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Posts Tagged ‘ Tim Barton ’

People who die without a valid will, die intestate. In this event, the state in which they resided effectively provides a will through the state’s intestacy law. This means that the state dictates who will receive the estate owner’s property and in what proportion.

While state intestacy laws do attempt to provide for a “fair” distribution of property, the state’s “one-size-fits-all” will simply cannot reflect the specific wishes of the estate owner in regard to either property distribution or the unique needs of the estate owner’s heirs.

In addition, state intestacy laws require that the probate court appoint a guardian for any minor children. The court-appointed guardian, who may not even be a relative, may be required to post bond and the guardianship will be supervised by the probate court.

Finally, when a person dies intestate, the probate court appoints an administrator of the estate. This administrator can be anyone of the court’s choosing and is required to post bond, an additional expense that must be paid by the estate.

The choice is yours…
you can draw your own will or the state will do it for you!

The Advantages of Having a Will Include:

  • A will allows property to be transferred according to the estate owner’s wishes, avoiding state intestacy laws.
  • A will permits a parent, instead of the state, to name the guardian for any minor children or other dependents, such as a handicapped adult child.
  • A will enables the estate owner to name an executor to administer the estate which, in some states, minimizes probate and its related expense.
  • A will can lower estate settlement costs by minimizing estate taxes, waiving probate fees and bonds and streamlining the disposition of estate assets.
  • Provisions in a will can defer distribution of a minor child’s remaining share of the estate to a more mature age than 18 or 21.
  • With a will, an estate owner can be certain that bequests of money or personal property to specific individuals or charitable organizations will be carried out.
  • If the estate includes a business, a will can authorize the executor to operate the business until the estate is settled, with no exposure to personal liability on the executor’s part.
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Durable Power of Attorney What Is It?

A power of attorney is a written document in which one person — the principal — authorizes another person — the attorney-in-fact — to act on the principal’s behalf.

What Authority Is Granted by a Power of Attorney?

The authority granted by a power of attorney depends on the type:

General Power of Attorney: The authority granted is very broad…the attorney-in-fact is granted essentially the same legal authority held by the principal. This means that the attorney-in-fact can exercise such powers as making gifts, buying and selling assets and filing tax returns on behalf of the principal.

Special Power of Attorney: The authority granted to the attorney-in-fact is limited to those powers specifically defined in the document.

The authority granted by both a general and a special power of attorney is typically limited to acts performed on behalf of the principal while the principal is competent, which brings us to a third type of power of attorney:

Durable Power of Attorney: The attorney-in-fact is authorized to act on behalf of the principal even if the principal becomes incapacitated. In fact, a durable power of attorney can become effective immediately, or it can become effective only if the principal later becomes incapacitated.

Why Should You Consider a Durable Power of Attorney?

In the event of future incapacitation, a durable power of attorney can be particularly useful in:

  • Estate Planning/Management: The attorney-in-fact acquires the authority to implement an estate plan and manage the principal’s estate during a period of incompetence.
  • Daily Living: A durable power of attorney can give the attorney-in-fact the authority to manage such practical issues as making living arrangements for a disabled person and paying the bills.


As with any legal document, legal advice should be obtained before entering into a power of attorney.

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Another Role for Life Insurance…
The Wealth Replacement Trust

The Problem:

There can be significant tax advantages in giving appreciated assets to a charity. Examples include real estate and securities. If you were to sell an appreciated asset, the gain would be subject to capital gains tax. By donating the appreciated asset to a charity, however, you can receive an income tax deduction equal to the fair market value of the asset and pay no capital gains tax on the increased value.

For example, Donor A purchased $25,000 of publicly-traded stock several years ago. That stock is now worth $100,000. If she sells the stock, Donor A must pay capital gains tax on the $75,000 gain. Alternatively, Donor A can donate the stock to a qualified charity and, in turn, rece

ive a $100,000 charitable income tax deduction. When the charity then sells the stock, no capital gains tax is due on the appreciation.

When a donor makes substantial gifts to charity, however, the donor’s family is deprived of those assets that they might otherwise have received.

A Potential Life Insurance Solution:

In order to replace the value of the assets transferred to a charity, the donor establishes a second trust – an irrevocable life insurance trust – and the trustee acquires life insurance on the donor’s life in an amount equal to the value of the charitable gift. Using the charitable deduction income tax savings and any annual cash flow from a charitable trust or charitable gift annuity, the donor makes gifts to the irrevocable life insurance trust that are then used to pay the life insurance policy premiums. At the donor’s death, the life insurance proceeds generally pass to the donor’s heirs free of income tax and estate tax, replacing the value of the assets that were given to the charity.

