Tax Season

We are back, enough of this spring break stuff – time to get back to what we like to do best…Rink Rats. We start off our spring season with what else? Tax Time.

On this date almost all of us have filed (except yours truly), but I have found when one tax year is complete and filed, now is the best time to prepare for the next. You have all your information and you have already completed one quarter of the current year.

Here are a few tips to help you with retirement tax planning 2017 and beyond.

A Slightly Different Tax Deadline for 2017

Did you know that you get 3 extra days for taxes this year? Duh!  This year April 15 is a Saturday and the following Monday is a holiday in Washington D.C.  So, tax day falls on Tuesday, April 18, 2017. That’s the deadline for filing taxes on income earned in 2016.

Are You Older than 70 1/2 and Still Working? Do a Reverse Rollover…

According to Pew Research, Americans over 70 are working at higher rates than ever before.  If this is you, then you might benefit from a reverse rollover.

A reverse rollover — transferring funds from an IRA into your company 401k or 403b program — is an interesting tax strategy if you:

Are over 70 1/2 and have money in an IRA account that will be subject to Required Minimum Distributions

Do not NEED or want to withdraw funds from your IRA accounts

Have access to a 401k or 403b program where you are currently working

Learn more about other ways to reduce the impact of RMDs.

Have Income?  Make it Nontaxable

If you are not yet retired, you certainly have income from work.  Already retired?  You may have taxable income from withdrawals, passive investments and more.

No matter your retirement status, retirement tax planning often means keeping your taxable income under certain thresholds.  To do this, you can take “deductions.”  Deductions are a way to turn taxable income into nontaxable income.

Here are a few ways to make your retirement income nontaxable:

Add to Retirement Savings: So long as your income is below a certain threshold, any money you put into a 401k, 403b or IRA (a traditional IRA, not a Roth IRA) will not be taxed.  For 2017, you can contribute up to

$18,000 into a 401(k) or up to $5,500 into an IRA

If you’re aged 50 or older, the maximums go up to $24,000 and $6,500, respectively.

Put Money in a Health Savings Account (HSA): Funding healthcare is expensive.  However, you can make your spending a little more efficient by utilizing an HSA.  Money you put in an HSA is deductible up to $3,400 for individuals and $6,750 for families in 2017.  Besides the savings being non taxable, distributions from the HSA are also tax free when they are used to pay medical expenses.

The One Advantage of Debt: If you itemize your deductions, then the interest you pay on some debts —  mortgages, student loans and more — is deductible.

The One Advantage of State Taxes: Like debt, state and local taxes can be deducted if you itemize.

Give a Little, Get a Little: Charitable contributions of up to 50% of your adjusted gross income are also deductible if you itemize and give to a qualified charity. Your donation can be in the form of money or property.

Watch Out for Lump Sum Benefits

If you are planning on getting a lump sum payment from a pension or other source, you could be facing a big tax headache.  The company paying your benefit is required — by law — to withhold 20% of the money for taxes.  (You can likely recover the taxes, but it is complicated and the lump sum distribution can trigger all kind of annoyances and the very real possibility of penalties.)

You may be able to avoid the problem if you ask your employer to deposit your pension directly into a rollover IRA.  The check can not be made out to you, it must be transferred directly into the IRA account.

Stay Flexible

After a couple of decades of working, you will most likely have several different account types, which may include a brokerage account, a traditional tax-deferred account like an Independent Retirement Account (IRA) or a 401(k) and a Roth IRA in which you can withdraw tax-free, explains Pamela Kornblatt, president of Tax Strategist, LTD, based in New York City.

“Conventional wisdom holds that you should start by drawing on the taxable assets and then move next to the tax deferred vehicles, saving the Roth, which is tax-free, for last,” Kornblatt says. “However it may not necessarily be advantageous to strictly follow this order, and it is in fact ideal to keep assets in each type of account to be able to tap into them throughout your lifetime.”

It’s a good idea to make sure you maintain assets in each of the three types of accounts, Kornblatt explains. “This allows for added flexibility to both help lower your overall tax burden and also spread taxes out over time so you don’t have to pay them all out at once,” she says.

Roth Conversions

There are two types of IRAs and 401ks — traditional accounts and Roth accounts.

In a traditional retirement account, you save the money tax free and then pay taxes when you withdraw the money.

In a Roth account, you pay taxes when you save the money and withdrawals are tax free.

You can rollover from one kind of account to the other and doing so can help you save on taxes.  When to do a conversion will depend on your current and future tax bracket, your time horizon, your estate plan, whether or not you can afford to pay taxes on a conversion and more.

Just Retired? Retiring Soon? You Need to Take More Control Over Taxes

A lot of retirees pay their taxes quarterly. When you leave the workforce, you may have to estimate your income and pay quarterly taxes ahead of the April deadline when most American have to file. This is because you are no longer paying federal taxes as you would while you are still in the workforce, which is typically taken right out of your paycheck.

