2015 Pension Plan and IRA Contributions Announced by IRS

On October 23, 2014, the IRS announced the 2015 pension plan and IRA limitations.

• The elective deferral limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased to $18,000. The catch-up contribution limit for employees aged 50 and over for these plans increases to $6,000.
  
• The limit on annual IRA contributions remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over also remains unchanged at $1,000.
  
• 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 AGI between $61,000 and $71,000. 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 $98,000 to $118,000. 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 $183,000 and $193,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range remains $0 to $10,000.
  
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly (an increase from the 2014 range of $181,000 to $191,000). For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  
• The limitation for Section 415(c)(1)(A) defined contribution plans is increased to $53,000.
  
• The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased $500 to $12,500.
  
• Additional informaion can be found on the IRS website here.

Additional info about the author can be found at:  www.schwartzfinancial.com

Real-Time Financial Planning With Your Financial Advisor

With the ever-increasing breadth of information available online with each passing year, consumers have more and more information at their fingertips – accessible with a smartphone or tablet! – and problems that once required paid experts for solutions can now be resolved with a quick Google search.

Yet while the power of internet searches can solve more and more complicated problems, when it comes to the real-world challenges of our financial lives, we hit a wall; some problems are just too complex to be solved with information alone, and still require the guidance of an expert to navigate. Of course, real world financial planning problems can be so complex, the financial planner can’t and won’t likely have all the answers, either. There is too much uncertainty for a known outcome, too many what-if scenarios to consider, and ultimately most people face practical constraints on their resources that require them to choose from the available trade-offs; there are no “right” choices, just paths to consider and consequences to weigh.

Which means in the end, the highest and best purpose of financial planners may not simply be to consult with and answer complicated questions, but to actually work collaboratively with clients utilizing technology to help them simulate the possibilities in real time, choose which goals to pursue, and then leverage the planner’s knowledge and experience to craft a plan to get them there.

That is why we provide each and every client with their own personal financial website specific to their own information.

For additional information go to:  www.schwartzfinancial.com  For information on your own personal financial website: http://mediahub.financialpicture.com/view/479/1532 

2015 Social Security and Medicare Figures Announced

Every fall, the Social Security Administration (SSA) and the Centers for Medicare & Medicaid Services (CMS) announce limits and costs for the following year. This year the SSA has announced that beneficiaries will receive a 1.7% cost-of-living adjustment (COLA), and CMS has announced that the standard monthly Medicare Part B premium will remain the same for 2015.

Additional information is available at: www.schwartzfinancial.com

“Barrel of Bricks”

“barrel of bricks”

Long-term care is one of those unexpected expenses everyone should plan for but few people actually do.

Consider this humorous accident report from someone who should have considered long-term care sooner.

I am writing in response to your request for additional information on my accident report.  In block number three of the accident reporting form I wrote, “Trying to do the job alone,” as the cause of my accident.  You said in your letter that I should explain more fully and I trust the following details will be sufficient.

I am a bricklayer by trade.  On the day of the accident I was working alone on the roof of a new six-story building.  When I completed my work I discovered that I had about 500 pounds of brick left over.  Rather than carry the bricks down by hand, I decided to lower them in a barrel by using a pulley, which fortunately was attached to the side of the building at the sixth floor.

Securing the rope at ground level, I went up to the roof, swung the barrel out, and loaded the bricks into it.  Then I went back to the ground level and untied the rope, holding tightly to it to ensure a slow decent of the 500 pounds of brick.  You will note in block eleven of the accident report that I weigh 135 pounds.

Due to my surprise at being jerked off the ground so suddenly, I lost my presence of mind and forgot to let go of the rope.  Needless to say, I proceeded at a rather rapid rate up the side of the building.

In the vicinity of the third floor I met the barrel coming down.  This explains the fractured skull and broken collarbone.

Slowing down slightly, I continued my rapid ascent, not stopping until the fingers of my right hand were two knuckles deep into the pulley.  Fortunately, by this time I had regained my presence of mind and was able to hold tightly to the rope in spite of my pain.

