Every CPA term, IRS form number, and NJ tax concept ProAxis uses with clients — defined in plain language with the statute or form citation.
This glossary covers 80 terms ProAxis Tax & Accounting Services uses every week with NJ small businesses, real estate investors, medical practices, contractors, restaurants, e-commerce sellers, and individual taxpayers. Each definition includes the statute, form number, or regulator that governs it.
Use the section index below or scroll. Every term links to the canonical ProAxis page where the concept is applied in real client work.
8 terms
An elective entity-level income tax that NJ S-corporations, partnerships, and multi-member LLCs may pay at the entity level under the NJ BAIT statute. Converts what would be a non-deductible personal SALT payment (capped at $10,000 federally) into a fully deductible business expense. Owners get a NJ tax credit for their share. Election is annual; payments are quarterly via Form PTE-100.
See related ProAxis page →A federal planning mechanism for pass-through business owners to bypass the $10,000 individual SALT deduction cap. The entity pays state income tax (deductible federally without the cap) and the owner gets a state tax credit. NJ implements this via the BAIT election. Other states have parallel PTET regimes.
See related ProAxis page →New Jersey's corporate income tax with its own apportionment formula, minimum tax floor, and add-backs for certain federal deductions (such as bonus depreciation). Applies to C-corporations and S-corporations doing business in NJ. The NJ CBT is separate from the federal corporate income tax and has its own quarterly estimated payment schedule.
See related ProAxis page →New Jersey's individual income tax. Has its own rate brackets and rules separate from federal. Applies to NJ residents on worldwide income and to nonresidents on NJ-source income. Does not conform to all federal tax changes — the OBBB and Tax Cuts and Jobs Act provisions do not automatically flow through to NJ returns.
See related ProAxis page →Quarterly NJ employer return reporting state income tax withheld, NJ Unemployment Insurance, NJ Disability Insurance, Workforce Development, and Family Leave contributions. Filed electronically by NJ employers. Companion to the federal Form 941 quarterly return.
See related ProAxis page →A New York City tax on the income of unincorporated businesses conducted in the city. Applies to partnerships, sole proprietors, and single-member LLCs. Rate is 4% on net UBT income above the city's threshold. Filed annually on Form NYC-202 (individuals) or NYC-204 (partnerships). Significant for NJ residents doing business in NYC. UBT applies even when the owner does not live in the city.
See related ProAxis page →A New York State payroll tax on employers and self-employed individuals. Applies to those doing business in the Metropolitan Commuter Transportation District. Funds MTA transit operations. Employer rates range from 0.11% to 0.60% of payroll based on quarterly payroll size and zone. Self-employed earners pay on net self-employment earnings sourced to the MCTD.
See related ProAxis page →A credit on the NJ resident return for income taxes paid to another state on the same income. Computed on Schedule NJ-COJ. NJ residents who work in NY typically owe more NY tax than NJ would charge. The credit prevents double taxation but caps at the NJ tax on that income. Critical for NJ residents with NY W-2 wages, NY-source K-1 income, or NY rental properties.
See related ProAxis page →12 terms
Allows eligible pass-through owners (sole proprietors, S-corp shareholders, partners) to deduct up to 20% of qualified business income from federal taxable income. Phases out for higher-income taxpayers in 'specified service trades' (SSTBs) — health, law, accounting, consulting, and financial services — based on annual income thresholds.
See related ProAxis page →Allows businesses to deduct the full purchase price of qualifying equipment and software in the year placed in service, instead of depreciating over multiple years. Annual dollar limit is set by IRC §179 and adjusts each year. Subject to a taxable-income limitation and a phase-out for total purchases above a threshold.
See related ProAxis page →Allows businesses to deduct a percentage of the cost of qualifying new or used assets in the first year placed in service. The percentage is set annually by IRC §168(k) and has been phasing down. Available even when Section 179 limits are reached. Often used together with Section 179 for maximum first-year deduction.
See related ProAxis page →An IRC §1031 transaction allowing real property held for business or investment to be exchanged for like-kind real property without immediate recognition of capital gain. Strict timing rules: 45 days to identify replacement property, 180 days to close. After the Tax Cuts and Jobs Act of 2017, only real property qualifies — personal property exchanges no longer qualify.
