Presented by Gary Hutto

Every year brings some financial change, so here are some relevant changes relating to investment, tax and estate planning for 2012.

Retirement plans. 401(k), 403(b) and 457 plan annual contribution limits rise slightly to $17,000, and you can contribute an additional $5,500 to these accounts if you are 50 or older this year. IRA contribution levels are unchanged from 2011: the ceiling is $5,000, $6,000 if you will be 50 or older in 2012.1

As you strive to contribute as much as you comfortably can to these accounts this year, you will probably notice some changes with the retirement plan at your workplace. In 2012, retirement plan sponsors (i.e., employers) will have to note all of the fees and expenses linked to the funds in the plan to plan participants. So if you have a 401(k) or 403(b), you may notice some differences in the disclosures on your statements and you will probably notice more information coming your way about fees. There is also a push in Washington, D.C. to have financial companies provide lifetime income illustrations on retirement plan account statements, projections of your expected monthly benefit at retirement age.2

Income taxes. Wealthy Americans are set to face greater income tax burdens in 2013, so 2012 may be the last year to take advantage of certain factors. For example, the top tax bracket in 2013 is slated to be at 39.6% instead of the current 35%. This year, capital gains and dividends will be taxed at 15% or less for everyone, 0% for those in the 10% and 15% tax brackets. In 2013, the qualified capital gains tax rate is scheduled to rise to 20% and qualified dividends will be taxed as ordinary income. So taking a little more income in 2012 could be smart.3

In 2013, the wealthiest Americans are supposed to be hit with new Medicare taxes: a new 3.8% levy on unearned income (such as capital gains, income from real estate, dividends and interest) and a new 0.9% tax or earned income. So next year, the truly wealthy could effectively face in the neighborhood of 45% federal taxes.3

Additionally, the IRS is planning to limit itemized deductions for upper-income taxpayers in 2013. A phase-out will also apply for the personal exemption deduction.3

Estate & gift taxes. At the end of 2012, some very nice estate tax breaks could sunset. Barring action by Congress, 2013 could see a 20% leap in the federal estate tax rate from 35% to 55%. The individual estate tax exclusion (currently $5.12 million) is scheduled to be reduced to $1 million.3

As we have unified gift and estate tax rates, those numbers and percentages also apply to gift taxes. That is, from 2012 to 2013 top federal gift tax rate is set to go from 35% to 55% and the lifetime gift tax exemption amount is scheduled to fall $4,120,000 per individual to $1 million. The annual gift tax exemption is $13,000 per recipient in 2012; there is an exemption limit for qualifying educational and medical payments. If you want to gift relatives or friends, you may want to avoid procrastinating for another very good reason: when you make such a gift early in a year, the recipient will gain both the principal and any appreciation tied to the gifted asset in that year.3,4

Speaking of gifts, we said goodbye to charitable IRA gifts in 2011. The IRA charitable rollover, a boon to non-profits and a handy tax deduction option for taxpayers older than age 70½, was not extended into 2012, not even temporarily as a sweetener to the payroll tax extension bill. There is hope it will be back. Two bills have been introduced in Congress with that goal, one sponsored by Sen. Olympia Snowe (R-ME) and Sen. Charles Schumer (D-NY) and another by Rep. Wally Herger (R-CA) and Rep. Earl Blumenauer (D-OR). The proposed legislation would let IRA owners start making charitable IRA gifts at age 59½ and remove the $100,000 limit on the rollovers.5

The limits on the generation-skipping transfer tax could change, too: assuming the Bush-era tax cuts do sunset, the GSTT rate would jump from 35% this year to 55% in 2013, with the GSTT exemption falling from $5,120,000 per person this year to roughly $1.3 million per person next year.3

So given all these changes, it might be wise to meet with the financial professional you know and trust early in 2012 as you strive to start the year off on the right foot. You have until April 17 to file your federal return, but you can plan now.

Gary Hutto may be reached at 888-403-2872 or gary@huttodean.com.
www.huttodean.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 – www.irs.gov/retirement/article/0,,id=96461,00.html [10/20/11]
2 – www.marketwatch.com/story/retirement-plan-changes-coming-in-2012-2011-12-29 [12/29/11]
3 – www.sbnonline.com/2012/01/how-to-approach-tax-and-estate-planning-opportunities-for-2012/?full=1 [1/3/12]
4 – advisorone.com/2012/01/06/10-tax-tips-for-advisors-in-2012 [1/6/12]
5 – www.northjersey.com/news/business/business_opinion/136217658_Payroll_tax_cut_benefits_charities.html [12/25/11]

Presented by Gary D. Hutto

Why do we cling to the myth that women don’t understand money as well as men?