At approximately the same time, however, the barrel of bricks hit the ground and the bottom fell out of the barrel.  Devoid of the weight of the bricks, the barrel now weighed approximately 50 pounds.  I refer you again to my weight in block eleven.  As you might imagine, I began a rapid decent down the side of the building.  In the vicinity of the third floor I met the barrel coming up.  This accounts for the two fractured ankles and the lacerations of my legs and lower body.

The encounter with the barrel slowed me enough to lessen my injuries when I fell onto a pile of bricks and, fortunately, only three vertebrae were cracked.

I am sorry to report, however, that as I lay there on the bricks in pain, unable to stand, and watching the empty barrel six stories above me I again lost my presence of mind.  I let go of the rope.

Moral of this tale:  It doesn’t pay to try to do the job alone.

Maybe you should take a serious look at long-term care now to prepare for the time when you or your loved ones might need it.  I can help you evaluate your options and needs to avoid your “barrel of bricks.”

  For additional information on the author:  www.schwartzfinancial.com 

Schwartz Financial Weekly Commentary 10/20/14

 

Schwartz Financial Weekly Commentary

October 20, 2014

 

The Markets

 

It’s a little early for Halloween, but markets sure got spooked last week. After a 21-month ride to mid-September highs, stock markets jolted and shook investors last week like the most dramatic and scream-inducing rollercoaster at an amusement park’s fright night. Barron’s described it like this:

 

“The Dow Jones Industrial Average endured dizzying swings each day, with a 460-point move midday on Wednesday. That’s when the market came closest to hitting a correction phase – that is, down 10 percent from the highs. The Standard & Poor’s 500 index fell to 1,820.66, or down 9.5 percent intraday from the all-time closing high of 2011.36, before closing on Wednesday down 7.4 percent from highs.”

 

Despite the wild ride, by Friday’s close, major U.S stock indices were down about 1 percent for the week.

 

Restoring some perspective

After a week like last week, it’s important to take a deep breath and cast a calm eye over current financial and economic circumstances. This can help restore perspective and ensure sound decision-making. Here are a few points to consider:

 

Ø  Markets go through corrections: Last week’s drop didn’t quite meet the definition of a market correction, but it came close. It’s no secret stock market corrections can be unnerving but, as Kiplinger’s explained recently, “Corrections are an inevitable part of investing. Since 1932, declines of 10 percent to 20 percent (the traditional definition of a correction) have occurred an average of every two years, according to InvesTech Research.” Based on history, 10 percent corrections are normal and to be expected. It has been three years since our last correction.

 

Ø  There is a lot happening in the world: ‘When it rains, it pours,’ as they say. A whole host of factors contributed to last week’s market volatility. Let’s take a brief look at some prominent concerns:

 

§  Monetary policy adjustments in the United States. The Federal Reserve has been moving away from the highly accommodative monetary policies it has pursued in recent years and that has some investors worried. Quantitative easing is expected to end this month. The next step is raising the Fed funds rate which is expected to happen next year. Last week, St. Louis Fed President James Bullard reassured markets when he suggested, “The central bank should extend its asset-purchase program when policy makers meet later this month. U.S. stocks erased losses and Treasury yields rose on expectations the Fed will take action to insulate the United States from global economic weakness,” reported Bloomberg.

§  Possible deflation in the Eurozone. It’s not here yet, but some Eurozone countries have fallen back into recession and the region is showing no growth. The European Central Bank reduced rates in June and September and is expected to begin a round of bond buying next week. These efforts may improve productivity and spur growth.

§  The strengthening U.S. dollar could affect global liquidity. While a strong dollar has potential to slow growth in emerging countries, liquidity issues may be balanced out by the effect of falling oil prices. Reuters reported, “The falling oil price… will improve household budgets in the United States hugely – one study from Citi estimates the global windfall so far at $660 billion which includes a $600 per-household bonus in the United States.” More money in the pockets of U.S. consumers may translate into stronger emerging market economies.

§  Slowing overseas economic growth. Slower growth in China is affecting markets around the world. Germany has experienced some economic weakness recently. Brazil is in recession. U.S. economic growth is slow but steady and is not expected to change.

§  The potential spread of Ebola. “This is a terrible human tragedy but Ebola’s transmission – through bodily fluids – appears to be more difficult than SARS… The cost will be high in human terms but, so far, there is nothing to suggest it won’t eventually be contained,” reported Barron’s.