See related ProAxis page →S-corporation shareholder-employees must pay themselves a 'reasonable' wage for services rendered before taking distributions. The IRS scrutinizes low salaries paired with large distributions because distributions avoid payroll tax. Reasonable compensation is determined by industry comparables, role, hours worked, and skill level — usually documented in a written analysis.
See related ProAxis page →Following the 2018 Supreme Court decision South Dakota v. Wayfair, states can require remote sellers to collect and remit sales tax once economic activity exceeds a state-specific threshold (typically $100,000 in sales or 200 transactions per year). Replaces the prior physical-presence requirement. Affects every multi-state e-commerce seller.
See related ProAxis page →A tax loss when allowable deductions exceed gross income for the year. Can be carried forward indefinitely under post-2017 rules to offset future taxable income. Limited to 80% of taxable income in any one carryforward year. Pre-2018 NOLs may still have a two-year carryback. Calculated and tracked on Form 1045 or Form 1040 attachments.
See related ProAxis page →A parallel federal tax system designed to ensure high-income taxpayers pay a minimum amount regardless of deductions. Computed on Form 6251 using a separate set of preference items, deductions, and rates. After 2017 tax reform the individual AMT applies to fewer taxpayers. The higher exemption and faster phase-out are the reason. The corporate AMT was repealed in 2018; a new 15% corporate AMT applies to certain large corporations starting 2023.
See related ProAxis page →An IRC §199A category that limits or eliminates the 20% QBI deduction for owners above income thresholds. Covers health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, and brokerage services. Also covers any business where the principal asset is the reputation or skill of one or more employees. Engineering and architecture are notable exceptions — they are not SSTBs. Threshold-driven phase-out applies between the lower and upper income limits each year.
See related ProAxis page →Federal payroll tax that funds unemployment compensation programs. Employers pay 6% on the first $7,000 of each employee's wages. A 5.4% credit applies when state SUTA is paid on time, dropping the effective rate to 0.6%. FUTA is paid by the employer only; employees do not contribute. Reported annually on Form 940.
See related ProAxis page →State unemployment tax paid by employers — separate from federal FUTA but coordinated with it. Each state sets its own rate, wage base, and experience-rating system. New Jersey, New York, and Pennsylvania each have distinct SUTA rates and rules. Timely payment of state SUTA qualifies the employer for the 5.4% FUTA credit. Most states require quarterly filings and payments.
See related ProAxis page →Tax rules that convert a portion of gain on sale of depreciable property from capital gain back into ordinary income. Section 1245 applies to depreciable personal property — recapture equals the lesser of depreciation taken or gain. Section 1250 applies to depreciable real property — recapture is limited to depreciation in excess of straight-line. Unrecaptured §1250 gain is taxed at a maximum 25% rate.
See related ProAxis page →19 terms
An LLC or corporation files IRS Form 2553 to elect taxation as an S-corporation under Subchapter S. Must be filed within 75 days of the start of the tax year (or formation). Once elected, the entity files Form 1120-S annually and issues Schedule K-1s to shareholders. The election can produce significant payroll tax savings for owners earning above ~$60,000 in net business income.
See related ProAxis page →The annual income tax return filed by S-corporations. Reports the entity's income, deductions, and credits and computes the share allocable to each shareholder via Schedule K-1. Due March 15 (or extended to September 15 via Form 7004). The S-corporation itself generally pays no federal income tax — income flows through to shareholders.
See related ProAxis page →The annual return filed by partnerships and multi-member LLCs taxed as partnerships. Reports partnership income and allocates it to partners via Schedule K-1. Due March 15. Like Form 1120-S, the partnership pays no federal income tax — income flows through to partners.
See related ProAxis page →Issued to each partner (Form 1065 K-1) or shareholder (Form 1120-S K-1) reporting their share of pass-through income, deductions, credits, and other tax items. Recipients use the K-1 to complete their personal Form 1040. K-1 timing often delays personal returns — extensions are common for K-1 recipients.
See related ProAxis page →Federal extension granting an additional six months to file Form 1040 (until October 15). Must be filed by the original April 15 deadline. An extension to file is not an extension to pay — any tax owed is still due April 15 to avoid penalties and interest. NJ requires a separate Form NJ-630 for state extensions.
See related ProAxis page →Federal credit under IRC §45B for food and beverage establishments where tipping is customary. Equals the employer's share of FICA tax paid on tipped wages above the federal minimum wage. Reduces income tax dollar-for-dollar. Restaurants that switch CPAs frequently discover the prior firm never claimed this credit — a recurring source of overpaid tax.
