Lindsey Report March

The 2015 year got off to a rocky start with equities pulling back in January (as measured by the S&P 500).  Fortunately, things turned around in February and all the major equity averages posted solid gains, recouping January’s losses and making additional gains (as measured by S&P 500 Dow and Nasdaq).

On the other hand, interest rates and bond yields are likely to remain low for the coming months, as the Federal Reserve continues to keep their Federal Funds rate at historic lows.  In other words, the returns from the fixed income portion of a portfolio are likely to remain muted.  Don’t expect CD’s, bank accounts or bonds to generate much return any time soon.

As it is “tax season”, many clients have had questions, regarding IRA distributions, gifting and other IRS limits.  The following will highlight the most popular questions (source was  The Required Minimum Distribution (RMD) can be a real concern for people turning 70 and every year thereafter.  The IRS says that the RMD is the “minimum amount you must withdraw from your IRA or retirement plan account each year”.  Generally, you must begin taking withdrawals in the year in which you turn 70 ½.  In my experience, many people are relieved to learn that the percentage (%) they must withdraw is less than they were expecting.  For example, at age 70, the RMD is only 3.65%.

Many retirees are interested in gifting “some” assets while they are still living, but they are concerned about Gift Taxes.  The most asked question is, “how much can I/we give”?  For 2015, the gift tax exclusion is $14,000 per donor to each “donee”.  For example, each parent can give each child $14,000, so a couple can gift $28,000 in a calendar year.  If you plan to exceed this amount, talk to your CPA.

Many working individuals continue to make pre-tax contributions to their company savings plans, using a 401(k), 403(b) or 457.  As this limit has increased over the years, a retiree who contributed to their plan back in the 70’s, 80’s and 90’s might be shocked to know that the contribution limit for 2015 is $18,000.  Plus, if you are age 50 or older, you can contribute an additional $6,000, using the catch-up provision.

In many cases people continue to save, using a traditional or Roth IRA (Individual Retirement Account).  In 2015 the limit is $5500 ($6500 for those 50 and older).  The most noteworthy difference between the two IRA’s is the tax treatment of the contributions and the withdrawals.

If you have any questions or concerns, please give me a call or send me an email.  Otherwise, I am looking forward to some warmer weather headed towards MI.  The 40’s sound like the 80’s to me!


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