§  Political unrest and military conflicts persist. Ukraine, the Middle East, Hong Kong, and other regions of the world are embroiled in conflict. Unrest often impedes economic growth.

 

When you add to the mix human emotion and anxiety that has lingered since the financial crisis, you create the potential for a week like the one we just had.

 

Ø  Growth is healthy in the United States: Despite last week’s market volatility, U.S. stock market fundamentals haven’t changed. Barron’s said:

 

“Fundamentally, the market is fairly valued, but not overvalued, and the economic backdrop remains healthy. The U.S. economy looks to be growing at a healthy pace – 4.6 percent in the second quarter and an estimated 3 percent in the third. Third-quarter earnings are expected to rise 5.1 percent year-to-year, according to FactSet. Employment and manufacturing growth reaffirm the trend and, while retail sales slipped 0.3 percent in September, falling gasoline prices have boosted consumer confidence.”

 

Barron’s also pointed out that, at Thursday’s close, 35 percent of the companies in the Standard & Poor’s 500 had dividend yields that were higher than the 2 percent yield on 10-year U.S. Treasuries. The point being, market downturns often create opportunities.

 

Ø  Accommodative monetary policy has suppressed volatility: The Fed’s policies have kept market volatility lower in recent years than it might have been otherwise. If you think back, you may remember the Chicago Board Options Exchange's Volatility Index (VIX), also known as Wall Street’s fear gauge, was at extraordinarily low levels this year. It moved from 12 to 26 during the past month. The historical average for the VIX is 20, and it reached 80 during the financial crisis. We need to get used to the idea that markets are likely to be more volatile as monetary policy normalizes, according to experts cited by Barron’s. The thing to remember is market fluctuations are not unusual. They may make us uncomfortable, but they should be expected.

 

Maintaining a disciplined approach

As you know, we have a disciplined investment process that was designed to help you reach your financial goals. While we monitor economic and market developments closely, we don’t let the noise of day-to-day events determine our actions. We will not take action until our process indicates we should. It’s important for you to understand we make decisions about your account all the time, and much of the time we decide to do nothing. We have confidence in our process. It is the reason we sleep well at night.

 

Data as of 10/17/14	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-1.0%	2.1%	8.9%	16.3%	11.4%	5.4%
10-year Treasury Note (Yield Only)	2.2	NA	2.6	2.2	3.4	4.1
Gold (per ounce)	1.3	2.7	-6.4	-9.8	3.3	11.4
Bloomberg Commodity Index	-0.6	-6.6	-9.1	-7.2	-3.0	-2.5
DJ Equity All REIT Total Return Index	1.6	17.4	10.8	17.6	16.6	8.4

S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

Weekly Focus – Think About It

 

“Wealth is the ability to fully experience life.”

--Henry David Thoreau, American author

Value vs. Growth Investing (10/17/14)

Name	1-Week	YTD	4-Week	13-Week	1-Year	3-Year	5-Year
US Market	-0.58	2.92	-5.84	-3.38	9.90	18.84	14.26
Large Cap	-1.15	3.75	-5.56	-3.12	11.11	18.57	13.71
Large Core	-0.75	5.18	-4.51	-1.76	11.02	21.13	14.79
Large Growth	-1.02	4.53	-5.58	-1.87	13.45	18.18	14.79
Large Value	-1.69	1.58	-6.61	-5.71	8.80	16.65	11.65
Mid Cap	0.69	2.07	-6.64	-4.01	8.19	19.79	15.87
Mid Core	0.83	4.26	-6.24	-4.26	10.61	20.87	16.96
Mid Growth	1.39	0.30	-6.41	-2.22	6.08	16.40	15.07
Mid Value	-0.20	1.89	-7.31	-5.55	8.15	22.24	15.55
Small Cap	2.14	-3.42	-6.46	-4.40	2.33	18.79	14.78
Small Core	1.98	-1.92	-6.74	-4.98	3.77	18.89	14.10
Small Growth	2.56	-7.37	-6.42	-3.38	-2.66	16.72	14.82
Small Value	1.90	-1.02	-6.23	-4.78	5.97	20.75	15.36
US Core	-0.26	4.48	-5.01	-2.49	10.42	20.90	15.23
US Growth	-0.34	2.88	-5.79	-2.04	10.81	17.71	14.91
US Value	-1.17	1.47	-6.72	-5.61	8.47	18.08	12.70

