Category Archives: Retirement Planning

WMA Newsletter – November/December 2016


 November/December 2016

Here’s a brief glance at what you’ll find in the November/December issue…


When should you pull the trigger on Social Security benefits?

When is it appropriate to start collecting Social Security benefits? As this article discusses, the answer to that question depends on such factors as the amount of benefits, additional assets, life expectancy and marital status. Individuals are also encouraged to consider the effect of earnings if they plan to work while receiving benefits. A table shows how full retirement age is determined.


Falling markets, though inevitable, provide opportunities

Investors don’t necessarily have to suffer when markets are volatile. As this article explains, investors with long-term objectives and broadly diversified portfolios can probably ignore short-term market fluctuations. In fact, volatility can provide opportunities to invest in stocks that previously were too expensive. Taking advantage of such buying opportunities may position investors for better performance.


Weighing the pros and cons of LTC insurance

Few people want to think about the possibility that they might need long-term care (LTC). But it’s important to do so, and LTC insurance can help. This article weighs the benefits of LTC insurance with the cost of the premiums and explains some of the terminology used in LTC policies.


Self-directed IRAs: Watch out for these 3 tax traps

Although self-directed IRAs enable account holders to invest in nontraditional assets such as real estate, they also contain several potential tax traps. This short article warns about unrelated business taxable income, unrelated debt-financed income and prohibited transactions.


To view a PDF of the newsletter with full articles visit our Web site


Boston CPA & Wealth Advisor Puts the Market swings in Context

It seems you can’t get away from the “fear trade” during these last few weeks. It is all over the news, in your email inbox, on social media, etc… it is hard to tune it all out.

Remember, we have been here before when panic drove the markets, and some investment managers are falling in again, trimming back their equity exposures in a time where the economic fundamentals do not support such a move. Currently, there are many causes to this recent pullback, not the least of which is time (we were due for a correction in the market). But, as you listen to the pundits and talking heads, they only seem to be focused on what will get them ratings, and that is usually fear.

We are continually looking at the economy (domestic and international) and the prospects for the markets overall, over time. Based upon that analysis, this last pull back was an opportunity, just as the last one was. We are still not that far from the all-time highs achieved by the markets a short time ago and the intraday movements may exceed them today! This tumult will pass and our economy will continue forward, but the volatility in the equity markets will be here until several fears settle down. Currently the fear factor seems to be the most prevalent issue moving the market, Ebola, ISIS, Ukraine are all adding to fear. The rise in value of the US dollar is helping the Fed back off on their tightening plans, and corporate earnings are starting to come in (positively). And we are in October, which has historically been a tough “transitional” month for the markets.

On the other hand, we have extraordinary drop in the cost of doing business in the US. Oil is down significantly and will be a boost to international consumer spending. Natural gas is still plentiful (and local) providing us with lower manufacturing costs and bringing jobs back to the US. The US dollar is strengthening giving us the ability import more goods at lower costs which should help drive US consumption. The employment picture keeps getting better.

Our sense is that you are seeing a lot of profit taking on the fear. This great article recently ran on CNN Money:
“Is it time to exit stocks?” by Heather Long

That sums up our thoughts quite well.

We have a very diversified long-term investment approach with an asset allocation that is designed to provide you with a reasonable return that will meet your needs. These down trends and adjustments happen. They will always happen. But you have plenty of time to wait a pullback out and watch the markets continue forward.

Don’t get caught up in the hype or lose track of the facts!


Our friend, John Tener, shared the following facts with us for us to share with you:

1. The U.S. now had had 63 straight months of economic expansion, including 54 straight months of private sector job growth (the best recovery in almost any measurable way since FDR).

2. The 54 straight months of private sector job creation is the longest period of job creation since the Labor Dept. began keeping statistics.

3. Unemployment had dropped from 10.1% in October, 2009 to 5.9%, and is projected to reach 5.4% by the summer of 2015.

4. The stock market has seen steady growth since early 2009, with the Dow Jones average reaching a record 17,098 this past August, 2014. 401k retirement plans, mostly affecting middle-class Americans have directly benefitted.

5. The Federal deficit continues to shrink, and has been reduced by two-thirds since 2009. In 2009, just after President Obama was sworn in, the deficit was $1.4 trillion. the 2014 deficit is projected to be around $500 billion, the smallest since 2007.

6. Federal spending since the beginning of 2009 has increased only 1.4% annually, the lowest rate since Eisenhower. (Under Reagan it was 8.7%; under G.W. Bush it as 8.1%.)

7. For 95% of American taxpayers, income taxes are now lower than just about anytime in the past 50 years. (The only people whose income taxes have gone up are those making $400,000 per year or more–less than 2% of the population).

