Preventing Financial Elder Abuse

The Missouri Secretary of State's office released findings last week from the Senior Investor Protection Symposium held in October. The Symposium featured presenters from the King County (WA) Prosecutor's Office, Washington University Neurology Department, Missouri Department of Health and Senior Services, St. Louis Area Agency on Aging, and the Securities Industry and Financial Markets Association (SIFMA)

"Senior investors control an incredible amount of assets, and transfers of these assets occur every day. In fact, $18 trillion or more will move between the generations in the next 20 years.

During that time, 10,000 people will turn 65 every day, and 20 percent will be victims of financial exploitation."

Loss of cognitive ability leaves many seniors vulnerable to financial exploitation and abuse. The Symposium looked at how other jurisdictions are using legal means to prevent & prosecute this abuse, and how state & social agencies, as well as the investment advisory community can defend our vulnerable elderly.

Awareness is the first step. Please keep an eye out for your loved ones.

For the full report, click here.

Advisors' Roundup - December 19, 2014

T'is the week before Christmas and here's what's on my mind:

Want to put a college education in your kid's stocking? Here's what it's going to cost according to
savingsforcollege.com

Investing is soooooo easy, even a high-schooler can do it; well, maybe not
New York Observer

The smartest quote I've read in ages
The Reformed Broker

There will be no Roundup next week. Enjoy the Holidays. Safe travels and use your head New Year's Eve. See you in 2015.

Advisors' Roundup - December 12, 2014

Here's what's on my radar this week:

Even the best funds under-perform
The Reformed Broker

Disagreeing with the genius behind Vanguard
The Irrelevant Investor

Taxes, Taxes, Taxes
Compton Advisors: Year-End Tax Issues



Please visit our website at: www.comptonadvisors.com

Year-End Tax Issues

What's left to be done for 2014

It's that time of year when tax-payers get to make decisions on the timing of cash flows - timing of a few days that can mean real dollars.

The general rule of thumb is this:

• If you will be in a higher marginal tax bracket next year:
• accelerate income
• delay deductions
• If you will be in a lower (or, like most of us, the same) marginal tax bracket next year:
• delay income
• accelerate deductions

Specifically:

• Charitable contributions
• If you want the deduction in 2014, make sure you give enough lead time to the charity to process the gift before year-end. Though your check may say December 30 and you postmarked it Dec 31, you don't want to be explaining to the IRS why your letter from the charity says "Thank you for your contribution on January 4".
• Make sure you follow the IRS guidelines for documentation, especially for non-cash gifts. They can be found in IRS publication 526.
• Harvesting tax losses in your portfolio
• Holding periods are based on transaction date, not settlement date
• Do not let tax decisions force you into poor investment decisions
• Beware of 'wash sales' - selling a stock and buying it back within 30 days erases the loss for tax purposes
• Gifting
• Any individual can gift $14,000 per year to any other individual without tax consequences. If you want to give more, plan it around year-end - gifting $14,000 in December and another $14,000 in January
• Need to give more, say to an adult child and their spouse? You can gift the child and the spouse $14,000 each in 2014 & 2015 as can your spouse for a total of $14,000 x 2 years x 2 grantors x 2 recipients for a total of $112,000 before the Rose Bowl ends.
• 401(k)
• You probably have one paycheck left to stuff your 401(k) up to $17,500 ($23,000 if you're 50 or older)
• Self-employed taxpayers should plan on making their non-profit sharing contribution to their solo 401(k) by year end.
• Business transactions
• Speaking of the self-employed: if you are on a cash basis, accelerate your expenses, including Section 179 expenses into this year if you are going to be in the same marginal tax bracket.
• Take your income in the year with the lowest marginal tax rate if you have a choice
• Other deductions
• Pay your state income tax estimates and, if you won't pay more in penalties than you save in taxes, your property taxes in the year you are in the highest marginal bracket. 
• If you can lump multiple years of miscellaneous or medical deductions together by delaying or accelerating payments, it may pay to do so as these are subject to a percent of Adjusted Gross Income (AGI) threshold each year before they are deductible 
• These only work for those who itemize deductions and even then beware that the Alternative Minimum Tax (AMT) may erode some of these benefits

Changes for 2015

• 401(k), 403(b), TSP, and most 457 plan contributions will be raised to $18,000 for workers under 50
• Catch-up contributions will increase to $6,000 (from $5,500) for those 50 y.o. or older
• Traditional IRA phase-out for tax deductions increases $1,000 for singles to between $61,000 (fully deductible) and $71,000 (non-deductible)
• The standard deduction is increasing to $6,200
• For now, the higher education tuition deduction is set to expire Dec. 31, 2014
• Business mileage deductions are increasing
• Tax brackets will be adjusted for inflation

It should be noted that Congress is notorious for last-minute (and retroactive) tax law changes, so this list may change before you file.

More Year-End Clean Up

Last week we ran down some year-end tax moves. This week we have a few more:

Required Minimum Distributions (RMDs)

If you have begun taking the required minimum distributions from your IRAs and 401(k)s, you must get the 2014 RMD out by December 31, 2014 (if you turned 70 1/2 in 2014 and this is your first year for an RMD, you have until April 1, 2014, but all subsequent years' payments must come out by December 31 each year).

If you miss the deadline, the taxes are brutal: 50% of the undistributed amount of the RMD.

For more information see IR-2014-112

529 Contributions

Though not deductible for Federal tax purposes, many states allow limited deductions for contributions to 529 plans (savings for higher education) that they sponsor from their residents (e.g. the first $8,000 contributed each year to the Missouri MOST plan is deductible for state tax purposes by Missouri taxpayers).

The deadline for these contributions is December 31.

For some ideas on how to make gifting to your child's 529 plan easy for friends & family this holiday season, see this savingforcollege.com article:

5 Ways to Get Money for College this Holiday Season

Advisors' Roundup - December 5, 2014

Here's what's on my radar this week:

Focus on the basics:
A Wealth of Common Sense

Was this the year for stockpickers? Ah . . ., no.
The Reformed Broker

Connect with your Inner Scrooge this Christmas
Dave Ramsey
Clark Howard
FiveThirtyEight