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What Is a Living Will?

“Living will” is a term commonly used to refer to a legal document available in most states that allows an adult to state in advance whether or not life-sustaining medical procedures should be used to prolong life when there is no chance for a reasonable recovery.

Why Should You Consider a Living Will?

Reasons to consider a living will include:

  • A belief that adults have the right to control medical decisions regarding their care, including the right to refuse or withdraw life-sustaining treatment.
  • Concern about the suffering and loss of dignity that can occur when life-sustaining measures are used to prolong an inevitable death.
  • Easing the emotional pain the family might otherwise have to suffer in making such a difficult decision.
  • Relieving a doctor’s and hospital’s fears of liability in withholding or withdrawing treatment.
  • Language concerning organ donation can be included in a living will.

How Do You Implement a Living Will?

While the validity of a living will is determined by state statute, the requirements generally include that the document be:

  1. In writing,
  2. Dated
  3. Signed 
  4. Witnessed by two people who are not related to the declarant and are not heirs of his or her estate.

In addition, doctors and their employees, as well as hospital employees, are generally not acceptable witnesses. Consult your doctor or attorney for more information about the availability of a living will in your state.

Once a living will has been executed, copies should be given to close family members, the primary doctor and the family attorney.

A living will can be revoked at any time by destroying the document and any copies or by signing a notarized revocation of the document.

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Need retirement income you can’t outlive? Have coffee with Meg. Take a video break and learn how Meg uses a single premium immediate annuity (SPIA) to alleviate concerns about outliving her retirement assets and being unable to meet monthly expenses.

Retire with Confidence

People are living longer than ever before, meaning  that unpredictable market performance, higher  healthcare costs and rising inflation could impact  your retirement nest egg. Social Security is in  question, and you may or may not have a pension.
The reality is, many individuals simply may not be  able to maintain their standard of living — or worse  — may run out of money during retirement.

 Live Comfortably with Retirement Income- Consider the risks that can affect your retirement and life:

  • Lifespan - Living longer and outliving your retirement money.
  • Inflation – Cost of living increases that erode your retirement buying power.
  • Fluctuation – Market volatility that impacts your retirement assets.
  • Experience – Life events that require retirement plan flexibility.

At what rate can you safely withdraw from your portfolio to address these risks?

  • According to the Journal of Financial Planning the safe withdrawal is 2.52%.


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You might know that you can move money from your employer’s qualified retirement plan to an IRA when you leave the employer.  But do you know you may be able to take advantage of this opportunity while still employed by the company?  There can be big benefits to this move.

What is an In-Service Withdrawal?

Basically, some companies allow active employees to move funds from an employer-sponsored qualified plan, such as a 401(k) or 403(b), while still contributing to the plan. When handled as a direct rollover, an actively working employee (usually age 59½ or older) then can buy an Individual Retirement Annuity (IRA) without current taxation. Of course, if a withdrawal is not rolled over to a qualified plan or IRA, it is considered taxable income (and may be subject to a 10% federal penalty if less than age 59½). But done right, there can be advantages to making this move.

What are the Benefits of an In-Service Withdrawal?

Using an in-service withdrawal to fund a deferred annuity in an IRA can offer these potential benefits:

  1. You may be able to gain more control over the retirement funds.
  2. You may be able to protect your retirement funds from market volatility.
  3. You may be able to choose options you feel better suit your retirement needs.
  4. You may be able to ensure yourself a guaranteed income stream in retirement.

What are the Next Steps?

  1. Talk to a Pro: Talk to your financial professional and see if taking an in-service withdrawal to fund an individual retirement annuity may benefit you.
  2. Talk to a Plan Administrator: Talk to your employer’s plan administrator about eligibility and requirements. They can tell you if the plan allows in-service withdrawals, and about any rules, such as withdrawal limits, fund types, transfer timing, etc.

Importance of Direct Rollover

As you consider an in-service withdrawal, it’s important to be certain your financial professional and plan administrator handle it properly — as a direct rollover.

With a direct rollover, your funds transfer from the plan trustee directly to another qualified retirement plan or IRA. By doing so they are not subject to tax withholding.

If your funds transfer to you, the plan participant, plan administrators must withhold 20% for federal income tax purposes, even if you intend to roll all the funds over within the 60-day time limit. This is a critical detail; one you don’t want to dismiss.