See related ProAxis page →An IRS application to settle a tax liability for less than the full amount owed, used when the taxpayer cannot pay in full and the IRS determines collectability is doubtful. Requires substantial financial disclosure (Form 433-A or 433-B). Approval rates are below 50%; preparation requires a CPA familiar with IRS collection standards.
See related ProAxis page →Annual return filed by 501(c)(3) and other tax-exempt organizations reporting revenue, expenses, governance, and program activities. Public document — anyone can request a copy. Smaller orgs may file Form 990-EZ or 990-N (e-postcard) based on revenue thresholds. Failure to file for 3 consecutive years results in automatic loss of tax-exempt status.
See related ProAxis page →Quarterly federal employer return reporting income tax, Social Security, and Medicare taxes withheld from employee paychecks plus the employer's share. Due the last day of the month following the end of each quarter. Companion to NJ-927 for NJ employers.
See related ProAxis page →Filed with Form 1040 by sole proprietors and single-member LLCs taxed as disregarded entities. Reports business income, deductions, and net profit or loss. Net profit flows to the owner's 1040 and is subject to self-employment tax via Schedule SE. The 20% QBI deduction may apply to the net profit.
See related ProAxis page →Filed with Form 1040 to report income or loss from rental real estate, royalties, partnerships, S-corporations, estates, and trusts. Rental income on Schedule E is generally not subject to self-employment tax. K-1 income from partnerships and S-corporations also flows through Schedule E.
See related ProAxis page →The business counterpart to Form 4868. Grants an automatic six-month extension to file Forms 1120, 1120-S, 1065, and most other business returns. Must be filed by the original return due date. Extension to file does not extend the time to pay — estimated tax is still due on the original date.
See related ProAxis page →Allows a designated third party (CPA, attorney, family member) to inspect and receive IRS records for the taxpayer. Unlike Form 2848, Form 8821 does not authorize the designee to represent or speak for the taxpayer. Used when records access is needed but no representation will occur. Expires on a date the taxpayer specifies.
See related ProAxis page →Authorizes a CPA, enrolled agent, or attorney to represent the taxpayer before the IRS. Required before a representative can argue an audit, negotiate a collection alternative, or sign documents on the taxpayer's behalf. Covers specific tax years and specific tax matters. The representative must hold an active license or enrollment.
See related ProAxis page →Federal estate tax return filed by the executor when a decedent's estate exceeds the federal exemption amount. Includes adjusted lifetime gifts in the calculation. Due nine months after death, with a six-month extension available via Form 4768. The current exemption is published annually by the IRS.
See related ProAxis page →Required when a donor gives more than the annual exclusion amount to any one recipient in a calendar year. The annual exclusion is set by IRS and adjusts for inflation. Filing does not always mean tax is owed — most gifts reduce the lifetime exemption first. Due April 15 of the year after the gift, extendable to October 15.
See related ProAxis page →Issued by employers to each employee by January 31 reporting wages paid and federal, state, and FICA taxes withheld. Filed with the Social Security Administration, not the IRS. Employees use the W-2 to complete their Form 1040. Misclassifying a W-2 employee as a 1099 contractor triggers IRS penalties and back payroll tax.
See related ProAxis page →Issued by businesses to each independent contractor paid $600 or more in a calendar year. Filed with the IRS by January 31. Replaces the prior reporting on Form 1099-MISC Box 7 after the 2020 form split. Recipients report 1099-NEC income on Schedule C and pay self-employment tax via Schedule SE.
See related ProAxis page →Annual federal employer return reporting FUTA tax owed on the first $7,000 of each employee's wages. Filed once a year — separate from the quarterly Form 941. FUTA funds federal unemployment programs alongside state SUTA. Employers in states with full SUTA credit pay an effective FUTA rate well below the statutory 6%.
See related ProAxis page →6 terms
An IRS classification allowing rental real estate losses to be treated as non-passive (deductible against ordinary income). Requires more than 750 hours of documented personal services in real-property trades during the year, AND more than half of total personal-services time spent in real-property activities. Time logs and contemporaneous records are required to defend the status under audit.
See related ProAxis page →An engineering-based study that reclassifies portions of a building (fixtures, finishes, land improvements) into shorter-life depreciation classes — 5, 7, or 15 years instead of 27.5 or 39. Generates large current-year depreciation deductions. Most cost-effective for properties valued $500,000 or higher. Often paired with Section 179 and bonus depreciation.
