Countdown for Tax Savings for 2014! Get your IRA funded ASAP...

The clock is ticking on one of the simplest and most effective decisions you can make to save money on your taxes, which is starting and funding an IRA. This handy savings account becomes your very own, Individual Retirement Account, and all the money you put in is a one big write-off! However, you only have 34 days left before April 15th, the famous day that Uncle Sam passes the hat to try to fill the governments coffers! My advice? Instead of writing a big check to the Feds, fill your retirement account instead!

Below you'll find all the nitty-gritty on how and why they work. The most important part? We're here to help you set up a no-fee IRA at one of our preferred custodians, TD Ameritrade or Charles Schwab, as it's one of the most prudent decisions you can make with your finances. Send me a message and I'll be happy to manage the process wherever you are in the country...

What Is a Traditional IRA?

Traditional individual retirement accounts (IRAs) can be a good way to save for retirement. If you do not participate in an employer-sponsored retirement plan or would like to supplement that plan, a traditional IRA could work for you.

A traditional IRA is simply a tax-deferred savings account that has several investing options and is set up through an investment institution. For instance, an IRA can include stocks, bonds, mutual funds, cash equivalents, real estate, and other investment vehicles.

One of the benefits of a traditional IRA is the potential for tax-deductible contributions. In 2015, you may be eligible to make a tax-deductible contribution of up to $5,500 ($6,500 if you are 50 or older). Contribution limits are indexed annually for inflation.

You can contribute directly to a traditional IRA or you can transfer assets directly from another type of qualified plan, such as a SEP or a SIMPLE IRA. Rollovers may also be made from a qualified employer-sponsored plan, such as a 401(k) or 403(b), after you change jobs or retire.

Not everyone contributing to a traditional IRA is eligible for a tax deduction. If you are an active participant in a qualified workplace retirement plan — such as a 401(k) or a simplified employee pension plan — your IRA deduction may be reduced or eliminated, based on your income.

In 2015, for example, if your modified adjusted gross income (AGI) is $61,000 or less as a single filer ($98,000 or less for married couples filing jointly), you can receive the full tax deduction. On the other hand, if your AGI is more than $71,000 as a single filer ($118,000 for married couples filing jointly), you are not eligible for a tax deduction. Partial deductions are allowed for single filers whose incomes are between $61,000 and $71,000 (or between $98,000 and $118,000 for married couples filing jointly). If you are not an active participant in an employer-sponsored retirement plan, you are eligible for a full tax deduction.

Nondeductible contributions may necessitate some very complicated paperwork when you begin withdrawals from your account. If your contributions are not tax deductible, you may be better served by another retirement plan, such as a Roth IRA. (The maximum combined annual contribution an individual can make to traditional and Roth IRAs is $5,500 in 2015.)

The funds in a traditional IRA accumulate tax deferred, which means you do not have to pay taxes until you start receiving distributions in retirement, a time when you might be in a lower tax bracket. Withdrawals are taxed as ordinary income. Withdrawals taken prior to age 59&1/2; may also be subject to a 10% federal income tax penalty. Exceptions to this early-withdrawal penalty include distributions resulting from disability, unemployment, and qualified first home expenses ($10,000 lifetime limit), as well as distributions used to pay higher-education expenses.

You must begin taking annual required minimum distributions (RMDs) from a traditional IRA after you turn 70&1/2 (starting no later than April 1 of the year after the year you reach 70&1/2), or you will be subject to a 50% income tax penalty on the amount that should have been withdrawn. Of course, you can always withdraw more than the required minimum amount or even withdraw the entire balance as a lump sum.

In short, get that contribution in before it's too late! You've got little more than a month to make a shrewd tax-savings move, and by working with us at Lagunitas Asset Management, we can help you understand if it would truly make sense as a part of your financial game plan. For a helping hand, give us a ring at 916.357.6656 or feel free to check us out at:

www.LagunitasFinancialPlanning.com

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2015 Emerald Connect, LLC

Get A Plan! College Costs are Ballooning

The average costs paid by families with students who attended private four-year colleges during the 2013–2014 academic year actually fell by 11.6% — from $39,434 to $34,855. This trend suggests that more families are making cost-conscious college decisions and taking advantage of scholarships offered to attract top students.1  

The amount of need- and merit-based financial aid offered to students has increased with published tuition prices in recent years. Overall, scholarships and grants covered 40% of the average total cost for a student at a four-year private college.2

Financial need is assessed based on family income and assets relative to college costs, so a student who doesn’t receive any money from a $10,000-per-year school could qualify for need-based aid at a school that costs $50,000 per year. And it’s possible for families with six-figure incomes and typical assets to receive at least some grant aid from high-cost universities, especially if they have more than one child in college at a time.