Added Considerations: Get the Complete Picture

  1. Talk with a tax advisor about potential tax implications before moving money out of your retirement plan.
  2. Use the proper paperwork. Most qualified plans have specific forms for direct rollovers.
  3. Some qualified plans may cease matching contributions for a period after taking an in-service withdrawal.
  4. The tax code allows the following to be rolled over from a qualified plan as an in-service withdrawal: Employer matching and profit-sharing contributions Employee after-tax contributions (non-Roth)
  5. Employee pre-tax and Roth contributions after age 59½
  6. The tax code does not allow rolling over the following before age 59½:
  7. Employer safe harbor match or safe harbor non-elective contributions
  8. Employee pre-tax or Roth contributions
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5 Reasons People Give

August 7, 2014 by

According to the Giving USA Foundation, individual giving accounted for 72% of all contributions to charitable organizations in 2012. 

Source: Giving USA Foundation™ – Giving USA 2013 Highlights

People give to charities for a variety of reasons. They give:

  1. Because they have compassion for the less fortunate.
  2. From a belief that they owe something back to society.
  3. To support a favored institution or cause.
  4. For the recognition attained by making substantial charitable donations.
  5. To benefit from the financial incentives our tax system provides for charitable gifts.

Regardless of your reasons for giving, a careful review of the various ways to structure charitable gifts can help make your gifts more meaningful, both to you and to the charities you choose to support.

A charitable gift is a donation of cash or other property to, or for the interest of, a charitable organization. The gift is freely given with the primary intention of benefiting the charity.

Whether given during lifetime or after death, charitable gifts are eligible for a tax deduction, but only if made to a qualified charitable organization. For example, you may have a relative who has fallen on hard times, someone you choose to help with gifts of cash. While you may be motivated by charitable intentions in making these gifts, you cannot deduct them for either income tax or estate tax purposes.

In general, qualified charitable organizations include churches, temples, synagogues, mosques and other religious organizations, colleges and other nonprofit educational organizations, museums, nonprofit hospitals, and public parks and recreation areas. Gifts to these types of organizations qualify for a federal income tax deduction if made during your lifetime or, if made after your death, can be deducted from the value of your estate for federal estate tax purposes.

On the other hand, examples of non-charitable groups include labor unions, social clubs, lobbying organizations, chambers of commerce, for-profit groups and individuals. Gifts to any of these are not eligible for a charitable tax deduction.

If in doubt about an organization’s qualified status, ask the charity for documentation of its tax-exempt status. Alternatively, the IRS provides a complete listing of approved charitable organizations in Publication 78, Cumulative List of Charitable Organizations ( (search Pub 78)

Don’t forget to check how much of your contribution is used for the charity’s mission verses how much is paid out in other expenses such as administration, salary, employee benefits and fundraising. is a good site to research a charity.

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At this point in our lives we’ve raised our own kids and hopefully the values we struggled to impart before they left home have become part of their family lives.  Now they’re raising  our grandchildren and like us, when we were new parents our kids will try to bring all of their life lessons into the mix.  The hard part, at times,  at least for me, is to keep my mouth shut not give unasked for advice.  Anyone else have that problem?

This narrows my options to – just setting the best example I can no matter the subject matter.  When it comes to money and finances.  Money does not grow on trees.

  • Young children can  understand the concept of money.  When I take them out and we’re going to buy a little something like an ice cream I give them the money to pay for it.   This teaches them money is exchanged for things we want.
  • Save all my “change” for grandkids. I split up this money into 3 coin purses for each kid marked 20% for savings,  10% sharing, and all the rest for whatever they want. (with parent’s permission of course)   The savings is used for their bigger desires/wants. The sharing can be used to buy things like ice cream, candy bars and other treats for family on outings or they will deposit it into Salvation Army kettles or other charitable containers found at the checkouts.  Elementary school age is a good time to start.
  • Demonstrate to the grandkids how to reach a savings goal.  Show them how saving X amount of their money each month and in how many months this money will equal an amount needed to buy a computer game, book or whatever.
  • When the grandkids are coming for a barbeque, a couple like to help cook.  We plan a menu, make a list of needed ingredients, figure out the budget (money to purchase listed items) and go to the store.  As we pick things out we discuss pricing,  brand names and how to evaluate the best deal.
  • Needs versus wants concept is very important throughout life for all of us.  As they age and gain understanding there are  things associated with my hobbies that reflect needs versus wants which make  good subject matter for discussion with my grandkids. Particularly an activity they have an interest in, like fishing for example.

