Planning for 2014:
A Year of Change!
Presented by:
Advisor
Name of Firm
Tonight’s Agenda

Historical Facts

Overview of Critical Tax Law Changes

Other Key Areas to Watch in 2014

Strategies to Consider

Questions & Answers

All examples provided are hypothetical and meant for illustrative purposes only. State income
tax laws can be different from Federal income tax laws depending on your state. Be sure to
take this into account before making any decisions. Individual situations will vary so please
consult a tax advisor to address your specific situation.
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Five Key Areas of Financial Planning





Protection
Retirement Plan
Investments
Tax Planning
Estate Planning
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Over 100 Years…
In 2013 both the Federal Reserve and
the IRS celebrated their 100th Birthday
Money Supply
The Federal Reserve
In 2010 created
$970 Million Dollars
Monopoly
$30 Billion dollars
of Monopoly money
is printed annually
Sources: Yahoo! and Federal Reserve Bank of Minneapolis
Not Everyone is a Good Saver!
According to Gallup,
51.3% of Americans consider themselves "thriving,"
45.1% say they are "struggling,"
and 3.6% say they're "suffering."
According to a study by Harvard
professor David Wise and his
colleagues, 46.1% of Americans die
with less than $10,000 in assets.
Volatility is NOT a NEW Concept!
Since 1928, the Dow Jones
has increased more than
10% in a single day 8 times,
declined more than 10% in
a single day 4 times, and
gone either up or down
more than 5% in a
single day 136 times.
Since 1928,
the S&P 500 has closed
at a new all-time high
1,024 times, or
4.8% of all trading days.
History of Blue Chip Stocks
"Blue Chips" is a term borrowed from poker
where the blue chips are the most valuable,
and refers to the stocks of the largest, most
consistently profitable corporations.
Are Interest Rates Low?
Tax History
The first income
tax ever was in
1404 in England.
King Henry IV of England
U.S. Tax History
•
Source: CCH Inc.
The first 1040 form appeared in 1914.
It was three pages long.
Today, one estimate puts the federal tax code
at more than 70,000 pages.
Many of the tax law changes from
2013 will be realized in 2014
A New Bracket
The year 2013 brought taxpayers a NEW TOP
tax bracket that will be used on all returns
filed on or before April 15, 2014
2012
2013
Top Ordinary Income Rate- Salary
35%
39.6%
Top Ordinary Income Tax Rate –
Investment Income
35%
39.6%
A Rise in Long Term Capital Gains Rates
The year 2013 brought taxpayers a rise in
Capital Gains Taxes that will be used on all
returns filed on or before April 15, 2014
2012
2013
Top Capital Gain Rate
15%
20%
Top Tax Rate on Dividends
15%
20%
Estate, Gift, and GST Tax Rate
and Exclusion Amount
 Tax rate is 40%, up from 35%
 Applicable exclusion amount
is $5,340,000 for 2014
 Portability made permanent
 GST Provisions extended
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Payroll Taxes Return from Vacation
 The Social Security Tax
reprieve that we enjoyed
from 2011 – 2012 is gone.
 We now pay 6.2% and so
do our employers on the
first $113,700 you earn
(12.4% for self-employed).
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NEW Healthcare Surtax
Began January 1, 2013
0.9% Healthcare Tax on Earnings
An additional
0.9% surtax
on higher income
households.
The tax applies to wages
and self-employment
income in excess
of threshold.
There is no employer match
on the 0.9 percent tax.
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Single
taxpayers
$200,000
Married
taxpayers
filing jointly
$250,000
NEW Medicare Surtax
The year 2013 brought taxpayers the
NEW Medicare Surtax for High income earners
that will be calculated on all returns filed on or
before April 15, 2014
3.8% Medicare “Surtax” Overview
“Threshold amount” is a key factor in the formula
for purposes of calculating the surtax.
Threshold amounts
 Single taxpayers - $200,000
 Married taxpayers - $250,000
 Estates/trusts - $11,950 (i.e. top income tax
bracket in 2013)
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Some Other Tax Law Changes:
• Penalties for failure to comply with Individual
Healthcare mandate
• Tax Credit for Buying Health Insurance
Tax Breaks that Expired in 2013 Include:
1.Option to deduct state and local
sales tax
2.Deduction for higher education
tuition and related fees
3.Charitable donations from IRAs
4.Energy efficient home credits
5.$250 deduction for teacher paid
school expenses
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Who Pays all of the Tax ?
In 1986, the top 1% of earners reported 11% of all income
and paid 26% of the income taxes;
the lower-earning 50% made 17% of the income and paid
6% of the nation's individual income tax bill.
Summary
2014 provides an opportunity
to review your situation
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Tax Planning Can Be Confusing!
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The only thing constant is change!
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All Tax Changes Require Planning
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2013 was a tale of 2 Different Returns
2013
S & P 500
Barclay’s Aggregate
Bond Index
24.2%
-2.13%
Wall Street sees S&P 500 rising 6% in 2014
There are no guarantees that these results will be achieved.
The Stock Market vs. Your Portfolio
 An index, whether S&P 500 or the Dow Jones,
isn’t a measure of your portfolio
 It’s what your portfolio is doing, not what “the
market” is doing, that is important
 Your portfolio doesn’t always move in lock step
with any single market or index
Indexes cannot be invested in directly, are unmanaged and
do not incur management fees, costs and expenses.
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How about interest rates?
As interest rates rise, bond prices fall!
What Should YOU do for 2014?
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Review ALL Your Sources Of Income
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Know Your Options
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Explore ROTH IRA Conversion
Opportunities
This might be a good time to review the pros, cons
and consequences of a partial or full ROTH IRA
conversion.
If converting a Traditional IRA to a Roth IRA,
you will owe ordinary income taxes on any
previously deducted Traditional IRA
contributions and on all earnings. A conversion
may place you in a higher tax bracket than you
are in now. Because Roth IRA conversions may
not be appropriate for all investors and
individual situations vary we suggest that you
discuss tax issues with a qualified tax advisor.
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Consider Your Alternatives
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What Can You Do?
 Analyze your sources of income and true cash
flow requirements
 Review your overall tax planning strategies
 Re-evaluate your investment goals
 Re-evaluate your investment timelines
o Short Term / Longer Term
 Re-evaluate your risk tolerance.
o Conservative / Moderate / Aggressive
 Review your emergency fund needs
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“ Markets can remain
irrational longer than
you can remain
solvent.”
John Maynard Keynes
“If past history was
all there was to
the investment
game, the richest
people would be
librarians.”
Warren Buffett
We Review
Changes
for Our Clients
Regularly!
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What can you expect from us?
 Constant communication
 More frequent discussions
 We are constantly reviewing
economic, tax, estate and
investment issues for our clients
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Our Role as Your Advisor
 We won’t be making panicky decisions
 We will maintain a non-emotional objective
 We will avoid knee-jerk reactions
 We will assist you in making decisions that are
always in your best interest! - and
 WE WILL BE HERE FOR YOU!!!
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Any Questions?
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The views expressed are not necessarily the opinion of
Insert Broker-dealer name. Information is based on sources believed to be
reliable, however, their accuracy or completeness cannot be guaranteed.
Investing involves risk including the potential loss of principal. No
investment strategy can guarantee a profit or protect against loss in periods
of declining values. Past performance is no guarantee of future results.
This information is not intended to be a substitute
for specific individualized tax, legal, or
investment planning advice.
Contents provided by MDP, Inc.
Copyright 2014 MDP, Inc.