Once you start tapping into your retirement accounts, Social Security benefits or pension, you will have to start submitting your estimated payments. You won’t have to pay estimated taxes on a quarterly basis if you opt to have taxes withheld from these income sources.

Working for Yourself?  Try This

Many retirees start their own businesses.  If this is you, did you know that you can deduct the premiums you pay for Medicare Part B and Part D plus the costs of supplemental Medicare or Medicare Advantage?

Be Mindful of Fees

Every investment firm wants to extract some of your money, and they have various means of getting to it, some with the small print, others with front or back loads, and the majority with an annual take on either returns or total assets or both.

As you move money around to try to avoid taxes, pay attention to these potential fees.  For many, this is more important than seeking lower taxes.

Consider Your Overall Retirement Plan as Well as Your Estate Plan

While minimizing your taxes this year and next is useful, you also want to think long term.

Estate Planning: If you plan on leaving any kind of estate, you will want to make sure you are taking advantage of the many different strategies that can preserve your wealth, reduce the tax burden on your heirs and strengthen your overall finances.

CPAs, financial advisors and lawyers can all help you strengthen your estate plan in a way that reduces your and your family’s tax burden. Above all else find an advisor you can trust.

Retirement Planning: Minimizing how much you spend on taxes is only one aspect of your retirement financial plan.  Taxes are annoying, but it is important for you to evaluate all aspects of your saving, spending and earning.

Consider using a retirement calculator that helps you plan for all aspects of your retirement.  Figure out what you want to spend for retirement happiness, how those expenses will change overtime and then find the best retirement strategies for making your dreams come true.

THE ROAD AHEAD FOR TRUMP - It doesn't get much easier after the health care failure. A potential shutdown looms on April 29th - Trump's 100th day in office. Senate Majority Leader Mitch McConnell on Sunday said he was confident the GOP could craft a deal to bring enough Democrats along in the Senate. But fights loom in both chambers over President Trump's proposed border wall, Planned Parenthood funding and military spending, to name just a few.

ELECTRIC SHOCK - Tesla Inc., the upstart Silicon Valley electric-car maker run by Elon Musk, has overtaken Ford Motor Co., the automotive pioneer that is exactly 100 years older, as the second-largest U.S. auto maker by stock-market value.

Market caps: GM $51.2 billion ... Tesla: $48.7 billion ... Ford: $45.5 billion.

THE NEXT GENERATION OF KENNEDYS - Three family members seem poised to step up on the national stage — with Trump as their foil.

Chris Kennedy — the eighth of Robert and Ethel Kennedy's 11 children, a Democrat running for governor in his adopted Illinois next year — is in "the vanguard of a Kennedy family comeback in American politics.

His cousin Ted Kennedy Jr., son of the late Massachusetts senator, is mulling his own 2018 gubernatorial run in Connecticut, where he's a member of the state Senate.

Then there's Joe Kennedy III, the third-term Massachusetts congressman, grabbing the national spotlight to help defeat Trump's health care plan — prompting big questions about his next move.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to Warren Beatty (80) Beverly Hills, CA., Gene Hasse …famous ruler of the clan, Norma Torres (52) Pomona, CA.

COLLEGE CHRONICLES - Outlook for Higher Education: Nonprofit higher education as a sector looks somewhat promising, at least through the lens of credit analysis. That’s because many colleges are beginning to meet challenges to their bottom lines with a more strategic approach, said Jessica Matsumori, a senior director and sector lead with S&P Global Ratings, a bond-rating agency.

In the past, many institutions tried to compete with their peers by doing the same thing as they did but doing it better, she said. More colleges these days have responded to competitive pressures by evaluating what unique programs or qualities they can offer, then making specific strategic moves to specialize, and enhance, their appeal to prospective students.

The increased nimbleness of some colleges has been aided by the decline in the number of tenured faculty members, which allows some institutions more adaptability to modify their offerings and to save money on salary and benefits. But colleges must perform “a balancing act,” regarding tenure from a financial standpoint, Ms. Matsumori said. Without it, they may not be able to recruit the faculty members they want.

STUDENT DEBT - Since 2010, when the government took over student lending, direct government lending to students has gone from approximately $200 billion to more than $900 billion – creating ... a population that is rightfully angry about how much money they owe.

SUNY IS FREE - State lawmakers in New York this week established a plan to provide free public-college education to middle-class residents. The Excelsior Scholarship, as the free-tuition plan is known, is to begin in the fall of 2017 for students whose families make $100,000 or less a year. By 2019 the income eligibility will increase to $125,000. There's a small catch: Students must stay in New York after graduation for as many years as they received the scholarship. Gov. Andrew M. Cuomo said on Monday that the requirement was added to ensure that students who receive the tuition dollars remain "an asset to the state."

