2018 Year End Contribution Reminders

Tax season comes quickly after the year comes to a close. In 2018, a few changes have occurred due to legislation that was created by the Tax Cuts and Jobs Act of 2017. One of the main changes was a lowering of tax rates and a near doubling of the standard deduction. Also, a number of expenses that were allowed as itemized deductions in previous years have been severely restricted or eliminated. It helps to understand which changes were made so that you can get ahead of preparing your return. Here are some of the changes that were made that may affect you in 2018:

Changes To Itemized Deductions

In 2018, tax bracket numbers stayed the same. However, rates were reduced. The tax rate at the top of the scale was lowered to 37 percent. While the standard deduction increased, other changes to allowable itemized deductions may mean that you will actually have a higher tax bill to pay.

Tax prep fees, investment expenses, foreign real estate taxes paid, home equity loan interest that wasn't used for home improvement and personal exemptions are no longer allowable as itemized deductions. Alimony payments for any divorce that is finalized in 2019 or after will also be added to that list and be applicable in 2019.

A Change To Charitable Donations

Charitable donations can only be used as a deduction if you decide to itemize. However, if you do itemize and have any cash contributions that were made to public charities, those can be deducted by as much as 60 percent of their AGI, which is up 10 percent from the previous limit which was 50 percent.

Tax Reform Only Offers A Few New Opportunities

There was a change in 529 plans. You now have the ability to use as much as $10,000 per year from the plan to pay for tuition related to kindergarten through 12th grade. The advantage of using a 529 plan is that it provides tax-free withdrawals and tax-free growth at the federal level for all qualified expenses.

Another change involves S corporations, partnerships and sole proprietorships. If you own one of these businesses, you may be eligible for a 20 percent deduction. However, this deduction does have some contingencies related to the type of business and the amount of income received.

Changes To The Alternative Minimum Tax For Individuals

There were also changes made to the Alternative Minimum Tax (AMT) for individuals. If you are married and filing jointly, exemptions have been raised to $109,400. If you're single your exemption has been raised to $70,300. These start to phase out at the $1 million level if you are a couple and $500,000 if you're single.

What Is The Best Way To Prepare

It's always a good idea to get stared as soon as possible before the end of the year to understand how any changes in the tax reform will affect your filing. It also helps to use a professional tax advisor or CPA who understands the nuances of the new tax act. You want to make sure that you pay the appropriate amount for estimated taxes or for your withholding tax for the year.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJA, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. Investors should consider, before investing, whether the investor's or the designated beneficiary's home state offers any tax or other benefits that are only available for investment in such state's 529 savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors.

Long Term Care Planning Could Save Your Retirement

Yes, saving for retirement and planning for income is important but so is planning for the unexpected. It is incredibly easy to get caught up in the present and not think about how much one needs to take care of themselves in the future. This is why retirement planning is more about planning for all aspects of your retirement years and now just about income.

As one ages, the amount that they have to spend to take care of themselves will likely increase. For those entering the old age, these payments tend to be significantly more. Medical bills and housing costs increase with time. In short, everything becomes more expensive over time, and your earnings in the present need to be able to take care of your needs in the future.

Doing the math and figuring just how much you can save for the future is essential, even as one starts their career. People who are in well-paying jobs and who are more than well situated for their futures to decide to start planning early to take care of their lives in advance. To understand the importance of planning early, here are some of the prominent statistics that have been derived after a thorough analysis of the earnings that people have and the costs associated with them as a result of their savings.

52% of the total population above the age of 65 are in need of specific resources that can aid them with their medical bills and additional care. As a person ages, they tend to encounter a lot more health problems than those who are younger and healthier. This means that when planning for one’s future, they have to take into account certain costs that are associated with medical bills and care costs.
14% of the total population need long-term care for more than five years. This again is because of the prevalent health issues that people within this category tend to face. Persistent health issues and conditions often need a lot more tending to, especially in the later stages of one’s life, and planning for this future is incredibly important for anyone who wants to get treated for their conditions.
10% of Americans over the age of 65 have developed some form of neurological disorders, or have been diagnosed with Alzheimer's or Parkinson's. These are disorders in which individuals need round-the-clock care, and a lot of treatments to get better. Since these aren’t cheap by any means, paying for them can burn one’s pocket rather easily.
57.5% of the population who are above the age of 65 years tend to spend around $250,000 on long-term care. As the number of disorders that people face tends to increase, the expenditure on medical costs also tends to go up. Americans generally spend incredible amounts on health care, and these costs are only going to grow over the next few years.
3.8% is the amount of inflation that nursing rooms tend to experience every five years. This means that over the years, the amount that one is going to need to spend on a simple room to take care of themselves is only going to increase. Since these become a necessity in many instances, it becomes important for an individual to plan properly for the future.

