Products March 4, 2015

myStockOptions.com Expands Tax Return Guidance

Content in the myStockOptions.com Tax Center provides insights into the prevention of tax return mistakes for equity compensation plans.
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This tax-return season presents greater-than-usual potential for confusion, uncertainty, and expensive mistakes in Internal Revenue Service (IRS) filings for equity compensation plans, according to myStockOptions.com.

The big changes for this year include modifications both in the major IRS form used to report stock sales and in the rules for reporting the cost basis of stock compensation.

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Anyone who received income from equity compensation or sold shares in 2014 must understand the related reporting on IRS tax forms if they are to avoid costly errors on their tax returns. In the articles and FAQs of its Tax Center, myStockOptions.com provides guidance that can help taxpayers and their tax return preparers file accurate and error-free IRS tax returns.

The content provides insights into the prevention of tax return mistakes. Examples in plain English show taxpayers and their advisers exactly how to report stock compensation and stock sales on tax returns. A new interactive quiz on tax returns lets users test their understanding of the tax rules before they file.

The Tax Center has all the answers on the filing and reporting of tax returns that involve stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans. Core articles and FAQs spell out the most common mistakes people make with stock grants on their tax returns. Taxpayers, their financial advisers, and their accountants can quickly run through these to be sure they submit error-free returns.

Users of the Tax Center can make sense of reporting requirements with annotated how-to diagrams of IRS tax-return forms, along with diagrams of Form W-2, Form 3922 (for employee stock purchase plans), and Form 3921 (for incentive stock options). Podcasts and a video convey tips for tax returns, including common errors to avoid.

“The tax reporting for stock compensation is complex,” says Bruce Brumberg, editor-in-chief of myStockOptions.com. “Even accountants and tax advisers sometimes make mistakes. Our goal is to help employees and their financial or tax advisers realize the full potential of equity compensation by educating them about tax rules and helping them prevent costly errors.”

For more information, visit http://mystockoptions.com, email sales@mystockoptions.com, or call 617-734-1979.

Data & Research March 4, 2015

Increase in Average Retirement Age Has Stalled

A trend toward working longer seen in the 1980s and '90s has stabilized.
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The leveling of the average retirement age suggests that earlier drivers of working longer are no longer having a substantial impact, according to a research report from the Center for Retirement Research at Boston College.

Alicia H. Munnell, director of the center, notes in the report that around the mid-1980s the labor force participation of men ages 55 to 64, and men 65 and older, started to gradually increase due to a number of factors:

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  • Social Security program changes made work more attractive relative to retirement. The liberalization, and for some the elimination, of the Social Security earnings test removed what many saw as an impediment to continued work. The delayed retirement credit, which increases benefits for each year that claiming is delayed between the Full Retirement Age and age 70, also improved incentives to keep working.
  • The shift from defined benefit to defined contribution plans eliminated built-in incentives to retire. Studies show that workers covered by 401(k) plans retire a year or two later on average than similarly situated workers in a defined benefit plan.
  • Life expectancy for men at 65 has increased about four years since 1980, and evidence suggests that people may be healthier as well, particularly those with higher socioeconomic status.
  • People with more education work longer. Over the last 30 years, education levels have risen significantly, and the movement of large numbers of men up the educational ladder helps explain the increase in participation rates of older men.
  • The shift away from manufacturing means that jobs now involve more knowledge-based activities, which put less strain on older bodies.
  • More women are working. Wives, on average, are three years younger than their husbands, and husbands and wives like to coordinate their retirement. If wives wait to retire until age 62 to qualify for Social Security, that pattern would push their husbands’ retirement age toward 65.
  • Combine the decline of employer-provided retiree health insurance with the rapid rise in health care costs, and workers have a strong incentive to keep working to maintain their employer’s health coverage until they qualify for Medicare at 65.

However, Munnell’s research finds that labor force participation of older people did not change much between 2003 and 2013. The average retirement age has increased only slightly in the last 10 years—to 64 for men and 62 for women.

Munnell notes that Social Security’s delayed retirement credit is fully phased in, and the shift from defined benefit to defined contribution plans is nearly complete in the private sector. She suggests that the delay in retirement due to the availability of Medicare has played its role, education is no longer increasing, improvements in health may have stabilized and rises in longevity may no longer be salient.

As working longer can help workers have a secure retirement, a major educational initiative may be warranted, Munnell says.

The issue brief, “The Average Retirement Age – An Update,” may be downloaded here.

 

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