In fact, what parents don’t know about the financial aid process could cost them thousands of dollars.

File the FAFSA 
Families must fill out the Department of Education’s Free Application for Federal Student Aid (FAFSA), which is used to determine eligibility for financial aid from federal and state sources and/or for institutional funds granted by colleges nationwide. An expected family contribution (EFC) is calculated based on the information provided. The federal formula is heavily weighted toward income, and the EFC is divided by the number of children enrolled in college.

The FAFSA may be filed online beginning January 1 of the year the student will attend college. Families who don’t expect to qualify for grants may want to complete the FAFSA anyway, in case it’s needed for federal loans or merit-based scholarships.

Schools may be stricter than the federal government in assessing a family’s ability to pay. Private colleges often require applicants to fill out the lengthier CSS/Financial Aid Profile®, which unlike the FAFSA takes home and business equity into account.

Max Out Eligibility 
Financial decisions made before and during college can affect the amount of aid a student might receive from the government and/or the university.

• The base income year, which begins January 1 of a child’s junior year in high school, will have the most influence on a family’s eligibility. If they can, parents should postpone income to help lower their EFC, and they should avoid selling securities or a residence that would produce capital gains or result in a temporary income or asset spike.
• Assets in retirement plans are not counted in the federal calculation. Thus, contributing as much as possible over time could reduce your asset base and lower your EFC. On the other hand, taking retirement account distributions to pay for college expenses typically adds to your taxable income and may increase the EFC for the following year.
• Student and parent assets are treated differently: 20% of the student’s assets must be contributed each year, compared with only 5.6% of the parents’ assets. That’s why it is generally better to keep college savings accounts in the parents’ names and spend down any student assets first.
• Families with substantial household savings might consider accelerating necessary expenses (such as a car purchase and home improvements) or retiring debt to reduce assets before filing their first FAFSA.

Some institutions and states grant funds on a first-come, first-served basis. Therefore, you may want to file your tax returns, complete the FAFSA, and apply for aid according to the college’s instructions as early as possible.

www.LagunitasFinancialPlanning.com

1–2) Sallie Mae, 2014

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright 2015 Emerald Connect, LLC.

Lock In Tax-Savings by Picking the Right IRA!

• Rapidly approaching is April 15th, which is not only "tax-day" but also the last day to make IRA contributions for the tax year of 2014.  Even though we're already a month and a half into the new year, you still have time to set-up & contribute to an IRA and lock in a substantial write-off!  As anyone who has forgotten to do this can tell you, it is a huge chunk of tax-savings that you definitely want to keep in your pocket, rather than in Uncle Sams!
• In this column, I address some of the most common IRAs that my clients at Lagunitas Asset Management use, as well as some of the options that are available to small business owners who are looking to set up a retirement plan for themselves and their employees. It is extremely important to remember that you get to fund not only your retirement plan at work, but also an individual plan for yourself!  No matter if you're maxing out your 401k, 403b, or whatever plan that company offers, you still can fund your own IRA. That's what the I in IRA stands for: your Individual Retirement Account!  Please reach out to me via email at Mike@LagunitasIQ.com if you need any help in getting these accounts set-up and funded for yourself or your business.

What Is a Traditional IRA?

Traditional individual retirement accounts (IRAs) can be a good way to save for retirement. If you do not participate in an employer-sponsored retirement plan or would like to supplement that plan, a traditional IRA could work for you.

A traditional IRA is simply a tax-deferred savings account that has several investing options and is set up through an investment institution. For instance, an IRA can include stocks, bonds, mutual funds, cash equivalents, real estate, and other investment vehicles.

One of the benefits of a traditional IRA is the potential for tax-deductible contributions. In 2015, you may be eligible to make a tax-deductible contribution of up to $5,500 ($6,500 if you are 50 or older). Contribution limits are indexed annually for inflation.

You can contribute directly to a traditional IRA or you can transfer assets directly from another type of qualified plan, such as a SEP or a SIMPLE IRA. Rollovers may also be made from a qualified employer-sponsored plan, such as a 401(k) or 403(b), after you change jobs or retire.