These are just few examples of actions and conversation points  I use to demonstrate how to use money with my grandkids.  Actually I did the same things with their parents as they grew up and remember how I appreciated any support from other adults.  As a grandpa I just wait for the “teachable” moment or when the conversation flows that way.  To be effective today’s kids are no different than yesterday’s kids- the brains shut off during “the talk”.

Need more ideas?  Download my PDF booklet

“Money Doesn’t Grow on Trees…  Teaching Kids about Money”


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Return of Money Trumps Return on Money

Gallup March 31,2014

“United States investors are generally a cautious group when thinking about risk versus return options for their retirement savings.”

Nearly 2 thirds (66%) of investors surveyed by Gallup said a guarantee that their initial investment was secure even if that meant lower growth potential; outranked having high growth potential that carried some risk of losing their initial investment.

The Takeaway – In 2013 – Interest guarantees and income guarantees increased annuity sales 5% higher, to 230,100,000,000 industry wide. According to LIMRA, 2/24/2014

Retirees who take income from an annuity are happier than those who adopt a different approach according to “Annuities and Retirement Happiness” (September 2012)  The report from consultants Towers Watson, concluded-

“…while workers and retirees might have very different needs, almost all of them can benefits from annuitizing some portion of their of their retirement income (beyond Social Security).

Non-Spousal? Non-Problem

Business partners? Yes.     Father and sons? Yes.  Charitable donors and donees? Yes.    Non-spousal joint annuitant structuring provides added  flexibility for income solutions.



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The January 2014  Bobrow tax court ruling  is an IRA game changer with huge ramifications for IRA owners.   The tax court has ruled the once a year IRA rollover rule applies to all of someone’s individual retirement accounts and not to each separately.  This ruling is stunning in that it changes the Internal Revenue Service’s long standing position in private letter rulings and  IRS Publication 590 that the once a year rule applies to each IRA separately.

According to IRC Section 408(d)(3)(B) IRA owners can roll over only 1 distribution within a 1 year period, 365 days not calendar year.   The 365 days starts on the day the IRA owners receives the money. Until this January 2014 court ruling it was clear the owner of  IRAs could rollover each IRA separately once per year.  If the owner wanted they could rollover each IRA once per year.

This a significant departure from everyone’s previous understanding thus making it prudent to only do one IRA to IRA rollover per year.

If an IRA owner needs to rollover more than one IRA account it is best to use the trustee to trustee transfer commonly  referred to as a direst transfer or institution to institution transfer.  These are the preferred methods to avoid tax trouble.

Is the IRS going to look back on taxpayer IRA rollovers?  Unknown at this time.  If they did -  taxpayers who  rolled over more than one IRA in a 365 day period could be required to pay the 6% penalty for excess contributions if the money was moved into another retirement account.

To avoid the above tax problems always  do direct transfers.  These  avoid comingling  IRA funds with regular “nonqualified” account funds (checking or saving account).  If a rollover is coming from a 401(k) or other tax qualified plan it is common practice for the institution to send the funds to the owner.  Make sure the check is made payable to “new institution FBO owner’s name” This check can be forwarded to the new institution without the comingling of funds.


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Naming an IRA Beneficiary

February 13, 2014 by

What Are the Options Available in Naming an IRA Beneficiary?

When you open an IRA account, you are asked to name a beneficiary or beneficiaries to receive the value of the IRA at your death. You can also change beneficiaries during your lifetime. There are generally three classes of beneficiaries:

  • Primary Beneficiaries: A primary beneficiary is your first choice of who you want to receive the IRA value at your death.
  • Secondary Beneficiaries: A secondary beneficiary receives the IRA value if your primary beneficiary does not survive you.
  • Final Beneficiaries: A final beneficiary receives the IRA value if none of your primary or secondary beneficiaries survive you.

If you do not have a named beneficiary who survives you, your estate becomes the beneficiary and will be taxed on the value of your IRA at your death.

If you’re married, you can name your spouse as your IRA beneficiary. Alternatively, you can name multiple beneficiaries. If, for example, you have three children, you could name them as the three primary beneficiaries, specifying the percentage of the IRA each will receive. Or, you could name your spouse as the primary beneficiary and your children as the secondary beneficiaries.


If you have several IRAs, you can name different beneficiaries for each IRA. If you have both a regular IRA and a Roth IRA, however, keep in mind the different income tax treatment of these two types of IRAs: the beneficiary of a regular IRA will have to pay income tax on IRA distributions, while the beneficiary of a Roth IRA will receive distributions income tax free.



