processes as the top procurement challenge across industries, with rising costs and preparing for unexpected challenges being the next two biggest challenges for government.

The National Association of State Procurement Officers (NASPO) defined top priorities for state procurement in 2024 as modernizing the procurement process (moving up from the fifth priority in 2023), continuous process improvement, talent management and succession planning, and more.

Cybersecurity, sourcing requirements, climate/sustainability, supplier diversity, and more are converging to put more demands on procurement. Agility to promote repeatable quality processes that offer flexibility, deliver results faster, incorporate user feedback, and respond to changing needs while addressing talent challenges and upholding the myriad of regulations appears to be central to addressing today’s procurement challenges.

E-procurement is taking the lead as a prominent trend, with municipalities increasingly adopting digital solutions for tendering, bidding, and contract management in an effort to shorten the procurement cycle, enhance transparency, reduce paperwork, and improve efficiency. At the same time, it promotes equal opportunities among suppliers to bid by providing greater access to information.

Sustainability is increasingly being embedded into procurement practices, with a focus on acquiring services and goods in a manner that protects and supports the environment, while promoting ethical practices and supporting social welfare. (New York’s Green Purchasing Community provides a framework for local governments to ensure purchasing has a lower environmental impact while earning points toward Climate Smart Communities Certification.)

Data analytics and artificial intelligence point to increased opportunities for municipalities to use data for insights on spending, performance, and market trends. AI can help detect fraud, improve decision-making, and automate processes, while predictive analytics improves forecasting and increases cost savings. According to NASPO, there may be ways for AI to help vet suppliers, track supplier performance, identify problem suppliers, and detect fraud.

Beyond technology, municipalities are looking to create job opportunities and drive economic growth with a greater focus on supporting small and medium-sized businesses (SMBs) via their procurement processes. Some are adopting policies to award a percentage of contracts to SMBs while making bidding easier and providing assistance to help SMBs navigate the process.

As your municipality explores opportunities to modernize procurement while operating within New York State laws, you can count on RBT CPAs to focus on your accounting, audit, tax, and advisory needs. Give us a call to find out how we can be Remarkably Better Together.

 

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your organization’s confidential financial data.