If you look at the personal finance books out right now, some of the titles might convince you that women need “special help” when it comes to figuring out saving, investing and budgeting. The current self-help tomes include Prince Charming Isn’t Coming … SHOO, Jimmy Choo! The Modern Girl’s Guide to Spending Less and Saving More … Does This Make My Assets Look Fat? … Girl, Get Your Money Straight … A Purse of Your Own: An Easy Guide to Financial Security.

Judging by these titles, you would think contemporary American women are naive shopaholics or squanderers. But is that really the case?

Data suggests women and men don’t spend that differently. The Bureau of Labor Statistics, which tracks consumer spending patterns per gender, finds that personal spending between the genders evens out. For example, while women have historically spent more on their apparel than men do on theirs, recent findings show that men are spending more on eating out, audio and visual equipment and transportation.1,2

Do women run wild at the mall? Data seems to say otherwise. While the most recent BLS data indicates that 76% of women have at least some credit card debt compared with 67% of men, it also reveals that credit card balances are higher for males. Empathica, a firm providing consumer insights to retailers, polled more than 7,200 U.S. consumers in 2009 and found that 72% of women had reduced their retail spending in the recession compared to only 62% of men.1,3

Two surveys suggest women might be more prudent investors. In 2001, a study conducted by two University of California, Davis professors titled Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment appeared in MIT’s Quarterly Journal of Economics. Looking at patterns across 35,000 households, Brad Barber and Terrance Odean determined that male investors traded stocks about 50% more often than women investors, with their market timing efforts resulting in poorer returns and more frequent fees and charges.1

In March 2009, University of Oregon professor Ellen Peters conducted a nationwide survey which revealed that just one in every 40 women had “made riskier investments looking for long-term growth” in the past week, while one in eight men had taken such a risk.4

Other surveys find women prioritizing savings and debt reduction. TD Ameritrade has a new poll out in which 68% of women say they intend to save more of their money in 2011, compared to 62% of men. In a 2010 Citigroup survey, 48% of women aged 18 to 39 said that they were saving more money than they had in the past. Overall, 72% of women in the Citi survey responded that they would use extra cash to pay down debt, compared to 65% of their male counterparts.5,6

The real issue is unequal income. On average, women live longer than men and therefore need more money across a lifetime. Yet on average, they don’t earn as much as men. According to the Labor Department, women working full-time after age 24 still earn just 80% of what men working full-time do.5

However, the National Center for Women and Retirement Research estimates that 75% of women will be widowed – at an average age of 56 – and that 90% of women will be solely responsible for their financial situation at some point in their lives.5

There is no need for condescension; there is a need for comprehension. Women do need to realize the financial challenges that come with potentially longer life spans and potential absences from the workforce, and plan accordingly. But, it’s time to shed the old stereotypes and myths.

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If assistance or further information is needed, the reader is advised to engage the services of a competent professional.

Citations.
1 slate.com/id/2274416/ [11/17/10]
2 mint.com/blog/finance-core/boys-gone-shopping-wild/ [1/27/09]
3 prweb.com/releases/2010/01/prweb3531414.htm [11/1/10]
4 online.wsj.com/article/SB124181915279001967.html [5/9/09]
5 blogs.reuters.com/deep-pocket/2010/11/08/women-saving-more-despite-uncertainty/ [11/8/10]
6 businesswire.com/news/home/20100510007375/en/Citi-Survey-Finds-Young-Women-%E2%80%9CMe-Generation%E2%80%9D [5/11/10]

http://image.eupdates.afd.com/lib/fecc157471650575/m/1/MFGEFL-409-0411P.pdf?et_cid=39457990&et_rid=1276097759

I would consider the above a “Must Read” for all long term, successful investors.  As you may know, American Funds is one of the largest and oldest money managers in the US…beginning with their first fund, ICA, in 1931.

Please read and reply with your thoughts.

Again, we’d like to thank all of our clients for their continued support.

Sincerely,

Gary Hutto

http://www.pageturnpro.com/Crescendo-Business-Services/24033-2011-OC-WM-Gary-Hutto/index.html#2

Gary would like to thank all of those who participated in the survey.  All of us at HuttoDean & Co., Inc. are truly humbled and appreciative.

Thanks again.

Thanks again.

Sincerely,

Gary Hutto

Economic Outlook and Market Information

with Hutto Dean & Co.

Disclosures: Hutto/Dean & Co., Inc. is not an affiliate of GWN Securities, Inc. Gary D. Hutto is a Registered Securities Principle of GWN Securities, Inc.

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