Certain situations require special care in designating IRA beneficiaries. These include marriages in which one or both spouses have children from a prior marriage, as well as a child or grandchild with a disability or a drug or alcohol problem that might impair their judgment or use of funds from the IRA. In this situation, naming a trust as beneficiary can establish some control over how the funds are used after your death.




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How Can an Income Annuity Protect Against the
Risk of Living Too Long?

The purpose of an annuity is to protect against the financial risk of living too long…the risk of outliving retirement income…by providing an income guaranteed* for life.

In fact, an annuity is the ONLY financial vehicle that can systematically liquidate a sum of money in such a way that income can be guaranteed for as long as you live!

Here’s How an Income Annuity Works:

The annuity owner pays a single premium to an insurance company.

  • Beginning immediately or shortly after the single premium is paid, the insurance company pays the owner/ annuitant an income guaranteed to continue for as long as the annuitant is alive. There are other payout options also available.
  • With a cash refund provision the insurance company pays any remaining funds to the designated beneficiary after the annuitant’s death.

Seeking a secure life long retirement income?  Click the video box to left of this post.


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The following is an overview of the options available to an IRA beneficiary. Depending on the type of IRA, whether or not the IRA beneficiary is the spouse of the deceased IRA owner and the IRA beneficiary’s needs and objectives, different options may be appropriate. 

In order to avoid unforeseen and/or negative tax consequences, an IRA beneficiary should seek professional tax advice before selecting an option.

 Inherited Traditional IRA Options: 

The options available to an individual who inherits a traditional IRA include the following: 

  1. Immediate Lump-Sum Distribution: Surrender the inherited IRA and receive the entire value in a lump sum. The taxable value of the IRA is then included in the beneficiary’s income in the year of surrender.
  2. Distributions Over Five Years: If the IRA owner was under age 70-1/2 at death, the beneficiary can take any amounts from the inherited IRA, so long as all of the funds are distributed by December 31 of the year containing the fifth anniversary of the original IRA owner’s death. This option is not available if the IRA owner was over age 70-1/2 at death.
  3. Life Expectancy: The IRA assets are transferred to an inherited IRA in the beneficiary’s name, where the date by which required minimum distributions must begin depends on whether or not the beneficiary is the surviving spouse and by the IRA owner’s age at the time of death.
  4.  Spousal  Transfer:    Under this option available only to surviving spouses who are the sole IRA beneficiary, the spouse beneficiary treats the inherited IRA as his/her own and the IRA assets continue to grow tax-deferred. IRA distribution rules are then based on the spouse’s age, meaning that distributions may not be available prior to the spouse’s age 59-1/2 without paying a penalty tax and required minimum distributions must begin by the spouse’s age 70-1/2.

For spouse beneficiaries: 

    • If the deceased spouse was younger than age 70-1/2 at the time of death, the surviving spouse may delay required minimum distributions until the year in which the deceased spouse would have reached age 70-1/2.
    • If the deceased spouse was older than age 70-1/2 at the time of death, the surviving spouse must begin taking required minimum distributions by December 31 of the year following the spouse’s death.

 For non-spouse beneficiaries:

    • Required minimum distributions from the inherited IRA can be spread over the non-spouse beneficiary’s life expectancy, with the first payment required to begin no later than December 31 of the year following the year of the IRA owner’s death.


Inherited Roth IRA Options:

 The options available to an individual who inherits a Roth IRA include the following: 

  1. Immediate Lump-Sum Distribution:  Surrender the inherited Roth IRA and receive the entire value in a lump sum. The earnings, however, may be taxable if the Roth IRA is not at least five years old.
  2. Distributions Over Five Years: The beneficiary can take any amounts from the inherited Roth IRA, so long as all of the funds are distributed by December 31 of the year containing the fifth anniversary of the original Roth IRA owner’s death. Any earnings distributed before the Roth IRA is at least five years old, however, may be taxable. Since all amounts other than earnings can first be withdrawn tax free, it may be possible to minimize or eliminate any taxation on earnings by withdrawing them last.
  3. Life Expectancy: The IRA assets are transferred to an inherited IRA in the beneficiary’s name. For non-spouse beneficiaries, required minimum distributions based on the beneficiary’s life expectancy must begin no later than December 31 of the year following the year of the deceased Roth IRA owner’s death. For a spouse who is the sole IRA beneficiary, required minimum distributions may be postponed until the year in which the deceased Roth IRA owner would have reached age 70-1/2. Since contributions are considered to be withdrawn first, it’s unlikely that any taxable distribution of earnings will take place if the Roth IRA hasn’t been in existence for five years.
  4.  Spousal Transfer: Under this option available only to surviving spouses who are the sole Roth IRA beneficiary, the spouse beneficiary treats the Roth IRA as his/her own. Roth IRA distribution rules are then based on the spouse’s age, meaning that distributions of earnings may not be available prior to the spouse’s age 59-1/2 without tax or penalty. Since Roth IRAs have no required beginning date and no required minimum distributions, the spouse can leave the money in the Roth IRA as long as he/she wants.
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What Is the Retirement Savings Tax Credit?

