Quoted in USA Today on Tax Planning

Quoted in USA Today on Tax Planning

Now that tax season is over (unless you had to extend) you probably want to breathe a sigh of relief and forget about taxes again for another eight months or so. While that feeling is more than understandable, you may want to consider that it is also the perfect time to start exploring tax planning opportunities for the current year. If you take the time to engage in proactive and deliberate planning, your next tax season may not be so painful. Since most tax strategies have to be implemented before December 31st, the best way to minimize your taxes in the long-run is to think about it prior to filing. Last week, an article in USA Today examined this very concept, and featured several CPA financial planners, including yours truly.

New Advisor at Laminar Wealth

New Advisor at Laminar Wealth


I’m excited to welcome Mary Oransky, CFP® to Laminar Wealth!
Mary was born and raised in St. Louis, and after graduating from Cor Jesu Academy, she headed out to California to attend Santa Clara University. Not only did she earn a degree in biochemistry while at Santa Clara, but she also met her husband (me). After several years of working in the San Francisco Bay Area, we decided to move to Chicago to be closer to family. This was also when I launched Laminar Wealth. As I dedicated myself to my new business, fortunately, Mary also found herself drawn to conversations about financial planning, rather than nagging me for talking about work all the time. While continuing to work in sales, Mary began taking financial planning courses through Northwestern University’s School of Professional Studies. After just a year in Chicago, we decided to move to Mary’s hometown, and this seemed like a natural time for her to change careers. Upon our move, Mary worked at a well-respected, independent advisory firm where she gained valuable experience assisting clients in all aspects of their financial lives. During that time, she also earned her Certified Financial Planner designation. Mary is excited to now be working with Laminar Wealth, where she can continue to help people lead richer lives. When she’s not working, you’ll find Mary playing with our 10 month old daughter Ellie, walking our golden retriever Hana, snuggling our two cats Sassafras and Lily, or having a glass of wine and a philosophical discussion about financial planning with me (yes, we really are that nerdy)!
Welcome aboard, Mary!

It's Not Too Late to Contribute to an IRA for 2016

It's Not Too Late to Contribute to an IRA for 2016

The deadline for making 2016 contributions to an IRA is April 18, 2017. The contribution limit is the lesser of your earned income or $5,500 ($6,500 if you were over age 50 on December 31, 2016). You may also be able to contribute to an IRA for your spouse, even if they didn't have any income for the year.

Traditional IRA

To contribute to a traditional IRA, you must have been under age 70 1/2 by December 31, 2016. If you or your spouse was covered by an employer plan (e.g. 401k) for 2016, your ability to deduct your contribution may be limited depending on your filing status and modified adjusted gross income (MAGI) (see table below). If you won't be able to deduct your traditional IRA contribution, evaluate whether you can make a Roth IRA contribution (see below) as this is almost always better than making a non-deductible traditional IRA contribution.

2016 Income Phaseout Ranges for Traditional IRA
If covered by an employer-sponsored plan and filing as... Your IRA deduction is reduced if your MAGI is: Your IRA deduction is eliminated if your MAGI is:
...Single or Head of Household $61,000 to $71,000 $71,000 or more
...Married Filing Jointly $98,000 to $118,000 $118,000 or more
...Married Filing Separately $0 to $10,000 $10,000 or more
If not covered by an employer-sponsored retirement plan, but filing joint return with a spouse who is covered by a plan $184,000 to $194,000 $194,000 or more

Roth IRA

While there is no tax deduction for Roth IRA contributions, the earnings and eventual distributions are tax-free. For those who expect to be in a higher effective tax bracket when they begin distributions, a Roth IRA may be your best bet. In addition, there is no age limit to contribute to a Roth IRA and no required minimum distributions once reaching age 70 1/2. There are however income limitations that can reduce or eliminate your ability to contribute to a Roth IRA (see table below).

2016 Income Phaseout Ranges for Roth IRA
Your ability to contribute to a Roth IRA is reduced if your MAGI is: Your ability to contribute to a Roth IRA is eliminated if your MAGI is:
Single or Head of Household $117,000 to $132,000 $132,000 or more
Married Filing Jointly $184,000 to $194,000 $194,000 or more
Married Filing Separately $0 to $10,000 $10,000 or more

Make Too Much Money?

