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Advisors Management Group

Be Smart with Your Holiday Jingle
The holidays are upon us, and the pressure is on. There is so much to do to prepare for the holiday season and the holiday bustle can leave you wondering if this is really the most wonderful time of the year. This year, the average American household plans to spend over $1000 this holiday season on gifts, decorations, travel to family and holiday meals. This, on top of normal monthly spending can make November and December some of the most expensive months of the year. Without a plan of attack, December’s holiday magic can easily turn into January’s credit card nightmare. Plan Ahead When it comes to gifts, know who you plan to buy gifts for and how much you intend to spend on them. Stick to the budget. It is easy to get trapped into spending too much especially if you overspend on someone, you may be tempted to buy more for another to make the gift even. If you determine what you are spending, you can determine what you think you’d like to buy to before you enter the store. Use a holiday savings account to save a little bit each month to avoid feeling overwhelmed when the time to shop comes. Keep the store ads with you. Many stores will price match, and this could save you a stop or help you secure an item that you are having difficulty getting at another store. Don’t underestimate how planning your shopping trip ahead can save you both time and money. Plan your route and keep your list handy. By avoiding driving all over town, and potentially backtracking, you can save money on gas and save time. Eating a healthy meal before you head out will put you in a good frame of mind and help you curve the temptation of spending unnecessary money on meals out or stopping for snacks while out and about. Avoid shopping at times that attract crowds like mid-day Saturday and Sunday. By shopping at off times, you can move through your list quickly and with less frustration. Although this one won’t help your pocketbook, time is money and piece of mind is priceless. Shop Online Using a credit card is the most secure way to shop online. It is easier to dispute a fraudulent transaction on a credit card than with a debit card. Remember not to charge anything you cannot pay off when the statement comes. Check multiple websites to make sure that you are getting the best deal. Aim to get free shipping and check for coupon codes. Avoid paying more for something than you should. Items like gaming consoles and other highly desired items are often sold brand new by private parties for a healthy upcharge to parents who are willing to pay anything just to get something that they can’t find in the stores. These items can often be purchased at a fair price after the holidays when the demand drops. Avoid Holiday Scammers and Fraudsters Be mindful of your purse, wallet and credit cards. Watch for skimming devices and be discreet about how you enter you pin number. Track packages and know when they are being delivered. Arrange to have them shipped to your place of employment or to have a neighbor pick them up off your porch. Be wary of vendors selling goods online who ask for gift cards as payment. This is a common internet scam, and it is likely that you will not receive the goods you purchased. Review your credit card statements often. Report and dispute any suspicious transactions right away. By being prepared and organized, you can save time and money so that you can focus on what really matters this holiday season. May your shopping be stress free and may your holiday season be merry and bright!   Rebecca Agamaite, MBA Investment Advisor Representative  Rebecca joined the firm in 2011 as an Investment Advisor Representative. In this role, she works with clients to manage their investment assets and help them obtain their financial objectives. Rebecca brings a great deal of experience to the team having worked for several years at Marshall & IIsley Bank and MetLife.   Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin.   Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security.  Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses.  Please do not send orders via e-mail as they are not binding and cannot be acted upon.  Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation.  This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services.  Any subsequent, direct communication by AMG  with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.  A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.
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Category: Retirement Savings

16 Aug 2021

Advisors Management Group

Roth IRAs and High-Income Households

Roth IRA contributions are not tax-deductible, so there is no tax benefit for the year of contribution.  The tax benefit comes when you take a distribution.  If you follow the IRS rules, distributions from Roth IRAs are generally tax-free.  Typically, you have to be 59 ½ or older and the account has to have been established for at least five years. Although, there are special rules in the case of death, disability, and conversions. Not everyone can contribute to a Roth IRA.  First, you must have earned income, basically income from a job or self-employment.  Secondly, there are income limits for contributing to Roth IRAs.  In 2021, if your filing status is married filing joint or qualified widow(er) and your modified adjusted gross income falls between $198,000 and $208,000, you can still contribute to a Roth IRA, but the contribution is limited.  If your income is above $208,000, you cannot contribute to a Roth IRA.  For single or head of household filers, the phase-out range is $125,000 to $140,000.  If you are above $140,000, then you cannot contribute to a Roth IRA.  These income ranges can change each year. It is best to consult with a tax professional or an investment advisor to understand if you are eligible to contribute to a Roth IRA and how much. Backdoor Roth IRA If your income is too high and you do not qualify to make a Roth IRA contribution, there may still be a way to contribute to one. The strategy uses current tax law, and the term is coined, “backdoor” Roth IRA contribution.  First, you make a non-deductible Traditional IRA contribution. This can be done even at high-income levels.  Next, you immediately convert that traditional IRA to a Roth IRA; there is no income limitation for these types of Roth IRA conversions. A Few Words of Caution Even though the backdoor Roth IRA process seems simple, there are several things to be aware of when completing one.  The first thing is the timing of the traditional IRA contribution and the conversion to the Roth IRA is important. If done appropriately there may be no tax due on this transaction. Also, delays in the process could cause gains in the traditional IRA to be taxable upon conversion. In addition, if you already have other traditional IRAs, this strategy may not work for you as it can cause unwelcome tax surprises down the road.  Finally, this transaction will generate a 1099-R and will need to be reported on your tax return.  Due to the complexity of this strategy, we recommend consulting a tax professional and investment advisor before starting this process. If you would like to learn more about this strategy to see if it is right for you, please contact one of our team members. Rebecca Agamaite, MBA Client Experience Manager, Investment Advisor Representative Rebecca joined the Advisors Management Group in 2011 as an Investment Advisor Representative. Rebecca brings a great deal of experience to the team having worked for several years at Marshall & IIsley Bank and MetLife.  Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin.   Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security.  Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses.  Please do not send orders via e-mail as they are not binding and cannot be acted upon.  Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation.  This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services.  Any subsequent, direct communication by AMG  with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.  A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