 

 ©2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) is not warranted to be accurate, complete or timely. Morningstar is not responsible for any damages or losses arising from any use of this information and has not granted its consent to be considered or deemed an “expert” under the Securities Act of 1933. Past performance is no guarantee of future results.  Indices are unmanaged and while these indices can be invested in directly, this is neither a recommendation nor an offer to purchase.  This can only be done by prospectus and should be on the recommendation of a licensed professional.

 

Office Notes:

 

“barrel of bricks”

 

Long-term care is one of those unexpected expenses everyone should plan for but few people actually do.

Consider this humorous accident report from someone who should have considered long-term care sooner.

I am writing in response to your request for additional information on my accident report.  In block number three of the accident reporting form I wrote, “Trying to do the job alone,” as the cause of my accident.  You said in your letter that I should explain more fully and I trust the following details will be sufficient.

I am a bricklayer by trade.  On the day of the accident I was working alone on the roof of a new six-story building.  When I completed my work I discovered that I had about 500 pounds of brick left over.  Rather than carry the bricks down by hand, I decided to lower them in a barrel by using a pulley, which fortunately was attached to the side of the building at the sixth floor.

Securing the rope at ground level, I went up to the roof, swung the barrel out, and loaded the bricks into it.  Then I went back to the ground level and untied the rope, holding tightly to it to ensure a slow decent of the 500 pounds of brick.  You will note in block eleven of the accident report that I weigh 135 pounds.

Due to my surprise at being jerked off the ground so suddenly, I lost my presence of mind and forgot to let go of the rope.  Needless to say, I proceeded at a rather rapid rate up the side of the building.

In the vicinity of the third floor I met the barrel coming down.  This explains the fractured skull and broken collarbone.

Slowing down slightly, I continued my rapid ascent, not stopping until the fingers of my right hand were two knuckles deep into the pulley.  Fortunately, by this time I had regained my presence of mind and was able to hold tightly to the rope in spite of my pain.

At approximately the same time, however, the barrel of bricks hit the ground and the bottom fell out of the barrel.  Devoid of the weight of the bricks, the barrel now weighed approximately 50 pounds.  I refer you again to my weight in block eleven.  As you might imagine, I began a rapid decent down the side of the building.  In the vicinity of the third floor I met the barrel coming up.  This accounts for the two fractured ankles and the lacerations of my legs and lower body.

The encounter with the barrel slowed me enough to lessen my injuries when I fell onto a pile of bricks and, fortunately, only three vertebrae were cracked.

I am sorry to report, however, that as I lay there on the bricks in pain, unable to stand, and watching the empty barrel six stories above me I again lost my presence of mind.  I let go of the rope.

Moral of this tale:  It doesn’t pay to try to do the job alone.

Maybe you should take a serious look at long-term care now to prepare for the time when you or your loved ones might need it.  I can help you evaluate your options and needs to avoid your “barrel of bricks.”

 

Regards,

,

Michael L. Schwartz, RFC®, CWS®, CFS

 

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added. 

 

Michael L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and advisory services through Independent Financial Group, LLC., a registered broker-dealer and investment advisor.  Member FINRA-SIPC. Schwartz Financial and Independent Financial Group are unaffiliated entities.

 

This information is provided for informational purposes only and is not a solicitation or recommendation that any particular investor should purchase or sell any security. The information contained herein is obtained from sources believed to be reliable but its accuracy or completeness is not guaranteed.  Any opinions expressed herein are subject to change without notice.  An Index is a composite of securities that provides a performance benchmark.  Returns are presented for illustrative purposes only and are not intended to project the performance of any specific investment.  Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Past performance is not a guarantee of future results.

 

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

 

* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices. 

 

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

 

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

 

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

 

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

 

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

 

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

 

* Past performance does not guarantee future results.

 

* You cannot invest directly in an index.

 

* Consult your financial professional before making any investment decision.

 

* To unsubscribe from our “market commentary” please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at mike@schwartzfinancial.com.