Equity markets slid lower last week, and the S&P 500 posted its first weekly loss since early October. Losses for most major domestic large-cap indices were grouped tightly in the 1.50 percent–1.60 percent range. Unlike in previous periods, there was no late-week rally to offset the declines that took place earlier in the week. Read more now in our Weekly Market Update.
With the end of the year quickly approaching, it is a wonderful time to begin organizing your finances for the New Year. We’ve put together a list of important financial planning topics that warrant consideration.
Presented by Thomas Chester, CFP®
Flexible spending accounts
Money that you’ve put away in your flexible spending accounts (FSAs) must be used by year-end or it will be forfeited. Now’s the time to schedule those doctor’s appointments you’ve been meaning to attend to or to stock up on items that are eligible for flexible spending. Doing this as soon as possible may help relieve some last-minute headaches and ensure that you don’t lose your hard-earned dollars.
Additionally, open enrollment begins around this time of year for certain employee benefit plans. So if you’re not using an FSA, take stock of your average expenses that would qualify. This can help you determine whether setting up an FSA for 2014 makes sense for you. If you already use an FSA, assess how much extra you have left in the account or how much of a deficit you ran and use it to calculate your allotment for the New Year.
Open enrollment for Medicare started in October and ends December 7, 2013. For many, this is the only chance to change health and prescription drug coverage for 2014. If you want to make any changes, act now.
Recharacterization of Roth IRA rollovers or conversions
If you converted a traditional IRA to a Roth IRA during 2013 and paid tax on the conversion, mark your calendar now to allow plenty of time to meet the October 15, 2014, deadline for recharacterizing (i.e., undoing) the conversion.
Reporting losses on stock sales
Be aware of important deadlines regarding trading date closings. A trade to sell a long position must be executed by the close of the last trading date of the current year. Similarly, a trade to sell a short position must be executed so that it settles by the last trading date of the current year.
Review your retirement plan allocation and contribution elections. If you’re not taking full advantage of any matching features or potential tax benefits for maximizing your contributions, now is the time to evaluate your ability to do that. Also, when it comes to qualified savings, assessing your allocation to ensure that it’s still in balance and pursuing your objectives will help you start the New Year off on the right foot.
Taking stock of savings
Did you set savings goals for the current year? Make a realistic assessment of how well you’ve met those goals and think about your goals for the upcoming year. There’s no reason why you can’t make some financial resolutions along with your other new year’s vows. If you determine that you are off track, let us help you develop and monitor a financial plan.
Taxes, taxes, taxes
RMDs and estimated taxes. If you’re turning 70½, you must devise the best strategy for taking required minimum distributions from your traditional IRA and 401(k) plans.
Be sure to take potentially large bonuses and a prosperous business year into account when considering your taxes for 2013. You may have to file estimated taxes or increase the upcoming January payment.
Managing marginal tax brackets. In 2013, the IRS added a 39.6-percent tax bracket, a 20-percent capital gain tax bracket, and a 3.8-percent Medicare tax on net investment income. Moreover, those in higher marginal tax brackets may be subject to an additional 0.90-percent withholding tax, as well as limits on and phase-outs of itemized deductions and personal exemptions.
If a taxpayer is on the edge of the new tax thresholds, he or she may be able to defer or accelerate income or deductions to help minimize taxes.
Too little or too much withholding. Also of note is that workers with gross earned income of more than $200,000 may have had too little or too much tax withholding in 2013. Employers may have withheld an additional 0.90-percent tax on incomes over $200,000 without regard to the taxpayer’s withholding status, which would put these taxpayers at a higher threshold. Other taxpayers may have had too little withholding because of other income unknown to the employer due to second jobs. Employees should plan to take a credit on their returns or pay additional taxes.
To help ensure that your estate plan stays in tune with your goals and needs, you should be reviewing and updating it on an ongoing basis. If you haven’t done so during 2013, take time before the end of the year to:
Consider seeking professional guidance
The above list of financial planning dates is not exhaustive. We are happy to go over deadlines that are most relevant to your personal situation, so you can better prepare for the coming year.
Whatever your planning may entail, we wish you a happy, healthy, and prosperous 2014!
