Broker Check


Lake And Green Living, July 2016
Diann Andrews, Resident Writer 

Social Security Changes – Were You Affected?

On November 2, 2015, the Bipartisan Budget Act of 2015 was signed into law. The Act contains provisions that are meant to help the financial sustainability of the Social Security program. In particular, the Act details key Social Security planning strategies, namely the file-and-suspend strategy and the filing of a restricted application for spousal benefits strategy.

The loss of these key planning strategies could have major impacts on your expected Social Security retirement income. Unless you’ve already implemented the file-and-suspend strategy, the restricted application strategy; or the retroactive lump sum you are out of luck. You will need to revisit your Social Security planning strategies to determine how best to optimize your lifetime Social Security retirement income in light of those changes.

If you choose to begin receiving Social Security benefits before your Full Retirement Age (FRA), your monthly benefits will be reduced. If you delay the start of benefits until after your Full Retirement Age (FRA), your monthly benefits will be increased. So, the basic tradeoff is between beginning earlier and receiving more but smaller payments or beginning later and receiving fewer but larger payments.

Of course, all Social Security benefit levels are based upon the viability of the Social Security system, which can be altered by the U.S. Congress at any time.

Unfortunately, with those recent changes, if you are not already receiving Social Security benefits, the strategies for which you were eligible over your lifetime are no longer available. One can assume that you have alternative strategies for Social Security retirement income, but it may be prudent to consider ideas to supplement your retirement savings. 

Currently, Social Security statements are only mailed to you on the years that your age is divisible by five and only then if you have not created a “my Social Security” account. If you don’t want to wait every five years, go to and create a “my Social Security” account to access your statements and all your information.

It is important to annually review your Social Security information; as, surprise, the government doesn’t always get it right. My husband and I recently discovered that our 2014 earnings were never reported to the Social Security Administration. We definitely paid our FICA taxes – we want the record to reflect the correct income. We have called Social Security and were advised that we must physically visit our local Social Security office to get the record corrected.

Several IRS retirement savings limits have been updated for 2016. Most are unchanged. For example:

  1. The maximum contribution that can be made to 401(k)s , 403(b)s, or 457 plans in 2016 under Section 415 is the lesser of $53,000 or 100 percent of compensation – unchanged from 2015.
  2. The limit of employee elective deferrals to Section 401K and Section 403b plans has remained unchanged at $18,000 in 2016. The limit for Section 457 plan salary reduction is likewise $18,000 in 2016.
  3. The maximum elective deferral for a SIMPLE or 401K SIMPLE plan has stayed at $12,500 in 2016.
  4. The limit on IRA contributions has stayed constant at $5,500 for 2016. Those 50 and older can still contribute an extra $1,000 under the special catch-up provision.
  5. Roth IRA contributions are phased out for adjusted gross incomes over $132,000 for single filers and $194,000 for joint filers.
  6. There is no income limit for conversion from a traditional IRA to a Roth IRA.
  7. If you’re an active participant in an employer plan, the deduction for IRA contributions phases out at $71,000 for single filers and $118,000 for joint filers. But, if your spouse in not an active participant in an employer plan, the phase out for their deduction happens at $194,000.


Lake And Green Living, June 2016
Diann L. Andrews, Resident Writer

Don’t Waste Your Tax Exemptions
People are sometimes surprised to learn that the government not only taxes the income they earn while working, but it also can tax the accumulated estate built from their work. What can you do to help reduce the sting of federal and state estate and gift taxes to protect your family’s inheritance? Start by looking at your will and beneficiary designations. 

Many married couples arrange their affairs so that all of their property will pass to their surviving spouse. This arrangement may seem like a good plan. It’s simple and – thanks to unlimited gift- and estate-tax marital deduction – generally allows you to leave all your property to your spouse estate tax free. But it may not be the best plan. Why not? Because, the plan doesn’t take advantage of your surviving spouse receives from you could be taxed as part of his or her estate. 

What is the estate tax exemption?
There are two numbers you need to be aware of – the federal exemption amount and the New York State exemption amount.

For 2016, the federal estate and gift tax exemption is $5.45 million per individual, up from $5.43 million in 2015. That means an individual can leave $5.45 million to heirs and pay no federal estate or gift tax. A married couple will be able to shield $10.9 million from federal estate and gift taxes. The annual gift exclusion remains the same as $14,000. The federal estate and gift tac exemptions rise with inflation.

The current New York State estate tax exemption is $4,187,500 until next April 1 when it increases. It is planned to increase incrementally until the New York exemption amount matches the federal estate tax exemption on January 1, 2019.

However, unlike the federal exclusion, eligibility for the state exclusion is subject to a phase out for taxable estates between 100 percent and 105 percent of the individual exclusion amount. This is called the cliff. This means that taxable estates that exceed 105 percent of the individual New York exclusion amount ($4,187,500) will lose the benefit of the exclusion completely – the entire taxable estate will be subject to the NY estate tax. This tax is applied at graduated rates up to a 16 percent maximum.

Coordinating your exemptions
Married couples who coordinate the use of their exemptions can leave twice as much as property to their families without incurring federal or state estate taxes. One way to take advantage of both your and your spouse’s exemptions is to create a family trust in your will and fund it with property equal in value to the exemption. With a trust strategy, your surviving spouse can receive income for life with the remaining property passing to your children at your spouse’s death. This strategy could offset estate taxes on the trust property, and the property won’t be included in your spouse’s estate. Your spouse’s exemption then will be available to offset some or all estate tax on any other property your spouse owns at the time of his or her death.

To ensure the beneficial use of both your and your spouse’s exemptions, you may have to retitle some of your property. Let’s say you and your spouse own most of your property jointly with right of survivorship. Generally, due to the marital deduction, property held jointly by married couples automatically passes to the surviving spouse with no federal estate tax consequences. So one spouse’s credit may be wasted. Dividing your property so that you and you spouse each own enough property separately to take advantage of the exemption can remedy the problem that allow you to effectively use estate planning techniques such as family trusts. Family trusts and retitling strategies are sophisticated planning techniques that may or may not be appropriate for you. Before implementing either technique, consult your professional financial planner.

Progressive Cattleman 
July 2016

Progressive Cattleman's July 2016 issue features an article written by NextStage Legacy president and founder, Diann Andrews, CFP®. Her article, "Protect Family Finances In The 'Most Dangerous' Industry" shares some personal experiences from her upbringing on a family farm in Iowa. Growing up, she lost several friends and loved ones to agriculture industry-related accidents, ranging from animal attacks to malfunctioning equipment. As a registered representative of Lincoln Financial Corporation, she is well-versed on the various insurance tools farmers can be useful in the event of an unforeseen accident.