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13 Jan 2021

Advisors Management Group

IRS Announces 2021 Retirement Plan Contribution Limits For 401(k)s And More

How much can you save for retirement in 2021 in tax-advantaged accounts? How does $58,000 sound? The Treasury Department has announced inflation-adjusted figures for retirement account savings for 2021.  The basic salary deferral amount for 401(k) and similar workplace plans remains flat at $19,500; the $6,500 catch-up amount if you’re 50 or older also remains the same; but the overall limit for these plans goes up from $57,000 to $58,000 in 2021. That helps workers whose employers allow special after-tax salary deferrals, and self-employed folks who can save to the limit in solo or individual 401(k)s or SEP retirement plans.  For the rest of us, IRA contribution limits are flat. The amount you can contribute to an Individual Retirement Account stays the same for 2021: $6,000, with a $1,000 catch-up limit if you’re 50 or older. There’s a little good news for IRA savers. You can earn a little more and get to deduct your IRA contributions. Plus, the phase-out income limits for contributing to a Roth IRA are bumped up. And the income limits to claim the saver’s credit, an extra incentive to start and keep saving, has gone up. We outline the numbers below; see IRS Notice 2020-79 for technical guidance. For more on 2021 tax numbers: Forbes contributor Kelly Phillips Erb has all the details on 2021 tax brackets, standard deduction amounts and more. We have all the details on the new higher 2021 estate and gift tax limits too.  401(k)s The annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $19,500 for 2021—for the second year in a row. Note, you can make changes to your 401(k) election at any time during the year, not just during open enrollment season when most employers send you a reminder to update your elections for the next plan year. The 401(k) Catch-Up The catch-up contribution limit for employees age 50 or older in these plans also remains steady: it’s $6,500 for 2021. Even if you don’t turn 50 until December 31, 2021, you can make the additional $6,500 catch-up contribution for the year. SEP IRAs and Solo 401(k)s For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) goes up from $57,000 in 2020 to $58,000 in 2021. That’s based on the amount they can contribute as an employer, as a percentage of their salary; the compensation limit used in the savings calculation also goes up from $285,000 in 2020 to $290,000 in 2021.  Aftertax 401(k) contributions If your employer allows aftertax contributions to your 401(k), you also get the advantage of the new $58,000 limit for 2021. It’s an overall cap, including your $19,500 (pretax or Roth in any combination) salary deferrals plus any employer contributions (but not catch-up contributions). The SIMPLE The contribution limit for SIMPLE retirement accounts is unchanged at $13,500 for 2021. The SIMPLE catch-up limit is still $3,000. Defined Benefit Plans  The limitation on the annual benefit of a defined benefit plan is unchanged at $230,000 for 2021. These are powerful pension plans (an individual version of the kind that used to be more common in the corporate world before 401(k)s took over) for high-earning self-employed folks. Individual Retirement Accounts The limit on annual contributions to an Individual Retirement Account (pretax or Roth or a combination) remains at $6,000 for 2021. The catch-up contribution limit, which is not subject to inflation adjustments, remains at $1,000. (Remember that 2021 IRA contributions can be made until April 15, 2022.) Deductible IRA Phase-Outs You can earn a little more in 2021 and get to deduct your contributions to a traditional pretax IRA. Note: Even if you earn too much to get a deduction for contributing to an IRA, you can still contribute—it’s just nondeductible. In 2021, the deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $66,000 and $76,000, up from $65,000 and $75,000 in 2020. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $105,000 to $125,000 for 2021, up from $104,000 to $124,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $198,000 and $208,000 in 2021, up from $196,000 and $206,000 in 2020. Roth IRA Phase-Outs The inflation adjustment helps Roth IRA savers too. In 2021, the AGI phase-out range for taxpayers making contributions to a Roth IRA is $198,000 to $208,000 for married couples filing jointly, up from $196,000 to $206,000 in 2020. For singles and heads of household, the income phase-out range is $125,000 to $140,000, up from $124,000 to $139,000 in 2020. If you earn too much to open a Roth IRA, you can open a nondeductible IRA and convert it to a Roth IRA as Congress lifted any income restrictions for Roth IRA conversions. To learn more about the backdoor Roth, see Congress Blesses Roth IRAs For Everyone, Even The Well-Paid. Saver’s Credit The income limit for the saver’s credit for low- and moderate-income workers is $66,000 for married couples filing jointly for 2021, up from $65,000; $49,500 for heads of household, up from $48,750; and $33,000 for singles and married filing separately, up from $32,500. QLACs The dollar limit on the amount of your IRA or 401(k) you can invest in a qualified longevity annuity contract is still $135,000 for 2021.   Sourec: Forbes

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