This is often an overlooked tax credit. Remember you have until April 15, 2014 to make your 2013 IRA contribution.

 The Retirement Savings Tax Credit dates back to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA 2001)which  introduced a new temporary tax credit for IRA contributions and elective deferrals to qualified plans made by certain lower income taxpayers. The availability of this “saver’s credit” was made permanent by the Pension Protection Act of 2006.

The credit is applied against the total of regular income tax and the alternative minimum tax and is allowed in addition to any other deduction or exclusion that would otherwise apply to the contribution/elective deferral.

Calculating the Credit

The credit is determined by multiplying “qualified retirement savings contributions” up to $2,000 times the “applicable percentage,” which is determined by the taxpayer’s adjusted gross income (AGI):

Adjusted Gross Income (2014) *

Married, filing jointly                Single                     Applicable Percentage

More than      Not over               More than Not over

$ 0                    $36,000                   $ 0        $18,000                              50%

$36,000           $39,000                $18,000   $19,500                               20%

$39,000           $60,000                 $19,500   $30,000                             10%

$60,000                                             $30,000                                              0%

* As adjusted for inflation

“Qualified retirement savings contributions” are equal to the total of IRA contributions and elective deferrals to a 401(k), 403(b), 457 or SIMPLE plan, a SAR-SEP and voluntary employee contributions to deemed IRAs for the tax year, reduced by distributions from such plans that are included in income (or not rolled over in the case of Roth IRAs).

An Example

A single taxpayer, who does not participate in an employer-provided retirement plan and has $18,000 in adjusted gross income, contributes $2,000 to a regular IRA in 2013. In addition to deducting the $2,000 IRA contribution, this taxpayer can also claim a $400 ($2,000 x 20%) retirement tax credit for 2013.


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2014 Individual Federal Income Tax Rates

Federal income tax rates are available on this handy chart to help with your tax planning and preparation.

Download the 2014 Tax Digest  PDF For additional information regarding:

  • Individual income tax rates
  • Deductions & Tax Credits
  • Social Security/ Medicare rates
  • Health Savings Accounts
  • Retirement Plan Contribution Limits including Traditional and Roth IRAs  

For additional information Requests contact Tim Barton, ChFC at

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This could be some money saving good news for Wisconsin residents who have or would have received nonrenewal notices from their health insurance company.   On November 21, 2013 Wisconsin Office of the Commissioner of Insurance issued a bulletin to the state’s health insurance companies-

Consistent with state requirements and the Office of the Commissioner of Insurance’s (OCI) enforcement power of state and federal law, OCI will allow carriers to renew at their option non-ACA compliant individual and small group coverage that was in effect on October 1, 2013, for a policy year starting between January 1, 2014, and October 1, 2014.

It is important to note that coverage must have been in force on October 1, 2013, and that this OCI guidance does not apply to “newly obtained coverage.” “Newly obtained coverage” does NOT include normal enrollment changes (i.e., adding dependents or new employees) nor does it include coverage that has merely received a price change before OR after October 1, 2013. Consistent with Wisconsin Statutes related to plan changes, the small business or individual may change their plan options from one non-ACA compliant plan to another and renew that coverage in 2014 provided:

  1. Coverage was in force for the individual or small employer before October 1, 2013; and
  2. The new plan was available for purchase prior to October 1, 2013.

Carriers opting to renew non-ACA compliant plans must provide disclosure to their enrollees including notice that an enrollee’s premium may be affected either on the date of renewal or the date on which the premium will be affected. Since the letter was sent too late for some carriers to comply with notice provisions under Wisconsin law, the 60-day notice provision under s. 631.36 (5), Wis. Stat., will not be enforced for affected products from the date of this bulletin until March 1, 2014.