See related ProAxis page →Required revenue-recognition method for most long-term construction contracts (those spanning more than one tax year). Revenue and expenses are recognized in proportion to contract costs incurred to date relative to total estimated costs. Requires a Work-in-Progress (WIP) schedule reconciling earned revenue, billed amounts, and over-/under-billings each period.
See related ProAxis page →A construction-industry financial report that reconciles each open contract's contract value, costs incurred to date, billings to date, earned revenue, and over- or under-billing. Required to support percentage-of-completion accounting. Reviewed monthly. Sureties and lenders require WIP schedules with annual financial statements for bonded contractors.
See related ProAxis page →Federal tax credit available to food and beverage establishments where tipping is customary. Equals the employer's share of FICA tax paid on tipped wages above the federal minimum wage. Claimed via Form 8846 and reduces federal income tax dollar-for-dollar. Recurring missed credit when restaurants switch CPAs without continuity.
See related ProAxis page →Federal tax owed by 501(c)(3) and other exempt organizations on income from a trade or business 'regularly carried on' that is not substantially related to the org's exempt purpose. Reported on Form 990-T. Applies to income from advertising, certain rental income, and side businesses unrelated to the charitable mission.
See related ProAxis page →13 terms
Removal or reduction of IRS penalties when a taxpayer qualifies for First-Time Abatement (clean compliance history for prior 3 years) or shows Reasonable Cause (illness, natural disaster, reliance on a tax pro, etc.). Failure-to-file (5% per month) and failure-to-pay (0.5% per month) penalties are the most commonly abated.
See related ProAxis page →An agreement to pay IRS tax debt over time, generally up to 72 months. Short-term plans (under 180 days) cover balances under $100,000 with no fee. Long-term plans cover balances under $50,000 via simple online application. Larger balances require Form 9465 plus financial disclosure. Interest and reduced penalties continue to accrue during the plan.
See related ProAxis page →An automated IRS notice proposing changes to a return when reported income does not match third-party reports (W-2s, 1099s, 1098s). Not an audit — a proposed adjustment with 30 days to respond. Common triggers: missed 1099 income, unreported brokerage gains, or mismatched wage reporting. Many CP2000s can be resolved by a written response with documentation.
See related ProAxis page →The IRS's first balance-due notice, sent after a return is assessed but the balance remains unpaid. Lists the amount owed plus accrued interest and failure-to-pay penalty. The taxpayer has 21 days to pay or contact the IRS before the next notice in the collection sequence. Ignoring a CP14 triggers escalating notices and eventually levy action.
See related ProAxis page →The second notice in the IRS collection sequence, sent roughly five weeks after CP14 if the balance remains unpaid. Restates the amount owed and warns that more aggressive collection action will follow. No new tax assessment — same debt, escalating tone. The taxpayer still retains all original appeal rights and can request an installment agreement or Offer in Compromise.
See related ProAxis page →The third IRS collection notice, typically arriving five weeks after CP501. Carries stronger warning language than CP501 about pending enforced collection. Still no new tax assessment, but the IRS now signals levy preparation. The CSED — the 10-year collection statute — continues to run during the notice sequence.
See related ProAxis page →An IRS Notice of Intent to Levy that authorizes seizure of state tax refunds and certain federal payments. Issued by certified mail roughly five weeks after CP503. Does not authorize levy of wages or bank accounts — that requires the LT11 final notice. Receiving a CP504 means broader levy authority is the next step in the IRS sequence.
See related ProAxis page →The IRS's final pre-levy notice, sent by certified mail after CP504. Triggers a 30-day window to request a Collection Due Process (CDP) hearing via Form 12153. After 30 days the IRS may levy wages, bank accounts, retirement accounts, and other property. Requesting a CDP hearing pauses levy action and preserves Tax Court appeal rights.
See related ProAxis page →A federal tax lien is a legal claim against all of a taxpayer's property securing the tax debt. A levy is the actual seizure of property to satisfy that debt. Liens damage credit and attach to future assets including real estate. Levies take wages, bank accounts, or refunds. The IRS files liens automatically after assessment; levies require prior notice and a hearing window.
See related ProAxis page →An IRS status that temporarily halts collection because the taxpayer cannot pay basic living expenses and the tax debt. Requires financial disclosure on Form 433-A or 433-F showing that allowable expenses meet or exceed income. Interest and penalties continue to accrue, and the CSED clock keeps running. The IRS reviews CNC status periodically and can resume collection if finances improve.
