Sams Club will offer small business health insurance, the government raises the contribution limits on 401(k) accounts, and Amazon has a very poor third quarter. Here is the news of the day for October 24, 2014.
401(k) Contribution Limits Raised
The Internal Revenue Service Thursday announced that for 2015, contribution limits for 401(k) retirement accounts are being expanded. The maximum contribution for the government’s Thrift Savings Plan, private sector 401(k)s and other comparable programs for employees has been raised to $18,000, an increase of $500 from 2013 and 2014. For contributors over the age of 50, the “catch-up’’ contribution maximum has been raised from $5,500 to $6,000. That means contributors approaching retirement age or already there can max out at a contribution of $24,000 annually. For small business owners and self-employed workers that invest in a SEP-IRA or a single 401(k), the 2015 annual contribution limit increases $1,000 to $53,000.
Sams Club Will Offer Health Insurance
Sams Club, which serves as a supplier for many small business owners, will now be able to supply health care coverage for employers through their own health insurance coverage. The wholesale retailer has announced new services for small companies, including a private health-care exchange for small business owners and their employees. Aetna will be the insurance company providing the coverage. Costco announced its own private insurance exchange for individuals earlier in 2014. Sams Club’s offering is aimed at business owners who are accustomed to working with Sams Club and will want to use its health coverage rather than state exchanges offered under the federal Affordable Care Act. The coverage will be available in 18 states.
UPS Reports Strong Earnings
United Parcel Service Friday said robust consumer and business demand in the United States and Asia led to a strong earnings and revenue report for the past quarter. UPS posted earnings of $1.32 per share on revenue of $14.29 billion, and also said its forecast for the full year is for earnings of $4.90 to $5.00 a share. Last year, UPS reported earnings of $1.16 per share on revenue of $13.52 billion during the same quarter.
Amazon Delivers Huge 3Q Losses
Amazon announced Thursday it had a net third quarter loss of $437 million compared to $41 million in the same period last year. Revenues rose 20 percent to $20.58 billion, up from $17 billion in the year ago quarter. Shares of Amazon are down more than 23 percent year-to-date. Amazon is forecasting losses as high as $570 million for the fourth quarter, and revenues of between $27.3 billion to $30.3 billion. The e-tailer in the third quarter launched a highly publicized smartphone, the Fire, which fizzled. Originally priced at $199 with a two-year contract, it has since been marked down to $1. The company has a new line of Kindle tablets that have been better received, and is looking to make a bigger splash with consumers by opening pop-up retail stores. One location is in New York.
Microsoft Earnings Top Expectations
Lifted by its cloud-computing products as well as strong phone and surface tablet sales, Microsoft reported higher-than-expected revenue for its fiscal first quarter on Thursday, USA TODAY reports. Microsoft shares rose 3 percent in after-hours trading to $46.37. Revenue rose 25 percent to $23.2 billion, helped by the phone business it bought from Nokia in April, topping analysts' average estimate of $22 billion. Quarterly profits for the world’s largest software company fell 13 percent, largely due to an expected $1.1 billion charge related to mass layoffs announced in July, which cut 11 cents per share off earnings. Including that charge, Microsoft reported a profit of $4.5 billion, compared with $5.2 billion in the same period a year-ago.
Senators Call for Nationwide Air Bag Recall
Senators Richard Blumenthal of Connecticut and Edward Markey of Massachusetts, both Democrats, demanded Thursday that safety regulators issue a nationwide recall of automobiles with potentially defective air bags that can launch metal shards into occupants. The air bags are manufactured by Takata Corp and installed in vehicles from 10 automakers. At least four deaths have been linked to the problem, leading to the recall so far of 7.8 million vehicles in the United States since last year and more than 16 million globally since 2008. The air bags are thought to inflate with too much force, causing parts to possibly spray into the faces and necks of occupants of the cars. The recalls have focused on cars in hot, humid places, such as Florida, as investigators believe improperly sealed air bags are prone to problems in warmer regions.