Many Wisconsin carriers have already offered their enrollees an early renewal option. OCI will continue to allow carriers to offer an early renewal for non-ACA compliant individual and small group coverage in 2014. As required under state law, renewals must be treated uniformly and without regard to health status.

For carriers that are transitioning individuals from an existing plan to a new plan, it is the position of OCI that nothing in the Wisconsin Statutes or regulations prohibits carriers from offering their enrollees auto-enrollment into a similar new plan. Auto-enrollment allows for minimal disruption to consumers as a result of changes required by the ACA. In communicating with enrollees regarding plan change options and auto-enrollment, insurers must inform them of their guaranteed issue right to choose any plan. While consumers have the right to choose any plan, the auto-enrollment feature helps ensure they are provided with the right to guaranteed renewable coverage afforded under Wisconsin law.

The above is an excerpt from the November 21st OCI bulletin.

Tim Barton, ChFC

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Stock market indexes have been for the most part rising this year;  high enough that some portfolios have made up for their losses from the last market decline.  Some investors and their advisors are starting to think of themselves as Albert Einstein’s of the market investing.   Although over the last 40 years I have yet to meet one who feels that way over the long term.  The equity markets have a way of equalizing financial pain or causing one to eat humble pie.

The question on everyone’s mind:  How high and how long will stocks go?  TV experts fill air time day after day with theories, usually a new one each day.  Same with some advisors; you know those who when asked will lean back in their desk chair and begin to expound on Monte Carlo Simulations, withdrawal rates, market direction, historical signs and graphs…

My answer is always simply – “I do not know, my crystal ball is just as foggy as the next guys.”  To which the reply is something along lines “Yeah but you are paid to know.”   I’ll let you in on a financial planning secret – no knows which direction the markets will turn next.  Markets will go up and markets will go down, that is what markets do.  Oh sure sometimes if a guy guesses enough he or she will be correct at some time causing them to look “smart.”  As for me I’ll admit I don’t know and work with my clients to transfer market risk from them to an insurance company.  After 9/11 that is what I did with my own personal retirement funds using fixed index annuities and they have paid off with good returns, no declines and peace of mind.

The first fixed index annuities were developed in 1996 and at first I like many others thought they were too good to be true. However, the last 17 years have demonstrated index annuities are in fact very good secure retirement products.   When you purchase an index annuity none of your funds are invested in any equity market.

Rather the annuity owner selects a market index like the S&P in order to determine the interest rate the insurance company pays them for the previous 12 months.  If the index has increased in value a portion of that increase is paid as interest to the annuity, if the index has gone down no interest is paid.  However, the annuity does not decrease in value while it resets the index value to the lower level so that when the index regains its loss part of the regain is interest paid to the annuity after the next 12 months.  Annuity principal and any interest credited are guaranteed to not go down.

An old investment cliché: “You don’t suffer a loss until you sell a stock- Until then it’s just a paper loss.”   Well, then the reverse would be true regarding gains:  Until you sell stock gains are just unrealized paper gains.

Is it time to turn your paper gains into real dollars?

For help you may ask questions in the comments  Or contact me privately: Tim Barton Chartered Financial Consultant


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Social Security payments are important to most American’s retirement plans.  After all,  a worker has contributed a significant portion of their income to Social Security via payroll taxes;  starting at 2.25% in 1950 - steadily increasing to 15.3% 1990 and later.  Because retirement could last 30 years or more a retiree must consider how and when to receive their income benefits.

The average 2012 Social Security monthly retirement benefit is about $1,230.  The maximum possible benefit for someone retiring in 2012 at full retirement age (66) will be $2,513.  The amount of benefit is permanently affected by the age a retiree starts SS income, it is crucial to consider the long term impact of starting benefits prior to reaching  full retirement age.

Social Security retirement benefits can be started as early as 62 but the benefit amount will be less than the full retirement benefit amount.  If benefits are started early the amount will be permanently reduced based on the number of months benefits are received before full retirement age.

Example for a retiree was born in 1955, full retirement age is 66 and 2 months.  If they draw Social Security at age 62 the benefit is reduced by 25.83%.

For those who start SS benefit early and earn more than $15,120 per year they will have their benefits reduced.  However, when they reach full retirement age any month in which benefits were reduced will be removed from the early retirement  deduction calculation, which may raise the benefit paid.

Delaying benefits beyond full retirement age results in an 8% yearly increase.  This annual increase will max out at age 70.

As much as 85% of Social Security benefits may be subject to federal and state income tax.