Not everyone contributing to a traditional IRA is eligible for a tax deduction. If you are an active participant in a qualified workplace retirement plan — such as a 401(k) or a simplified employee pension plan — your IRA deduction may be reduced or eliminated, based on your income.

In 2015, for example, if your modified adjusted gross income (AGI) is $61,000 or less as a single filer ($98,000 or less for married couples filing jointly), you can receive the full tax deduction. On the other hand, if your AGI is more than $71,000 as a single filer ($118,000 for married couples filing jointly), you are not eligible for a tax deduction. Partial deductions are allowed for single filers whose incomes are between $61,000 and $71,000 (or between $98,000 and $118,000 for married couples filing jointly). If you are not an active participant in an employer-sponsored retirement plan, you are eligible for a full tax deduction.

Nondeductible contributions may necessitate some very complicated paperwork when you begin withdrawals from your account. If your contributions are not tax deductible, you may be better served by another retirement plan, such as a Roth IRA. (The maximum combined annual contribution an individual can make to traditional and Roth IRAs is $5,500 in 2015.)

The funds in a traditional IRA accumulate tax deferred, which means you do not have to pay taxes until you start receiving distributions in retirement, a time when you might be in a lower tax bracket. Withdrawals are taxed as ordinary income. Withdrawals taken prior to age 59½ may also be subject to a 10% federal income tax penalty. Exceptions to this early-withdrawal penalty include distributions resulting from disability, unemployment, and qualified first home expenses ($10,000 lifetime limit), as well as distributions used to pay higher-education expenses.

You must begin taking annual required minimum distributions (RMDs) from a traditional IRA after you turn 70½ (starting no later than April 1 of the year after the year you reach 70½), or you will be subject to a 50% income tax penalty on the amount that should have been withdrawn. Of course, you can always withdraw more than the required minimum amount or even withdraw the entire balance as a lump sum.

An IRA can be a valuable addition to your retirement and tax management efforts. By working with us at Lagunitas Asset Management, we can help you can determine whether a traditional IRA would be appropriate for you.

What Is a Self-Employed Retirement Plan?

A self-employed retirement plan is a tax-deferred retirement savings program for self-employed individuals. In the past, the term "Keogh plan" was used to distinguish a retirement plan established by a self-employed individual.  However, self-employed retirement plans are now generally referred to by the name that is used for the particular type of plan, such as SEP IRA, SIMPLE 401(k), or self-employed 401(k).

Self-employed plans can be established by any individual who is self-employed on a part-time or full-time basis, as well as by sole proprietorships and partnerships (who are considered “employees” for the purpose of participating in these plans).

Unlike IRAs, which limit tax-deductible contributions to $5,500 per year (in 2015), self-employed plans allow you to save as much as $53,000 of your net self-employment income in 2015, depending on the type of self-employed plan you adopt.

Contributions to a self-employed plan may be tax deductible up to certain limits. These contributions, along with any gains made on the plan investments, will accumulate tax deferred until you withdraw them.

Withdrawal rules mirror those of other qualified retirement plans. Distributions are taxed as ordinary income and may be subject to an additional 10% federal income tax penalty if taken prior to age 59½. Self-employed plans can typically be rolled over to another qualified retirement plan or to an IRA. Annual minimum distributions are required after the age of 70½. Unlike the case with other qualified retirement plans, hardship distributions are not permitted with a self-employed plan.

You can open a self-employed plan account through banks, brokerage houses, insurance companies, mutual fund companies, and credit unions. Although the federal government sets no minimum opening balance, most institutions set their own, usually between $250 and $1,000.

The deadline for setting up a self-employed plan is earlier than it is for an IRA. You must open a self-employed plan by December 31 of the year for which you wish to claim a deduction. However, you don’t have to come up with your entire contribution by then. As with an IRA, you have until the day you file your tax return to make your contribution. That gives most taxpayers until April 15 to deposit their annual retirement savings into a self-employed plan account.

Each tax year, plan holders are required to fill out Form 5500, for which they may need the assistance of an accountant or tax advisor, incurring extra costs.

If you earn self-employment income, a self-employed plan could be a valuable addition to your retirement strategy. And the potential payoff — a comfortable retirement — may far outweigh any extra costs or paperwork.

 www.lagunitasfinancialplanning.com

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2015 Emerald Connect, LLC

The Perks of the Spousal IRA!

