Navigating new Tax Terrain: SIMPLE IRA Rules, Booster Donations & Stock Awards.

At Spizzirri Law LLC, we stay ahead of tax law developments to help clients optimize compliance, reduce risk, and unlock value—whether you're planning for retirement, launching a new venture, or structuring compensation packages. Here are three timely federal tax topics you should know about as we near the middle of 2025:

1. SIMPLE IRAs Are No Longer That Simple

The SECURE 2.0 Act has reshaped the landscape for SIMPLE IRAs, historically favored by small businesses for their ease of use. While the plan remains accessible, new 2025 rules introduce a complex mix of enhanced contribution limits and catch-up provisions—especially for employers with 25 or fewer employees.

For example:

• Employees aged 60 to 63 may now contribute up to $22,450, assuming eligibility and employer match thresholds.

• Employers must choose between providing a 3% match or a 4% nonelective contribution—decisions that could carry ERISA-related litigation exposure if mishandled.

From a mergers and acquisitions perspective, tax and compliance risks tied to retirement plans are now a bigger due diligence consideration. Employee benefit plans can materially affect transaction costs, post-deal integration, and successor liability.

Planning Tip: Businesses must opt in by October 1 to offer SIMPLE IRAs for the following year. Now is the time to align your retirement benefit strategy with updated federal thresholds.

2. Booster Club Donations: TCJA Repeal Still Stings

The Tax Cuts and Jobs Act (TCJA) eliminated the once-generous 80% deduction for college booster club donations tied to athletic ticket perks. Although workarounds exist—such as making anonymous or general-purpose gifts—many donors are still surprised to find their contributions nondeductible.

As NIL (name, image, and likeness) payments rise, universities are developing innovative funding channels. Still, many of these efforts raise tax ambiguity and potential audit risk, especially when tied to donor perks or unclear 501(c)(3) structuring.

Key Litigation Insight: IRS scrutiny of high-dollar donor structures continues. Ensure your client’s charitable giving, particularly through entities or funds tied to athletes or schools, passes muster under current deductibility rules.

3. Restricted Stock: A Hidden M&A Time Bomb

For growing companies and startups, equity compensation is a critical tool but, one that often carries unseen tax exposure.

Employees receiving restricted stock may face significant tax bills if the Section 83(b) election is not properly executed. For example:

• Selling $500,000 in shares post-vesting without the 83(b) election could trigger ordinary income tax at 37%, versus capital gains at 20% with the election.

• The difference could amount to $68,000 or more—a substantial liability in a corporate acquisition or exit event.

M&A Implication: During due diligence, acquirers must review whether target executives made timely 83(b) elections. Failure to do so can inflate tax liabilities and reduce after-tax value for key stakeholders.

Tax law may be federal, but its impact is definetly personal. At Spizzirri Law LLC, we help businesses and individuals navigate shifting IRS rules, audit risks, and strategic planning opportunities—with a keen eye on how every tax choice today shapes tomorrow’s litigation exposure or deal outcome. Need guidance on SIMPLE IRAs, donor strategy, or executive compensation in an M&A context? Contact us today.

Thanks for reading.

MD

Reference: Small Businesses: Tax Strategies- Vol. 20, No. 6, Pages 3, 4, & 6