See related ProAxis page →Releases one spouse from joint tax liability when the other spouse improperly reported items or omitted income on a joint return. Filed on Form 8857. Three types of relief exist: traditional innocent spouse, separation of liability, and equitable relief. Most requests must be filed within two years of the first IRS collection activity against the requesting spouse.
See related ProAxis page →The date IRS authority to collect a tax debt expires. Generally 10 years from the date of assessment. Several events suspend or extend the CSED. Examples include bankruptcy filings, Offer in Compromise pendency, CDP hearings, and CNC status. After the CSED passes the debt becomes legally uncollectible and the IRS must release any related liens.
See related ProAxis page →A 100% penalty under IRC §6672 assessed personally against owners, officers, or employees. Applies when the responsible person willfully failed to remit payroll taxes withheld from employee wages. Pierces the corporate or LLC liability shield because the withheld funds are held in trust for the government. The IRS interviews potential responsible persons on Form 4180 before assessment. Once assessed, the TFRP follows the individual personally for the full 10-year collection statute.
See related ProAxis page →10 terms
A business entity that does not pay federal income tax at the entity level. Income, deductions, and credits flow through to owners' personal returns. S-corporations, partnerships, multi-member LLCs taxed as partnerships, and sole proprietorships are all pass-throughs. PTE income generally qualifies for the 20% QBI deduction subject to income and trade-type limits. Most state PTE elections, including NJ BAIT, sit on top of this pass-through structure.
See related ProAxis page →A corporation taxed as a separate entity under Subchapter C of the Internal Revenue Code. Pays federal income tax at the corporate rate (currently 21%) on Form 1120. Profits distributed as dividends are taxed again on shareholders' personal returns — the double-taxation feature. Preferred by businesses raising venture capital, retaining earnings, or providing extensive fringe benefits.
See related ProAxis page →A limited liability company with one owner. By default treated as a disregarded entity for federal income tax. The owner reports business activity on Schedule C, E, or F. May elect S-corporation or C-corporation taxation by filing Form 8832 or Form 2553. State-law liability protection applies regardless of federal tax classification.
See related ProAxis page →A limited liability company with two or more owners. By default treated as a partnership for federal income tax — files Form 1065 and issues K-1s to members. May elect S-corporation or C-corporation taxation by filing Form 8832 or Form 2553. State-law liability protection applies regardless of federal tax classification.
See related ProAxis page →A business entity with one owner that is not treated as separate from the owner for federal income tax. The owner reports all activity on their personal return. Most common form is a single-member LLC that has not elected corporate taxation. Despite the federal disregard, the entity retains its state-law liability protection and operates as a separate legal entity.
See related ProAxis page →A nine-digit federal tax identification number assigned by the IRS to businesses, trusts, estates, and certain other entities. Required to hire employees, open business bank accounts, file business tax returns, and elect S-corporation status. Free to obtain via the IRS online application. Stays with the entity for its lifetime — does not change when ownership transfers in most cases.
See related ProAxis page →A nine-digit tax processing number issued by the IRS. Issued to individuals who must file US tax returns but cannot get a Social Security Number. Most common recipients include nonresident aliens, foreign spouses, and dependents. Applied for via Form W-7 with original identification documents. Expires if not used on a federal return for three consecutive years.
See related ProAxis page →An unincorporated business owned and operated by one individual with no legal distinction between owner and business. Income reported on Schedule C of the owner's personal Form 1040. The owner is personally liable for all business debts and obligations. Subject to self-employment tax on net profit via Schedule SE.
See related ProAxis page →A Limited Partnership (LP) has general partners who manage the business. Limited partners invest but have no management role. Limited partners enjoy liability protection; general partners do not. A Limited Liability Partnership (LLP) gives all partners limited liability. Commonly used by law firms, accounting firms, and other professional services. Both file Form 1065 and issue K-1s to partners.
See related ProAxis page →A single LLC that creates internal 'series' or 'cells', each with its own assets, members, and liability shield. Authorized in Delaware, Illinois, Texas, and a growing number of states — but not in New Jersey. Often used by real estate investors to isolate liability across multiple properties without forming separate LLCs. Federal tax treatment of each series is still developing; the IRS has issued proposed regulations but no final rules.