We are here to help you plan for the road ahead. Contact us, today.

Any opinions are those of John Sedberry and not necessarily those of RJA or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. You should consider all of your available options and the applicable fees and features of each option before moving your retirement assets.

2019: Contribute More Toward Your Retirement

Planning for retirement will be easier for those contributing to in 2019! Recent changes to a list of savings accounts are going to yield higher returns for savers in the new year.

You will be able to take advantage of "Employee-Sponsored Account", including 401(k) and 403(b)plans. The current limit for contribution is a little over $18,000. In the new year, the contributions are going to exceed more than $19,000. The plan also includes catch-up contributions around $6,000. You need to be 50 years of age or older to qualify. Those whose birthday fall on December 31st of that year also qualify. You should check with your employer to get more information, especially if you plan on leaving the company at some point. There are terms and conditions that apply, but that should make your life a little easier.

If you are self-employed, you can look into a "Self-Employed 401(k) Plan”. The only difference between this plan and the traditional 401 (k) plan is that you set it up instead of an employer. The contributions you make will reduce your gross income, but can help you when it comes to tax time. Keep in mind that this starts next year.

IRA plans are getting a boost, too. The contribution limit was $5,500 but will increase to $6,000. This plan applies to any IRA plan you have. You could be making some considerable tax savings with this new increased limit if you are 50 years or older.

The IRS also announced that it increased all income limits used in determining eligibility to make deductible contributions to traditional IRAs, Roth IRAs and even for claiming the Savers Credit.

Finally, there is also a "Health Savings Plan" that can help your financial picture when it comes to medical expenses. The 2019 annual HSA contribution limit for individuals with single medical coverage is $3,500, an increase of $50 from 2018. The limit is $7,000 for those covered under qualifying family plans (up from $6,900 in 2018). But if you're 55 or older in 2019, you can contribute an additional $1,000 annually, or $4,500 total to an HSA for singles and $8,000 for families.

If you're enrolled in a high-deductible health plan, you really should take advantage of this special savings opportunity. Make it a point to set aside pretax money into an HSA because you don't pay taxes on the earnings, which can also be withdrawn tax-free in retirement when used to reimburse yourself for qualified medical expenses.

Look forward to 2019 and take advantage of the changes to prepare for the retirement road ahead!

Changes in tax laws may occur at any time and could have a substantial impact upon each person�s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of Raymond James & Associates we are not qualified to render advice on tax or legal matters. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Opinions expressed are not necessarily those of Raymond James & Associates or your Financial Advisor.

Medicare Fall Open Enrollment Ends Soon

Time is almost up for this year’s Medicare Open Enrollment period. You have until the 7^th of December to modify your existing Medicare plans. In this period you can enroll in a Medicare Advantage Plan or a Part D drug plan.

Any modification made during this period is effective from January 1st of the following year. Generally, this is the only time of the year when one can opt for a new plan or switch from Advantage plans to Original Medicare plans. A tweak not known to many is to purchase a Medigap policy which compensates for Medicare costs to some extent. The availability of a Medigap Policy completely depends on the place of residence.

Medicare coverage and costs are revised every year. It is recommended to compare the existing package with the new ones for better understanding before making any possible modifications. The members of Medicare Advantage Plans of Part D receive notice of changes and the current evidence of coverage which are to be compared to see if any modification will result in cost and coverage benefits.

Medicare has rolled out a Plan Finder tool for locating the best plans in Part D drug coverage policies. The tool is designed to understand the requirement of drugs, cost of those drugs and the availability in pharmacies often visited based on which it runs extensive comparisons with other plans and end up displaying the best plan to opt for if there is any.