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
IRS CIRCULAR 230 DISCLOSURE:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Thomas Chester is a financial consultant located at (Allen Insurance and Financial, 31 Chestnut St., Camden, Maine, 04843. He offers securities as a Registered Representative of Commonwealth Financial Network®, Member FINRA/SIPC. He can be reached at 207-236-4311 or at firstname.lastname@example.org.
© 2013 Commonwealth Financial Network®
Allen Insurance and Financial is pleased to announce that Lindsey Eaton of Hope has obtained her license to sell property and casualty insurance in the state of Maine. She studied for the state exam through Allen's in-house education program.
As a scanning associate, Eaton plays a key role in Allen's paperless office system. She also supports members of the administrative staff and reception in the Camden office. She joined the company in February.
She is a Camden native and graduate of Camden Hills Regional High School.
The Allen Insurance and Financial education program allows the company's 70 employees to keep up with the always-changing insurance industry and to advance their careers through training and education.
Staff attend classes on company time as they prepare for their exams. Since the state also requires 24 hours of continuing education over every two-year period for those in the insurance business, Allen Insurance and Financial also offers those classes for their employees.
Stephanie McBride of Rockport has joined Allen Insurance and Financial as an account manager in the company's voluntary benefits division.
Stephanie, a native of Washington and graduate of BastyrUniversity in Kenmore, Wash., has 15+ years of experience in business ownership and management, sales and human resources.
Based in Allen Insurance and Financial's offices at 31 Chestnut St. in Camden, Stephanie works with groups and individuals to provide their voluntary benefits (life, disability, dental and vision), international health insurance and travel insurance needs.
Allen Insurance and Financial is pleased to announce that Amy Bowen will be joining the company's Belfast branch with a focus on business insurance.
"We have been warmly welcomed into the Belfast business community," said Michael Dufour, Allen executive vice president who oversees the company's business insurance division. "With her local roots and commitment to community, Amy is a great addition to our staff."
Allen Insurance and Financial opened its Belfast office in April 2013.
Bowen comes to Allen with more than 10 years of experience in the banking industry, most recently as an Assistant Branch Manager at Bangor Savings Bank in Belfast. She is looking forward to a change in careers from the banking industry to insurance. She will participate in the company's in-house education program.
Amy grew up in Belfast, attended Belfast High School, the University of Maine at Machias and Beal College in Bangor, receiving a degree in management. She lives in Belfast and is involved in the community through various organizations including Our Town Belfast, where she is a board member and treasurer and the Belfast Lions Club, where she is president.
Healthcare fraud is likely to increase through October, when the healthcare exchanges created under the Affordable Care Act open to the public. Many of these scammers are using phone calls or email to conduct their fraudulent activities.
Some things to keep in mind:
We're here to answer your questions and point you in the right direction.
As of Jan. 1, 2014, the Affordable Care Act requires that most individuals have minimum essential health coverage or pay a tax penalty. This fact sheet (PDF, click here) from the International Foundation of Employee Benefit Plans can provide some basic additional information.
Please call us with your questions: 236-4311.
For plan years beginning on or after Jan. 1, 2014, the Affordable Care Act (ACA) prohibits group health plans and group health insurance issuers from applying any waiting period that exceeds 90 days.
ACA’s 90-day waiting period limit does not require an employer to offer coverage to any particular employee or class of employees, including part-time employees. It only prevents an otherwise eligible employee (or dependent) from having to wait more than 90 days before coverage under a group health plan becomes effective.
Allen Insurance and Financial's Insured Benefits Division is available to answer your questions about the Affordable Care Act and what it means for you.
The Affordable Care Act, having been ruled constitutional by the Supreme Court, is picking up speed and momentum like a huge boulder rolling down a mountain. The ACA will land on your doorstep Jan. 1, 2014, accompanied by thousands of pages of regulations from a variety of federal agencies, including Health and Human Services, IRS, Department of Labor, Center for Medicare Services, and even Homeland Security.
Although we are still waiting for pricing and plan designs to be revealed, this edition of our Navigator newsletter will help you start thinking about your options.
For almost 150 years, Allen Insurance and Financial has been helping our clients with insurance and financial issues, and we're committed to helping you navigate the complexities of this massive new law.
In this newsletter, Dan Wyman and Sherree Craig discuss how the ACA will impact individuals, small groups, and larger organizations. Dan is Allen's group benefits department manager, as well as a broker, consultant and attorney focusing on group benefits. Sherree is Allen's large group health insurance guru and account manager.