Higher contribution limits on 401(k) & IRAs

Contribution limits for 401(k) plans have been increased to $17,500 and IRAs (both Roth & traditional) to $5,500 due to inflation. This is the first increase since 2008. Persons 50 and older can contribute an additional $1,000 to an IRA. If your earned income is between $178,001 and $188,000, your 2013 Roth IRA contribution limit phases out. Persons earning $188k or more cannot contribute to a Roth IRA but they can contribute to a non-deductible traditional IRA and later pay the taxes to convert to a Roth.
For those over 50 years old contributing to a 401(k), the additional “catch-up” amount will remain $5,500, resulting in a maximum contribution of $22,500.

Fiscal cliff’ calculator: What it means for me

It's New Year's Eve and it looks like Congress if pushing us over the fiscal cliff. Check out this interactive graphic on the Washington Post website to estimate how the cliff will affect your taxes.
http://www.washingtonpost.com/wp-srv/special/business/tax-cut-scenarios/
HNY!

Talk about financial planning with family during holidays

Use the holidays to talk about retirement planning with family
Holidays are a great time to ask family members questions about their retirement plans and experiences, such as how they are drawing down their savings and how many drug prescriptions they have, Steve Vernon writes. "You could learn some valuable lessons that might help you prepare for your own retirement," he writes. " It's holiday time again, and many readers will be gathering with family to celebrate. Last month, I offered 10 retirement questions to ask your relatives at Thanksgiving, a more informative and interesting approach than hearing about Aunt Suzie and Uncle Bill's road trip to see the world's largest rocking chair.
Instead, ask your relatives how they're doing in retirement. They'll likely be glad to talk with you about themselves. And who knows? You could learn some valuable lessons that might help you prepare for your own retirement. If you're worried that they might think you're being nosy, tell them you're asking these questions so you can learn from their hard-won experience. My guess is they'll be glad to help, and it will make them feel useful." some questions from Steve Vernon:

• What's on your "bucket list"? Have you done anything lately on your list, or are planning to in the near future?
• Have you made new friends, or do you mainly see old friends?
• If you don't mind telling me, how do you invest your retirement savings? Why?
• Do you use a financial advisor? If yes, how did you select that person?
• Did you buy long-term care insurance? Why or why not?
• Do you have a Medicare Part D prescription drug plan? If yes, why did you pick that plan?
• If you don't mind me getting a little personal, how many prescriptions do you have? (The answer may shock you.)
• How are you drawing down your retirement savings? Do you have a systematic method?
• If there was one thing you'd do differently to prepare for retirement, what would that be?
• What advice do you have for me to help me in retirement?
• http://www.cbsnews.com/8301-505146_162-57559665/10-more-retirement-questions-for-the-holidays/

Is Your Financial Professional Truly A Financial Advisor?

I want to share with you the perspective of Lon Jefferies, a Certified Financial Planner™ (CFP) in SLC. He makes the point that anyone can call themselves a financial advisor, but most are salespeople earning commissions. If they stand to gain (be paid a commission) when you buy the products they recommend, how objective can they be? read Mr. Jefferies advice at: http://utahfinancialadvisor.blogspot.com/2012/12/is-your-financial-professional-truly.html

Student loan forgiveness = Tax debt

Student loan borrowers who take advantage of the government's income based repayment program and eventually have part of their student loan debt forgiven after paying a % of their income for a minimum of 20 years may be in for a painful surprise. Under current law the IRS considers the amount forgiven as taxable income. Read the details in this New York Times article: "For Student Borrowers, Relief Now May Mean a Big Tax Bill Later" by Ron Lieber: http://www.nytimes.com/2012/12/15/your-money/for-student-borrowers-a-tax-time-bomb.html?pagewanted=1&_r=0&emc=eta1
Lieber ends the article: The IRS expects immediate payment and the IRS, "alas, does not have an income-based repayment program."