8. Our dependence on foreign oil has shrunk since 2009 due to record domestic oil production and vastly improved fuel efficiency standards for cars and trucks.

9. Since 2010, at least 7 to 10 million more Americans now have real, effective, affordable health insurance, which will inevitably lead to better health, more work productivity, less time loss, and longer lives.

10. Health care reforms (under the ACA) have added years to the life of Medicare, which was on course to exhaust its funds by 2018. It is now fully solvent to a projected 2030.

11. Health care reforms (under the ACA) have lead to the slowest rate of increase in health care costs since 1960.

12. There are now fewer soldiers, sailors and airmen in war zones than at any time in the last 10 years.

13. There have been zero successful attacks by al Qaeda on U.S. soil in the last six years.

2014 IRA and Retirement Plan Limits

IRA contribution limits

The 2014 IRA and Retirement Plan Limits are important to understand. The maximum amount you can contribute to a traditional IRA or Roth IRA in 2014 remains unchanged at $5,500 (or 100% of your earned income, if less). The maximum catch-up contribution for those age 50 or older in 2014 is $1,000, also unchanged from 2013. (You can contribute to both a traditional and Roth IRA in 2014, but your total contributions can’t exceed this annual limit.)

Traditional IRA deduction limits for 2014

The income limits for determining the deductibility of traditional IRA contributions have increased for 2014 (for those covered by employer retirement plans). For example, you can fully deduct your IRA contribution if your filing status is single/head of household, and your income (“modified adjusted gross income,” or MAGI) is $60,000 or less (up from $59,000 in 2013). If you’re married and filing a joint return, you can fully deduct your IRA contribution if your MAGI is $96,000 or less (up from $95,000 in 2013). If you’re not covered by an employer plan but your spouse is, and you file a joint return, you can fully deduct your IRA contribution if your MAGI is $181,000 or less (up from $178,000 in 2013).

If your 2014 federal income tax filing status is:
Your IRA deduction is reduced if your MAGI is between:
Your deduction is eliminated if your MAGI is:
Single or head of household

$60,000 and $70,000

$70,000 or more

Married filing jointly or qualifying widow(er)*

$96,000 and $116,000 (combined)

$116,000 or more (combined)

Married filing separately

$0 and $10,000

$10,000 or more

*If you’re not covered by an employer plan but your spouse is, your deduction is limited if your MAGI is $181,000 to $191,000, and eliminated if your MAGI exceeds $191,000.

Roth IRA contribution limits for 2014

The income limits for Roth IRA contributions have also increased. If your filing status is single/head of household, you can contribute the full $5,500 to a Roth IRA in 2014 if your MAGI is $114,000 or less (up from $112,000 in 2013). And if you’re married and filing a joint return, you can make a full contribution if your MAGI is $181,000 or less (up from $178,000 in 2013). (Again, contributions can’t exceed 100% of your earned income.)

If your 2014 federal income tax filing status is: Your Roth IRA contribution is reduced if your MAGI is between: You cannot contribute to a Roth IRA if your MAGI is:
Single or head of household

$114,000 and $129,000

$129,000 or more

Married filing jointly or qualifying widow(er)

$181,000 and $191,000 (combined)

$191,000 or more (combined)

Married filing separately

$0 and $10,000

$10,000 or more

Employer retirement plans

The maximum amount you can contribute (your “elective deferrals”) to a 401(k) plan in 2014 remains unchanged at $17,500. The limit also applies to 403(b), 457(b), and SAR-SEP plans, as well as the Federal Thrift Savings Plan. If you’re age 50 or older, you can also make catch-up contributions of up to $5,500 to these plans in 2014 (unchanged from 2013). (Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.)

If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($17,500 in 2014 plus any applicable catch-up contribution). Deferrals to 401(k) plans, 403(b) plans, SIMPLE plans, and SAR-SEPs are included in this limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can defer the full dollar limit to each plan–a total of $35,000 in 2014 (plus any catch-up contributions).

The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) plan in 2014 is $12,000, unchanged from 2013. The catch-up limit for those age 50 or older also remains unchanged at $2,500.

Plan type: Annual dollar limit: Catch-up limit:
401(k), 403(b), governmental 457(b), SAR-SEP, Federal Thrift Savings Plan



SIMPLE plans



Note: Contributions can’t exceed 100% of your income.

The maximum amount that can be allocated to your account in a defined contribution plan (for example, a 401(k) plan or profit-sharing plan) in 2014 is $52,000 (up from $51,000 in 2013), plus age-50 catch-up contributions. (This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan.)

Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2014 has increased to $260,000, up from $255,000 in 2013; and the dollar threshold for determining highly compensated employees remains unchanged at $115,000.


Copyright 2006-2013 Broadridge Investor Communication Solutions, Inc. All rights reserved

Medicare open enrollment period starts 10/15/2013

What is the Medicare open enrollment period?

The Medicare open enrollment period is the time during which people with Medicare can make new choices and pick plans that work best for them. Each year Medicare plans typically change what they cost and cover. In addition, your health-care needs may have changed over the past year. The open enrollment period is your opportunity to switch Medicare health and prescription drug plans to better suit your needs.

When does the open enrollment period start?

The Medicare open enrollment period begins on October 15 and runs through December 7. Any changes made during open enrollment are effective as of January 1, 2014.

During the open enrollment period you can:

  • Join a Medicare Prescription Drug Plan
  • Switch from one Medicare Prescription Drug Plan to another Medicare Prescription Drug Plan
  • Drop your Medicare prescription drug coverage altogether
  • Switch from Original Medicare to a Medicare Advantage Plan
  • Switch from a Medicare Advantage Plan to Original Medicare
  • Change from one Medicare Advantage Plan to a different Medicare Advantage Plan
  • Change from a Medicare Advantage Plan that offers prescription drug coverage to a Medicare Advantage Plan that doesn’t offer prescription drug coverage
  • Switch from a Medicare Advantage Plan that doesn’t offer prescription drug coverage to a Medicare Advantage Plan that does offer prescription drug coverage

What should you do?

Now is a good time to review your current Medicare plan. There are some factors you may want to consider as part of that evaluation. For instance, are you satisfied with the coverage and level of care you’re getting with your current plan? Are your premium costs or out-of-pocket expenses too high?

Has your health changed, or do you anticipate needing medical care or treatment? Now is the time to determine if your current plan will cover your treatment and what your potential out-of-pocket costs may be. If your current plan doesn’t meet your health-care needs or fit within your budget, you can switch to a plan that may work better for you.

What’s new in 2014?

Most Medicare Prescription Drug Plans have a temporary limit on what a particular plan will cover for prescription drugs. In 2014, this gap in coverage (also called the “donut hole”) begins after you and your drug plan have spent $2,850. It ends after you have spent $4,550 out-of-pocket, after which catastrophic coverage begins. However, part of the Affordable Care Act (ACA) gradually closes this gap by reducing your out-of-pocket costs for prescriptions purchased within the coverage gap. In 2014, you’ll pay 47.5% of the cost for brand-name drugs in the coverage gap and 72% of the cost for generic drugs in the coverage gap. Each succeeding year, out-of-pocket prescription drug costs within the coverage gap continue to decrease until 2020, when you’ll pay 25% for covered brand-name and generic drugs within the gap.

Health Exchanges (Marketplaces)

Health Exchanges, or Marketplaces, which are part of the ACA, are available for people to shop for health insurance coverage. The Exchanges are scheduled to open October 1, 2013. The ACA also includes an insurance mandate, which requires most individuals to have health insurance or face a penalty. However, if you have Medicare, neither provision applies to you. As a Medicare recipient, you won’t face penalties for being uninsured. Also, Exchanges do not provide information on Medicare plans, and you can’t purchase Medicare coverage through an Exchange.

Where can you get more information?

Determining what coverage you have now and comparing it to other Medicare plans can be confusing and complicated. Pay attention to notices you receive from Medicare and from your plan, and take advantage of help available by calling 1-800-MEDICARE or by visiting the Medicare website, Your financial professional can also help you find the information you need to make decisions about Medicare.






No Rendering of Advice The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a qualified professional accountant.Presentation of the information is not intended to create, and receipt does not constitute, an accountant-client relationship. Internet subscribers, users, online and other readers are advised not to act upon this information without seeking the service of a professional accountant.Any U.S. federal tax advice contained in this document is not intended to be used for the purpose of avoiding penalties under U.S. federal tax law.Accuracy of Information While we use reasonable efforts to furnish accurate and up-to-date information, we do not warrant that any information contained herein or made available through our website is accurate, complete, reliable, current or error-free. We assume no liability or responsibility for any errors or omissions in the content of this website or such other materials or communications.

Disclaimer of Warranties and Limitations of Liability This document is provided on an “as is” and “as available” basis. Use of this or our website is at your own risk. We and our suppliers disclaim all warranties. Neither we nor our suppliers shall be liable for any damages of any kind with the use of this website.
Copyright 2006-2013 Broadridge Investor Communication Solutions, Inc. All rights reserved