A surviving spouse’s benefit is based on the deceased spouse’s income amount; a death scenario should be considered when thinking about taking Social Security before full retirement age.

Retirees should be very careful considering any “break even” analysis. There are many variables to consider such as income tax, longevity, survivor’s benefit, etc. Retirees may want to adjust the age when they take retirement income in order to gain maximum lifetime benefit.

Many people take the reduced Social Security benefit before full retirement age.  Each situation is different and starting early may be appropriate, in some cases.  Keep these issues in mind-

  • If life is expected to be longer than average the reduced benefit will stay reduced for a long time.  Consider the amount that may be given up over a lifetime.
  • If working while drawing Social Security early consider how those earnings will affect Social Security benefits.
  • A reduced SS benefit may also reduce the income benefit a spouse receives after the death of their partner.
  • If there is a significant difference in spouse ages Social Security benefits are likely to be paid over a greater period of time than when the spouses are closer in age.  In situations like this it is more important to understand how different assumptions will affect a retirement income plan. Variables such as the age benefits start, longevity, and survivor’s benefits can combine to produce substantial differences in total benefits received.

There are 81 different Social Security combinations and strategies a retiree should consider rather than just a  simple “break even” analysis.

If you would like to explore your Social Security benefit options contact Tim Barton, ChFC for an analysis.  List your SS estimated monthly benefit for both spouses and current age in the comment section.





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How many ways are there to take Social Security benefits?

Would you believe there are 81 different possibilities?

Most people think of 3:

  • Early retirement at age 62
  • Full retirement at 66 or later depending on birth date
  • Maximum retirement at age 70.

Known as the “break-even” analysis method; retirement planners use stock computer models that add up the monthly Social Security payments for each of the above over a chosen life expectancy.  Then the totals of each of the 3 incomes are  compared.  Whichever is higher becomes the recommended choice.

Did you know if you live to age 83 your total Social Security income is the same no matter which option you pick?   That is if you settle for only one of the 3 options above.

But there are 78 more Social Security income combinations available and almost no one is talking about or using them to maximize their clients retirement income streams.  Until now.

At the end of May a new patent pending Social Security Explorer which is capable of estimating the income potential from all 81 SS combinations will be available in Tim Barton’s office.  This will be a comprehensive income planning service designed to  help retirees and those approaching retirement more fully understand all of their Social Security options.  If someone has already started drawing their  Social Security they may still be able to maximize their benefits.  Many do not realize Social Security benefits can be changed even after the checks begin.

If you would like to explore your Social Security benefit options contact Tim Barton, ChFC for an analysis.  List your SS estimated monthly benefit for both spouses and current age in the comment section.

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Government regulations dictate senior’s retirement income plans.  The question; Is this government “retirement plan” the best option?

If they have a traditional IRA, 401(k) and/or any other qualified retirement plan they must take Required Minimum Distributions (RMD) upon reaching age 70- 1/2.  If they do not take RMD as required the penalty is a harsh 50%.  Most seniors follow the RMD plan so it must be the optimal way to receive retirement income… Right?

The new reality is nothing could be further from the truth.  Expected longevity continues to increase well past the I.R.S. life tables used to calculate RMD withdrawals.  This could  set up a dangerous financial situation later in life.

The alternative solution and one most seniors have not considered  is a Life Income Annuity.  Rollovers from IRAs and 401(k)s are easy and there are no taxes due or 10% penalty even if income is started before age 59.

Advantages of Life Income Annuities are significant and perform better than RMD plans:

  1. After enduring a decade of sub economic performance, low interest rates,  disappearing pensions and a decreasing Social Security trust fund seniors need protection from steep market swings. Income annuities eliminate market risk by providing a steady monthly pay check.
  2. Saves the golden decade of retirement; the 10 years from age 70 – 80.  RMDs are scheduled to be lower during this time and increase later.  The lifetime annuity has on average a 60% higher payout  during the golden decade and guarantees these payments for life with any remaining principal paid to beneficiaries.
  3. Prevents the RMD crash.   A typical life income annuity starts payments at age 70 about 60% higher than RMD withdrawals.  It is true RMDs increase with age but assuming a 3% growth rate at their peak they  will provide an income 15% lower than the annuity.  After the RMD’s peak withdrawal years the  annual income begins decreasing until the money runs out.

Lifetime annuities take the RMD drop off  and longevity risk away while offering a higher payout.

For help you may ask questions in the comments

Or contact me privately: Tim Barton Chartered Financial Consultant


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