See related ProAxis page →4 terms
An accounting method where income is recognized when cash is received and expenses when cash is paid. Simpler than accrual — does not track receivables, payables, or inventory adjustments. Available to most small businesses with average annual gross receipts under the IRS small-business threshold. The current threshold is approximately $30 million. Not permitted for C-corporations and certain partnerships unless they meet the small-business exception.
See related ProAxis page →An accounting method where income is recognized when earned and expenses when incurred — regardless of when cash changes hands. Required for businesses with inventory and for most C-corporations exceeding the gross receipts threshold. Produces a more accurate picture of profitability over time. Standard method for GAAP financial statements used by lenders, sureties, and investors.
See related ProAxis page →A long-term construction accounting method where all revenue and expenses are recognized when the contract is substantially complete. Permitted only for certain small contractors and for home construction contracts. Defers tax recognition until the project finishes — useful for bonding strategies. Contractors above the small-contractor gross receipts threshold must use percentage-of-completion instead.
See related ProAxis page →A managerial accounting method that tracks costs by individual job or project. Labor, materials, equipment, and overhead are allocated to each contract. Standard practice for construction, manufacturing, professional services, and other project-based businesses. Required for accurate WIP schedules and percentage-of-completion accounting. Job-level cost data also supports bidding, change-order pricing, and profitability analysis.
See related ProAxis page →8 terms
Adjusted Gross Income with certain deductions added back — used to determine eligibility for many tax benefits. Phase-outs for Roth IRA contributions, Traditional IRA deductibility, education credits, and the Premium Tax Credit key off MAGI. The Net Investment Income Tax does too. The exact add-backs vary by benefit. Planning to keep MAGI under a threshold often pays off across multiple credits and deductions.
See related ProAxis page →A taxable transfer of pre-tax retirement funds (Traditional IRA, 401(k), 403(b)) into a Roth IRA. The converted amount is fully taxable as ordinary income in the conversion year. Future qualified Roth withdrawals — including all growth — are tax-free. Most often used in low-income years, retirement gap years, and during market downturns. Converting depressed asset values reduces the tax cost.
See related ProAxis page →A retirement strategy that funnels after-tax 401(k) contributions into a Roth IRA or Roth 401(k). Requires a 401(k) plan that allows after-tax contributions plus in-service distributions or in-plan Roth conversions. Annual potential is up to the total 401(k) limit minus elective deferrals and employer contributions. Substantially increases Roth space beyond the standard contribution limits. Popular with high-income W-2 employees at large employers.
See related ProAxis page →A 401(k) plan designed for self-employed individuals and owner-only businesses with no employees other than a spouse. Allows both employee elective deferrals and employer profit-sharing contributions. Annual maximums are significantly higher than a SEP-IRA at the same income level. Roth Solo 401(k) option is available in many plan documents. Required to file Form 5500-EZ once assets exceed the IRS threshold.
See related ProAxis page →A Simplified Employee Pension plan funded entirely by employer contributions to each employee's IRA. Annual contributions can be up to 25% of compensation, capped at the IRS annual limit. Simple to set up and administer — no annual Form 5500 required for most plans. Popular with self-employed individuals and small businesses with few or no employees.
See related ProAxis page →A Savings Incentive Match Plan for Employees. Designed for small businesses with 100 or fewer employees. Employer must either match employee contributions up to 3% or make a 2% non-elective contribution. Lower contribution limits than 401(k) but easier and cheaper to operate. Suitable for businesses outgrowing SEP-IRA but not ready for a full 401(k).
See related ProAxis page →A retirement plan that promises a specific benefit at retirement — often calculated from years of service and final salary. Employer contributions are actuarially determined to fund the future benefit. Allows much higher annual contributions than defined-contribution plans for older high-income owners. Often used by professional practices and one-person businesses with strong, stable income. Compresses decades of retirement savings into a few years.
See related ProAxis page →Annual withdrawals retirees must take from most tax-deferred retirement accounts starting at the required beginning age. SECURE 2.0 set the age at 73 (rising to 75 in 2033). Calculated by dividing the prior year-end account balance by an IRS life expectancy factor. Penalty for missing an RMD is 25% of the shortfall — reduced to 10% if corrected promptly under SECURE 2.0.
See related ProAxis page →This glossary is for general reference. Specific tax outcomes depend on individual facts and current law. Schedule a free consultation with ProAxis at proaxiscpa.com/contact for advice on your specific situation.
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