Bridging the Gap with a Spousal IRA

An IRA study found that women lag behind men when it comes to accumulating money for retirement (see chart). Though there may be multiple reasons for this disparity, the most fundamental is the continuing wage gap between men and women.1

This gap tends to widen around the age when many women have children, which suggests that time away from the workforce may have a negative impact on a woman’s career.2 It also stands to reason that if a mother — or stay-at-home dad — is taking care of the children rather than working, she or he may not be contributing to a retirement account. The same situation could arise later in life if one spouse works while the other takes time off.

Additional Saving Opportunity
A spousal IRA — funded for a spouse who earns little or no income — offers an opportunity to help keep the retirement savings of both spouses on track. It also offers a larger potential tax deduction than a single IRA.

For the 2014 and 2015 tax years, an individual with earned income (from wages or self-employment) can contribute up to $5,500 to his or her own IRA and up to $5,500 more to a spouse’s IRA — regardless of whether the spouse works or not — as long as the couple’s combined earned income exceeds both contributions and they file a joint tax return. An additional $1,000 catch-up contribution can be made for each spouse who is age 50 or older. Contributions for 2014 can be made up to the April 15, 2015, tax filing deadline.

All other IRA eligibility rules must be met. So if a spousal contribution to a traditional IRA is made for a nonworking spouse, she or he must be under age 70½ in the year for which the contribution is made. The age of the working spouse does not matter for purposes of the spousal IRA.

Traditional IRA Deductibility
If neither spouse actively participates in an employer-sponsored retirement plan such as a 401(k), contributions to a traditional IRA are fully tax deductible. However, if one or both are active participants, federal income limits may affect the deductibility of contributions.

In 2015, contributions to the IRA of an active participant will phase out with a modified adjusted gross income (AGI) between $98,000 and $118,000, but contributions to the IRA of a nonparticipating spouse will phase out with an AGI between $183,000 and $193,000. (The income ranges were slightly lower in 2014.) Thus, some participants in workplace plans who earn too much to deduct an IRA contribution for themselves may be able to deduct an IRA contribution for a nonparticipating spouse.

Annual required minimum distributions (RMDs) from traditional IRAs and most employer-sponsored retirement plans must begin for the year in which the account owner reaches age 70½. Withdrawals taken prior to age 59½ may be subject to a 10% federal income tax penalty, with certain exceptions as outlined by the IRS.

Thanks,

Mike

Michael M. Knittel

Director; Portfolio Manager

Lagunitas Asset Management

1024 Iron Point Rd, Suite 100

Folsom, CA 95630

916.357.6656

www.LagunitasFinancialPlanning.com

 

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Securities offered through Fortune Financial Services (FFS), member SIPC. Advisory services offered through Lagunitas Asset Managment (LAM), California Registered Investment Advisor.  FFS and LAM are unaffiliated entities. Please be advised that we cannot accept any trade instructions over email or voicemail as they must be confirmed either in writing or through direct communication.  This email may contain confidential and proprietory information and is intended for the recipient only.  If you have recieved this communication in error, please delete immediately.

1) The Washington Post, May 21, 2014
2) Pew Research Center, 2013

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright 2015 Emerald Connect, LLC.

Tax-Planning Advantages of IRAs & 401(k)'s

How Much Money Can I Put into My IRA or Employer-Sponsored Retirement Plan? IRAs and employer-sponsored retirement plans are subject to annual contribution limits set by the federal government. The limits are periodically adjusted to compensate for inflation and increases in the cost of living. IRAs For the 2015 tax year, you can contribute up to $5,500 to all IRAs combined (the limit will be adjusted annually for inflation). If you have a traditional IRA as well as a Roth IRA, you can only contribute a total of the annual limit in one year, not the annual limit to each. If you are age 50 or older, you can also make a $1,000 annual “catch-up” contribution. Employer-Sponsored Retirement Plans Employer-sponsored retirement plans such as 401(k)s and 403(b)s have a $18,000 contribution limit in 2015; individuals aged 50 and older can contribute an extra $6,000 each year as a catch-up contribution. If you are currently contributing to an IRA or an employer-sponsored retirement plan, it may be wise to check the contribution limit each year in order to put aside as much as possible. Distributions from traditional IRAs and most employer-sponsored retirement plans are taxed as ordinary income and may be subject to an additional 10% federal income tax penalty if taken prior to reaching age 59½. If you participate in both a traditional IRA and an employer-sponsored plan, your IRA contributions may or may not be tax deductible, depending on your adjusted gross income. We hope this helps you come tax-day this April 15th, or in your tax-planning throughout 2015! Thanks, Mike Michael M. Knittel Director/Portfolio Manager Lagunitas Asset Management 1024 Iron Point Road, Suite 100 Folsom, CA 95630 916.357.6656 www.LagunitasMoneyIQ.com "Helping Smart People Make Smart Investments"™                                                                                                                               www.twitter.com/LagunitasIQ       www.linkedin.com/in/LagunitasIQ/                     The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2015 Emerald Connect, LLC

We Stand with France! We Stand with Charlie Hebdo!