CONSUMER BALANCE THE BUDGET - 1 in 3 Americans can't come up with $2,000. That's according to a new study released this week from The New York Fed. While 32.5% of survey respondents feel they might need $2,000 to cover an unexpected expense in the next month, almost exactly the same number, 32.8%, admit they could not come up with that sum in the next month if faced with an emergency. The financial vulnerability of Americans is a reminder that, despite historically low unemployment rates, many in the U.S. are still living paycheck to paycheck.

END OF AN ERA - Now that the Detroit Red Wings have been officially eliminated from this year’s playoffs, their glorious postseason streak has reached its conclusion. Twenty-five straight seasons of success is certainly something to celebrate. So are their four Stanley Cups and six finals appearances total since 1990 – both of which lead the NHL during that span.

Simply put, it’s the end of an era. Some argue that said era has been over since the 2009-10 season. But making the playoffs every year since has given the Red Wings a chance at yet another Stanley Cup and that certainly counts for something.

HUNTINGTON LIBRARY CHANGE - The Board of Trustees of The Huntington Library, Art Collections, and Botanical Gardens announced in an email this past week that Dr. Laura Skandera Trombley, president of The Huntington, has stepped down from her post effective immediately.

As the newest recipient of the Louis J. Budd Award for outstanding contributions in the field of Twain scholarship, Dr. Trombley will give priority to her scholarship as she immediately starts her next book-length study of Mark Twain, according to The Huntington’s Board.

“We wish Laura well in all her future endeavors and scholarship and appreciate all her fine efforts on behalf of The Huntington,” said Anne Rothenberg, chair of the Board of Trustees.

Dr. Steve Hindle, the W.M. Keck Foundation Director of Research, has been named the acting president as a search for a new president gets underway. Dr. Hindle specializes in social and economic history of early modern England, previously working at the University of Warwick where he was involved in many leadership positions. He began his role as Director of Research at The Huntington in July 2011.

Dr. Trombley will serve as an advisor to the Board of Trustees of The Huntington and has been engaged as a consultant to the Schiff Foundation and the Libra Foundation.

Dr. Trombley stepped into her role as president in July 2015, as both an admirer and frequent visitor of the grounds. As the eighth president of The Huntington, she was the first woman to lead the institution. Previously, she was president of Pitzer College in Claremont, where she is widely credited with dramatically improving the college’s standing in higher education.

Can you say “spin city.”

ESPN - Tough times at the Worldwide Leader in Sports: ESPN Has Seen the Future of TV and They're Not Really Into It"): ESPN has lost more than 12 million subscribers since 2011 ... and the viewership erosion seems to be accelerating. Last fall, ESPN lost 621,000 subscribers in a single month, the most in the company's history. ... As subscribers leave the network, and often cable altogether, ESPN is stuck with rising costs for the rights to broadcast games. Programming costs will top $8 billion in 2017.

COLLEGE HOCKEY PICK OF THE WEEK – Congratulations to the University of Denver Pioneers for winning the National Championship 3-2 over Minnesota-Duluth. Also congratulations to Red Berenson after thirty three years of coaching the University of Michigan, Mr. Berenson is retiring.     Final Season to date (9-9) …until next season.

THE SWAMI’S WEEK TOP PICKS –

Major League Baseball 2017 Season Picks:

American League:

East – Boston Red Sox,  Central – Cleveland Indians,  West – Houston Astros

Wild Cards – Detroit Tigers, Seattle Mariners

Detroit over Boston in the Championship Series

National League:

East – New York Metropolitans,   Central – Chicago Cubs,   West – San Francisco Giants

Wild Cards – Los Angeles Dodgers, St. Louis Cardinals

New York Mets over the Chicago Cubs in the Championship Series

World Series Champs – Detroit Tigers

Season to Date (30 - 16)

MARKET WEEK – Exchange traded funds attracted record inflows in the first three months of 2017 as investors continue to move out from traditional actively managed funds in protest against inconsistent performance and high fees.

Investors worldwide ploughed $197.3bn into ETFs between January and March, a quarterly record, according to ETFGI, a London-based consultancy. This follows 2016, when ETFs, which are famed for being low cost, gathered the highest ever annual amount of $390.4bn in new cash.

DRIVING THE WEEKEND - IMF and World Bank hold their spring meetings this week in DC ... President Trump heads to Wisconsin on Tuesday and hosts the New England Patriots (or at least most of them) at the White House on Wednesday ... Trump meets Italian PM Paolo Gentiloni at the White House on Thursday ... Special election Tuesday for a GOP House seat in Georgia with Dems hoping for a big pickoff. Republicans want to force a run-off.

Next Blog: Radio Days.

Until April 24, Adios

Claremont, California

April 17, 2017

#VII-39-341

CARTOON OF THE WEEK –Trump Golf