Why Social Security is Sustainable

With fiscal cliff negotiations in high gear, much attention is focused on cutting "entitlements" a word that has a strong negative connotation. To learn more about the role and future of Social Security and why it should not be eviscerated, read Nancy Altman's analysis: Social Security Sustainable: Productivity Improvements Enlarge the Pie, Facilitate Funding Boomer Benefits and Beyond at: http://www.huffingtonpost.com/nancy-altman/social-security-sustainable_b_2318345.html

Give the gift of education with help from UESP & Zions Bank

This holiday season give a child a gift that they will remember for a long time. Establish a college savings account. The accounts offer tax savings and are an excellent way to save for college. There is no minimum contribution so no excuses. Skip the gift cards and toys imported from China. And get a $25 bonus! http://www.uesp.org
"The Utah Educational Savings Plan (UESP), Utah’s official nonprofit 529 college savings program, is teaming up with Zions Bank to help Utah residents give the gift of education this holiday season. Utah residents and beneficiaries who are new to UESP when they open a UESP college savings account before December 23, 2013, may be eligible to receive a $25 matching contribution, compliments of Zions Bank. To enjoy an extra $25 toward your college savings: visit uesp.org to open a new UESP account or download an Account Agreement; enter the promo code 1213HOL; and contribute at least $25 to the new UESP account."
To qualify, both the account holder and the beneficiary must be new to the plan. Go to: http://www.sltrib.com/sltrib/news/57271992-78/account-match-plan-utah.html.csp for details. Thanks to Lindsay Whitehurst at The Salt Lake Tribune for info.

Health Reform Subsidy Calculator

Find out whether you might be eligible for a subsidy to pay for health insurance under the Affordable Care Act. http://healthreform.kff.org/subsidycalculator.aspx?source=QL

The Kaiser Family Foundation website http://healthreform.kff.org, has an amazing amount of information and resources on health insurance. Learn more about the ACA at their website. “This tool illustrates premiums and government assistance under the health reform law signed by the President. Beginning in 2014, tax credits will be available for people under age 65 who purchase coverage on their own in a health insurance Exchange and are not covered through their employer, Medicare or Medicaid. The tool allows the user to examine the impact at different income levels, ages, family sizes, and regional costs.
Premium calculations are consistent with estimates of premiums under reform prepared by the Congressional Budget Office. CBO projects that average premiums under reform for the same level of coverage for a given group of enrollees would be 7-10% lower than under the status quo. However, in many cases coverage will be more comprehensive and accessible than what is typically available today in the non-group market. As a result, 2014 premiums in the calculator cannot necessarily be compared to what people buying insurance on their own are paying in 2010.
The calculator does not apply to people with coverage available through an employer, where the firm is generally paying for a substantial portion of the insurance premium.”

Year-End Investment Considerations for Investors

The SEC’s Office of Investor Education and Advocacy and the Financial Industry Regulatory Authority (FINRA) are issuing this Investor Alert to provide individual investors with a few suggestions for year-end investment planning as the year draws to a close.
Suggestions and topics include:

• Review Your Asset Allocation
• Consider Rebalancing
• Tax Considerations (especially with the fiscal cliff looming)
• Check Out Your Investment Professional
• Locate Your Financial Records  
• For details see: http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/MoneyManagement/P197390  

More Than 80 Percent of Centenarians are Women!

 “The 2010 Census counted 53,364 people age 100 and older in the United States, and they were overwhelmingly female. For every 100 centenarian women, there were only 20.7 centenarian men. The report, Centenarians: 2010, also compares centenarians with other age groups in the older population.”

Are you planning for the possibility of joining this exclusive club?

Taxes, W-2s & Health Care Reform

What’s the biggest federal tax subsidy? 

Most people would guess something other than the tax exclusion for employer provided health insurance! 

“Employers’ payments covering premiums for employer-sponsored health insurance are exempt from federal income and payroll taxes. Any portion of premiums paid by the employee is typically excluded from taxable income and is therefore also tax-free, although some employers require employees to pay their share of premiums out of after-tax income.” Who benefits the most? “Because the exclusion of premiums for employer-sponsored insurance reduces taxable income, it is worth more to taxpayers in higher income tax brackets than to those in lower brackets.”  So the more you earn, the more you benefit from this subsidy. Learn more at the Tax Policy Center website: http://www.taxpolicycenter.org/briefing-book/key-elements/health-insurance/exclusion.cfm

Effective January 1, 2013, employers are required to report the value of each employee’s health insurance premiums on their W-2. The reportable cost includes both the employer and the employee portions of the total premium.  This information will not affect your taxes for 2013; the amount will just be printed on your W-2.