 “Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows neither victory nor defeat.”

– Teddy Roosevelt

It's impossible to put into words the range of emotion that I've felt in watching the people of France suffer so greatly at the hands of terrorists starting with the attack on the offices of Charlie Hebdo and culminating with watching the France Unity March this morning on the BBC.  So many have been lost, so many have been shaken, yet so many STAND TOGETHER today in the face of such horrific and tragic events.  The true beauty of humanity is shining ever-more bright this morning, from the arms of world leaders interlocked with the people whom they serve, the moments of silence observed around the world, and in the hearts of the millions of Parisians, Europeans, and other fellow marchers in the heart of Paris today.

Just like we witnessed here in the United States in the days, weeks, and months following the tragedy on 9/11, 13 years and 4 months to the day, there is so much good that can come in the aftermath of a national tragedy such as this.  My hope is that the French people, just like we experienced here in the States, experience a profound period of unity and national pride. Our hearts, minds, and prayers are with the people of France today, tomorrow, and forever.  May God Bless those families who lost loved ones in this past week's attacks in France.  May God Bless the Marchers, the Leaders, and all People who are holding on to one another and building the great hope that so often rises in the face of extreme adversity.

Written below is an excerpt from a letter that I wrote and published on the anniversary of the 9/11 attacks about the good that sprung forth in the U.S. in the time that followed our own national tragedy.  We are now united by a bond that does not recognize borders, and we too will "Never Forget" by standing with you and remembering the Charlie Hebdo tragedy as if it is our own.  Captured so beautifully in the lyrics below, let's "Imagine" a future united by love, and rise from this time together.

“Imagine there's no countries

 It isn't hard to do
Nothing to kill or die for
And no religion too
Imagine all the people
Living life in peace

You may say that I'm a dreamer
But I'm not the only one
I hope someday you'll join us
And the world will be as one” 

― John Lennon, Imagine

Published 9/11/14 by Michael M. Knittel

Thirteen years ago, the lives of everyone in our country shifted on a single moment, a startling terrorist attack that brought our national consciousness to a level not seen since the end of the Cold War.  On the day of the September 11^th attacks, my office went into full shut down and Wall Street fell silent for six straight days in a time that greatly resembled the country’s reaction to the assassination of JFK nearly forty years prior.   On the first day that the stock market reopened, the Dow Jones average fell nearly 7.1% and by that Friday, the market was down over 14% (www.investopedia.com).  What did that terrible event teach us and how are we different now? 

For one, it changed an entire generation that had never been through a collective national tragedy and popped the bubbles that life in our country could never be touched.  Second, it raised the levels of national pride that were felt across the country, from the baseball games that were played in New York City following the attacks, to the flags that we all flew with pride outside our homes, car windows, and office buildings.  A lot of those displays have faded into the background as time has passed, but I know that in my heart and in the hearts of many people I know, we were forever bettered by something so awful occurring.  

When I reflect on the aftermath of September 11^th, 2001, I feel a tremendous amount of pride in the way people pulled together, from the top of our government to my neighbors who went to Ground Zero as first responders and hope that we won’t ever forget the love, support and kindness that came out of such an earth-shaking day.  I know that I sure won't and remember each day, just how fortunate we are to be blessed by a life of peace and freedom.

Thank you so much for reading and God Bless France, the United States, and all those countries and people who hold Peace, Love and Unity so dear.

To donate to the victims and families of those affected by the Charlie Hebdo tragedies, please follow this link https://www.leetchi.com/c/solidaritecharlie.

Thank You,

Mike

Michael M. Knittel

Director/Portfolio Manager

Lagunitas Asset Management
1024 Iron Point Road, Suite 100
Folsom, CA 95630
916.357.6656

www.LagunitasMoneyIQ.com

"Helping Smart People Make Smart Investments"™              

                                                                     

                                         

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Securities offered through Fortune Finacial Services (FFS), Member FINRA/SIPC.  Advisory services offered through Lagunitas Asset Management.  Lagunitas Asset Management and FFS are unaffiliated entities.