If your income is too high to contribute to a Roth IRA and you're unable to deduct a traditional IRA contribution, there are some advanced tax planning techniques that may allow you to make a non-deductible traditional IRA contribution and later convert it a Roth IRA, paying little or no tax in the process. There are a number of considerations that need to be taken into account before attempting a "back-door" Roth IRA strategy to ensure that you don't inadvertently create a large tax bill or run afoul some of the IRS's principle-based doctrines. Contact us if you think you might be a candidate.

TD Ameritrade Lowers Prices

TD Ameritrade Lowers Prices

Last week, TD Ameritrade Institutional, the brokerage firm we typically recommend to our clients to custody and safeguard their managed assets, announced it was reducing their prices.

Mutual Funds
Dimensional Fund Advisors (DFA) funds are now $9.99 per transaction, down from TD's standard pricing of $24 per transaction. This is exciting news since we use several Dimensional funds in our clients’ portfolios. Vanguard mutual funds, which we also use, remain at $24 per transaction and allow our clients access to the lower expense ratio Admiral share class with no minimums. By way of comparison, other custodians charge as much as $50 per transaction for mutual funds from Dimensional and Vanguard.

Exchange Traded Funds (ETF)
Standard ETF pricing has been lowered from $9.99 per trade to $6.95 per trade. In the equity portions of our portfolios we often use the ETF version of Vanguard's offerings, so this is welcomed news, as well! Sadly, starting November 20, 2017, the limited number of Vanguard ETFs that have been on TD Ameritrade Institutional’s commission-free list, including several we used regularly will be removed. While this is unfortunate, the new standard pricing of $6.95 per trade is still competitive and a worthwhile cost to access Vanguard ETFs. We will, however, modify our trading guidelines slightly, to ensure this change does not have a material impact on our client's trading costs.

Our Relationship with TD Ameritrade Institutional
The recent pricing changes are overall great news for our clients and reaffirm our confidence in TD Ameritrade Institutional. In addition to competitive pricing, they continue to be at the forefront of technology solutions and client service. As an independent Registered Investment Adviser (RIA), we are completely independent of TD Ameritrade Institutional, but recommend them because of the value they offer our clients.

Posted: March 6, 2017.

Updated: October 16, 2017 to reflect the removal of Vanguard ETFs from TD Ameritrade Institutional's commission-free list, effective November 20, 2017.

2017 Key Financial Planning Numbers

2017 Key Financial Planning Numbers

Individual Retirement Accounts (IRA)

  • Contribution Limit = Lesser of $5,500 or 100% of earned income
  • Additional "Catch-up" Limit (age 50 or older) = $1,000
  • Traditional Deductible IRA Compensation Limits (income phase-out range for deductibility if covered by a employer-sponsored plan)
    • Single = $62,000 - $72,000
    • Married Filing Jointly = $99,000 - $119,000
    • Married Filing Separately = $0 - $10,000
    • Not Covered by Employer Plan, but Filing Jointly with Spouse Who is Covered = $186,000 - $196,000
  • Roth IRA Compensation Limits (income phase-out range for ability to fund)
    • Single = $118,000 - $133,000
    • Married Filing Jointly = $186,000 - $196,000
    • Married Filing Separately = $0 - $10,000

Employer Plans - 401(k), 403(b), 457(b), SAR-SEPs

  • Elective Deferral Limits = Lesser of $18,000 or 100% of earned income
  • Additional "Catch-up" Limit (age 50 or older) = $6,000
  • Annual Limit (employer + employee contributions) = $54,000

Health Savings Accounts (HSA)

  • Annual Contribution Amount for Self-only Coverage = $3,400
  • Annual Contribution Amount for Family Coverage = $6,750
  • Additional "Catch-up" Limit (age 55 or older) = $1,000

Flexible Spending Account (FSA) for Health Care

  • Maximum Salary Reduction Contribution = $2,600

Social Security

  • Cost-of-Living-Adjustment (COLA) = 0.30%
  • Under Full Retirement Age - Annual Earnings Limit to Avoid Temporary Withholding = $16,920
  • Reaching Full Retirement Age in 2017 - Annual Earnings Limit to Avoid Temporary Withholding = $44,880

Estate Planning

  • Annual Gift Exclusion = $14,000
  • Gift & Estate Tax Lifetime Exemption = $5,490,000
  • Generation-skipping Transfer Tax Exemption = $5,490,000

Business Planning

  • Maximum Earnings Subject to Social Security Taxes = $127,200
  • Maximum Section 179 Deduction = $510,000
  • Standard Mileage Rate = 53.5 cents per mile