Tune-up your 401(k) for 2017

A 401(k) plan is a remarkable retirement tool, but it requires a little routine maintenance. Here’s what to look for.

First, verify you are contributing the maximum possible. The most an employee can contribute for 2017 is $18,000. But the catch up amount for those ages 50 and older is $6,000. Every dollar you contribute lowers your current taxable income. If you think your tax rate will actually be higher
in retirement, consider switching to a Roth 401(k). Your contributions won’t reduce taxable income, but later withdrawals will be tax-free.

With the recent stock market fluctuations, now is also a good time to review your 401(k) investment allocation. You might find your portfolio out of balance or too concentrated in certain areas. For convenience and peace of mind, consider investing in funds that do the re-balancing for you based on how long you have until retirement.

And while you are looking at your investments, take a peek at the fees you are paying. Recent law changes require investment companies to disclose their fees, and you could be surprised at what you pay. Next to taxes, investment fees are one of the biggest threats to your retirement earnings over time. Of course, investment fees should be compared to performance history for a complete picture.

Something many people forget to update is their 401(k) beneficiary information. Changes in family members, married status, or other life events may require a revision to your plan records. Beneficiary information should also be updated for new contact information. You may even decide to donate your plan after you pass away and list your favorite charity as a beneficiary.
Finally, don’t forget to review and update those retirement accounts you have kept at previous employers.

For help with these and other retirement issues, contact our office. ♦

2017 Tax Update

It seems like we’re already preparing for the 2017 tax season only moments after we drop our 2016 tax return at the post office or hit send on our E-File return. Keeping informed of changes and updates is a great way to prepare yourself come tax time. Apart from tax law changes, the IRS adjusts many tax numbers for inflation each year. Here are some of those adjustments that you need to be aware of in your 2017 tax and financial planning.

  • The standard mileage rates are 53.5¢ a mile for business driving, 17¢ a mile for medical and moving, and 14¢ a mile for charitable driving.
  • The social security taxable wage limit is $127,200. Retirees under full retirement age can earn up to $16,920 in 2017 without losing benefits.
  • Contribution limits to some retirement accounts increase for 2017. The maximum contribution for an IRA remains at $5,500 for those under age 50 and $6,500 for those 50 and older. The limit for SIMPLE plans remains at $12,500 for those under age 50 and $15,500 for those 50 and older. The 401(k) limit for 2017 is $18,000 for those under age 50 and $24,000 for those 50 and older.
  • The nanny tax threshold remains at $2,000.
  • The kiddie tax threshold remains at $2,100.
  • The annual gift tax exclusion limit remains at $14,000 for 2017.

For details on these and other 2017 numbers and changes, give us a call. ♦

Client Alert: Tax strategies for an uncertain 2017


Taxes, like death, might be certain, but strategies to lower your taxes might be quite fluid this year in light of changes in Washington.  

◗ Let’s start with what we know
The tax extenders law passed in 2015 made permanent many rules that used to hinge upon last minute passage by Congress. These include the rule allowing taxpayers age 70½ or older to distribute up to $100,000 from an IRA direct to charity. Also made permanent was the American Opportunity Tax Credit, which provides a credit of up to $2,500 for qualified higher-education expenses for yourself, your spouse, or a dependent in the first four years of college. Be aware that the AOTC phases out at $180,000 for married joint filers and at $90,000 for unmarried taxpayers. It is not available if you are married and file a separate tax return.

Business owners can also count on permanent tax breaks such as the generous Section 179 deduction of up to $510,000 for qualified new or used business equipment. However, the deduction is limited for every dollar spent on equipment in excess of $2,030,000. In addition, new equipment purchased in 2017 may qualify for 50% bonus depreciation.
In 2018, this bonus rate drops to 40%, so plan your acquisitions accordingly. Light duty vehicles placed in service in 2017 will be eligible for an $8,000 first-year bonus depreciation.

Some tax strategies are tried and true and unlikely to change in 2017.

Contributing the maximum to your retirement plan is solid advice year in and year out. The limits for a 401(k) remain unchanged in 2017 at $18,000, plus another $6,000 for ages 50 and older. Holding appreciated securities more than one year before selling will likely qualify you for lower
long-term capital gains rates. And gifting securities to charity remains an effective tax strategy to avoid capital gains taxes, while creating a charitable deduction to boot.  

Tax breaks related to home ownership should be on solid footing again this year as well. Mortgage interest, real estate taxes, and qualified points are perennial taxpayer perks. However, the deduction for private mortgage insurance (PMI), is not currently available in 2017.

◗ On the other hand
Changes in Washington may turn some trusted strategies completely on their head in the coming months. If individual or corporate income tax rates are lowered, you might want to increase 2017 taxable income rather than defer it if you have flexibility in this area. This might also be a good year to convert your regular IRA to a Roth and pay the taxes due now rather than on future withdrawals.

The slippery nature of this year’s tax scene requires nimble tax planning. Contact our office for up-to-the-minute tax planning tips.

Protect elderly family against fraud

Protect elderly family against fraud

Aging parents, grandparents or other loved ones who have accumulated a sizable "nest egg" are a fertile field for con artists. Seniors are more vulnerable to the "bait and switch" scenario because of several reasons – they tend to forget information more readily than their younger counterparts, and they are often more trusting and polite than younger generations.

Here are five tips on how to avoid becoming a victim of fraud yourself, and how to protect your elderly loved ones too:

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Free Accounting Advice!

Pictured: Chris Patterson and Lindsey Stiegler

Pictured: Chris Patterson and Lindsey Stiegler

Hi! Now that I've got your attention, let me introduce myself! My name is Lindsey, I'm the owner of a small business in Mobile, Alabama called Soirée Signatures Invitation Studio. I'm also a client of Lawrence & Lawrence PC. As a new small business owner and young professional, I feel that I have SO many questions about how to best run my business, as well as how to handle my own personal finances.

In my last meeting with my accountant, Chris Patterson, I expressed my need for more information and my struggle with knowing how to do things properly with my accounting throughout the year. While I understand that Chris will answer my questions at any time, my dilemma is not wanting to pester Chris with all my "silly" questions. If I have all these questions, I know other people do as well, so that's why I proposed collaborating on a blog with him for the Lawrence & Lawrence PC firm. That way, I can document all the questions I've had along the way in hopes that it will help other people wanting to start a business, maintain their already established business, or just manage their personal finances.

So, here we go! Follow me and my journey through becoming more financially savvy, and send me your questions you have too! I'm sure you have questions I haven't thought about yet or experienced, so feel free to email me directly at hello@soireesignatures.com and I'll ask my buddy Chris, or you can email Chris (cpatterson@llcpa.com) or any of the other professionals at L&L and they'll be happy to answer any of your questions! (Just be sure to let them know you found their website so I'll get your question posted online too!)