United Bank & Trust Blog

Effective January 1, 2012, United Bank & Trust along with other Michigan financial institutions, are required to withhold Michigan income tax from distributions from certain retirement accounts (including traditional IRAs and employee benefit plans) made to Michigan residents. Although there are ongoing discussions between the State of Michigan and the Michigan Bankers Association (“MBA”) regarding the date withholding is actually going to be required under the law, we want inform you about this new provision as it is currently drafted. As written, the law provides the following:

For individuals born before 1946 (over age 65), withholding is required on distributions from a private pension or retirement account that in any one year, exceed the sum of $45,842 if single or married filing separate, or $91,684 if married, filing a joint return. Distributions from pension and retirement benefits received from public sources are not subject to a withholding requirement for this age group.

For individuals born between 1946 and 1952 (between ages 59 and 65), withholding is required on distributions from either a public or private pension or retirement benefit account that in any one year, exceed the sum of $20,000 if single or married filing separate or $40,000 if married, filing a joint return. Please note that the withholding requirements for this age group are for distributions from both public and private pension payments.

For individuals born after 1952 (under age 59), withholding is required on all distributions from all public and private pension or retirement benefits. There is no exempt amount.

If you are a United Wealth Management Group client and take distributions from retirement accounts, your relationship manager should be contacting you soon to discuss how United will handle our withholding responsibility requirements. Absent a change in the effective date as referred to above, we will begin withholding the full amount of Michigan income tax (4.35%) from all retirement account distributions beginning on January 1, 2012. We will certainly provide our clients with additional information regarding the discussions over the effective date going on between the State and the MBA as we learn more.

In the interim, if you would like to discuss your specific situation or if you have general questions about this new law, please contact a United Wealth Management Group relationship manager.

Please note that nothing contained in this posting is intended to be tax or legal advice. We are happy to work in conjunction with your tax and legal professionals to ensure you are kept up to date on the latest regulatory changes and serve your needs as your trusted financial advisors.

United Structured Finance Company (USFC) was ranked as the number-one Small Business Administration (SBA) lender in Washtenaw, Livingston, and Lenawee Counties and number-three in the state of Michigan for the fiscal year ending September 30, 2011 (in SBA 7a dollars approved) based upon information provided by the SBA. We financed more than $30 million in projects and helped to originate over 30 transactions in Michigan.

These results continue to demonstrate our commitment to supporting the communities we serve by helping small businesses succeed and retain jobs here in Michigan.

A recent transaction we completed provided an opportunity for a borrower, who specializes in fiber coating processes and engineering consulting for industries such as automotive and aerospace, to grow their business and hire additional employees. In addition, they export about 70% of their products overseas.

The borrower asked for additional working capital due to nearly $5MM in increased business. Because of this request, their existing lender ordered an updated appraisal of their commercial real estate which showed a reduced value and the lender was no longer willing to work with the borrower and demanded full payment.

Payroll for this borrower was on Wednesdays, and we knew the proceeding Monday that if we weren’t able to put a solution together for them by then they would have to close their doors and almost 60 employees would suddenly be out of a job.

Not only did we refinance the borrowers existing debt but we added about $800,000 for the borrower to have available as additional working capital for their sales growth.

This is yet another exciting example of the things we are able to do for our borrowers and communities by using the SBA loan programs.

If you are looking for expertise and solutions that can help you in business expansion financing, business acquisition financing, debt restructuring or SBA financing programs, contact United Structured Finance Company today.

See how we have helped other small businesses grow and succeed.