Joining an Advantage Plan is a very simple process. Calling their national toll free number may be the quickest way to know about the plans in that area following which one can choose to opt for a particular package best suited for the requirements. Calling the State Health Insurance Assistance Program can help you understand the available options and is recommended for changes if necessary. After shortlisting a plan, it is a must to check that the doctors and hospitals are included in the network. Speaking to the representative should be followed by noting down the date, the conversation and a cross-check with the current plans for transparency.

Though there are different ways to enroll during the fall open enrollment period, the most hassle-free way of enrolling and protecting yourself is to directly call their toll free number which is 1-800-MEDICARE. One last check to confirm all the details before making payment is suggested.

In case that you are not satisfied with any Advantage Plan opted for during the Fall Open Enrollment period, you can modify the plan in the next window which is called the Medicare Advantage Open Enrollment Period abbreviated as MA OEP. This period starts from 1st January and ends on 31st March of every year. This is the final window for making any sort of changes wished for in the Medicare Advantage Plans and the Part D drug coverage plans.

There lies a distinct difference between Open Enrollment for Federal Marketplaces and the Fall Open Enrollment period. The federal marketplaces are meant to annually offer enrollment periods for American citizens who are not insured or underinsured according to the standards set by the law. Though the duration of both the windows may coincide, the federal marketplaces or exchanges is not recommended citizens with existing membership with Medicare or are eligible for Medicare. For people who can afford and are eligible for Medicare and are looking to modify their current plans or opt for the new membership with the organization, the Fall Open Enrollment Period starting from October and ending on December is the correct time of the year.

Any opinions are those of John Sedberry and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

Retirement Should Not Scare Women

Halloween may be an appropriate time for a good scare, we should limit unwanted surprises in retirement! Generalizations may not necessarily reflect your individual circumstance although there are fact-based reasons why the average woman faces greater hurdles than the average man does in securing her retirement. However, an awareness of the negatives and a proactive plan to take full advantage of some positives should demonstrate that retirement should not scare women.

More years of retirement and with fewer assets

The deck is stacked against some women before they even think about enjoying their first day of retirement. Some of the factors include:

Longer life expectancy
Greater likelihood of being the surviving spouse
Wage gap as compared to male counterparts
Less working years due to child rearing and caring for aging parents

One factor that may be interpreted as either a positive or negative is risk tolerance. Women tend to invest more conservatively than men, which can lead to lower potential returns. Conversely, conservative investors tend to move money around less often and continuity can lead to more consistent growth in the long term.

Take control

Where one starts is seldom as important as where one ends up. Consider these strategic goals to level the retirement playing field:

Save – Start early, continue to save and save as much as possible. 20 percent of income is a nice goal but maximizing what is practical is the ultimate goal.
Know what is needed – In our sunset years, we tend to fear dying less than outliving our retirement money. One way to prevent that is to begin with knowledge of what it costs to live. Be realistic about expenses that are fixed and what will no longer be needed once work is no longer in the picture. Ideally, the fixed expenses of one year of retirement living is generated annually by retirement income.
Invest the savings – This comes with one caveat – invest savings once an emergency fund for unexpected expenses is established. Most experts recommend six months of living expenses in cash assets as a minimum. Once that is accomplished, an asset allocation plan should be devised based primarily on age and ultimate financial goals.
Keep working – Other than the satisfaction work can provide as wells as a longer timeline to save, extending work past age 65 pays dividends in social security benefits. Although many women are concerned social security may one day fail, experts predict its pending demise is over exaggerated. One thing that is certain is that the longer a worker waits before taking benefits, the better. Consider that at age 62 a worker receives 70 percent her full retirement benefits, but that number rises to 132 percent at age 70.

Include an estate plan

Careful planning includes what-if scenarios. Take the time to set up a will and more preferably a trust, as well as a financial power of attorney and durable power of attorney for healthcare.

There’s no reason any woman should fear retirement. A realistic analysis, a well-crafted plan and disciplined execution will go a long way towards a secure and serene future. We are here to help, give us a call, today.

**This material was provided by AdvisorFuel.com, a third party vendor not affiliated with Raymond James**