How Trump’s Proposed Tax Changes Could Affect You

Trump has been pretty clear about wanting to simplify our tax code. I sat down with CPA Steven Stern to help explain these proposed changes. So, here are where things currently stand and how they might affect you:
Here’s list of the of the items discussed in the video, but be sure to watch the video for to learn how these changes specifically affect you:

CHANGE #1 

Shift From 7 Income Tax Brackets To 3

Current (Married Filing Jointly):

  1. 10% bracket: $0 to $18,550
  2. 15% bracket: $18,550 to $75,300
  3. 25% bracket: $75,300 to $151,900
  4. 28% bracket: $151,900 to $231,450
  5. 33% bracket: $231,450 to $413,350
  6. 35% bracket: $413,350 to $466,950
  7. 39.6% bracket: $466,950 or more

Proposed (Married Filing Jointly)

  1. 12% bracket: $0 to $75,000
  2. 25% bracket: $75,001 to $224,999
  3. 33% bracket: $225,000 or more

CHANGE #2

Increasing the Standard Deduction

Trump proposes increasing the standard deduction from $12,600 to $30,000 for joint filers (from $6,300 to $15,000 for singles), and capping itemized deductions at $200,000 (joint) or $100,000 (single) and scrapping AMT.

CHANGE #3

Eliminate 3.8% Affordable Care Act Tax

The 3.8% Affordable Care Act tax on the lesser of net investment income or the amount by which your AGI exceeds $200,000 would also be eliminated.


Source: Bob Veres

7 Important Ages To Be Ready For In Retirement

Getting ready to retire or have you just started your retirement? Here are 7 important ages you should to be ready for:

 

AGE  55

Can Make Withdrawals Without 10% Penalty if Retired

At age 55 you can withdraw from your 401(k) or 403(b) plan without the 10% penalty if you retire or get fired. Also, if your employer offers a pension you may be eligible for full retirement benefits, if you meet the plan requirements.

AGE  59 1/2

Can Make Withdrawals Without 10% Penalty

This is an important age to remember. Once you turn 59 ½ you can withdraw money from IRA’s and deferred annuities without paying the 10% penalty for early withdrawal.

AGE 62

Can Start Reduced Social Security Benefits

This is another big year. At age 62 you can start receiving Social Security benefits. However, keep in mind your benefits will be reduced since you will not have reached full retirement age. The other thing is that at age 62 you may be eligible for full pension benefits if applicable to your situation.

AGE 65

Qualify for Medicare Benefits

This is when you qualify for medicare benefits. Also, with most pension plans you become eligible for your full benefits.

AGES 66 & 67

Eligible for Full Social Security Benefits

Ok, I have two ages here. But, they are pretty much for the same thing so I lumped them together. At age 66 you become eligible for full social security benefits, if you were born between 1943-1954. Everyone born after 1954 follows this table:

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AGE 70

Your Social Security Benefits Max Out

Once you hit 70 you should start collecting your social security benefits if you haven’t already done so because your benefits will be maxed out. Waiting to collect benefits until age 70 can actually be a great strategy if you are trying to max out social security benefits or are concerned about longevity.

AGE 70 1/2

Must Start Your Required Minimum Distributions (RMD’s)

Finally, age 70 ½ . When you turn 70 ½ you will be required to start withdrawing specified amounts from your 401(k)’s and IRAs. This is called your Required Minimum Distribution or RMD for short. You must begin these withdrawals once your turn 70 ½ but you actually have until April 1st of the year following the year you actually turn age 70 1/2 . I know, confusing right? Let me give you an example. Let’s say you turn 70 ½ in January 2016, you will need to take your RMD by April 1st, of 2017. Now, you can take it in 2016 but you don’t have to. Going forward, every year after your first RMD you will be required to take the distribution buy December 31st.


Source:

  1. Planning Retirement Income

 

 

What a Trump Presidency Means For Your Retirement Accounts

With the election of President Donald Trump, we should be prepared for volatility in the investment markets. Since he has provided less detail about his policy positions than a traditional campaign, it may take some time for markets to sort out his priorities. Although, for the time being the market has digested the news positively.

[CLICK TO WATCH]

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What’s Happened So Far

Donald Trump’s surprise presidential election victory led to extreme market volatility in overnight trading since the market had already priced in a Clinton win. Futures were down over 800 points while votes were being counted and it was becoming clearer that Trump would win. But, we bounced back and ended the following day up over 250 points, hitting all time market highs. What we can be sure of is that markets are likely to remain unsettled in the near to medium term.

The Intrinsic Value of Stocks

In the end, the intrinsic value of stocks don’t change with the occupant of the White House.

What To Do Now:

In times of uncertainty, remember that panic is not a good investment strategy, and that it’s important to stick to your long-term investment plan.  The very worst thing you could do, over the next few days and weeks, is make a temporary loss permanent by selling into the general panic or buying into over excitement. Follow this advice:

  • Have an investment plan
  • Be prepared for volatility
  • Remember, the market will move up and down but it won’t always be in the direction you want

Accumulating Retirement Assets?

If you are accumulating assets for retirement with a long term time horizon the key is to stick to your proper allocation regardless of what is happening in the markets.

Preserving Your Assets?

If you are preserving your assets and approaching retirement, again make sure you are allocated appropriately and taking on the appropriate amount of risk.

Drawing on Your Assets?

If you are drawing on your assets, consider using a bucket approach and having your short term needs in cash so you are not forced to take money out if the market is down.

Use This Tool

To make sure your portfolio is matched with your comfort for risk you can use this tool: http://bit.ly/YourRiskNumber. It’s a good first step to help steer you in the right direction if changes are needed in your portfolio.