Market Week: January 6, 2014

The Markets

Equities rang in the new year by taking a bit of a breather. As investors decided to take some of the profits that the Santa Claus rally had left in their stockings, the Dow lost 135 points on 2014’s first trading day, though it regained much of that the following day. The other three domestic indices…
Click here to read the rest of this market summary, “Market Week: January 6, 2014”

Prepping for 2013 Tax Filing

The IRS recently announced that they’d begin processing tax returns on January 30th, 2014. If you’re not ready to meet that aggressive timeline, you can always wait until the April 15th deadline. Whichever date you choose to send your paperwork in and close out the 2013 tax year, you need to be organized and have all your data together. Here are a few tips to make the process easier.

• Compile your documents. If you’re taking deductions for charitable contributions, energy-efficient home improvements, child care, tuition and other expenses, now’s a good time to start gathering those receipts together. If you can’t find a receipt, call the retailer or organization you gave the money to and see if they can provide a copy.

• Gather your statements. In January, you’ll start receiving end-of-year statements from your mortgage lender, retirement account custodians and banks. These statements will show important information that may need to be used on your tax forms, including gains, interest payments, distributions, contributions, and more. Get these documents together and match them with the various 1099 statements you will receive in February so that you can verify accuracy. Most 1099-DIV and 1099-R documents are mailed by January 31st, 2014 but the deadline for 1099-B forms is not until February 18th so you may not receive your tax documents for non-retirement brokerage and investment accounts until the end of February.

• Max out your Traditional and Roth IRA contributions by April 15th, 2014. You have until April 15th to make a 2013 contribution to your Roth* or Traditional IRA. The maximum IRA contributions for 2013 are $5,500 with an added catch-up contribution of $1,000 for people over 50. Don’t forget to tell your IRA custodian the tax year you want the contribution credited to.

• Make health savings account (HSA) contributions by April 15th, 2014. The balance in your HSA rolls over from year to year and funds withdrawn for non-medical purposes are exempt from the ten percent penalty once you reach age 65, making this an important account to max out annually. Just as with an IRA, you can make a 2013 contribution between now and April 15th, 2014. You must still follow 2013 limits, which are $3,250 for single individuals, $6,450 for families and a catch-up contribution of $1,000 for those over 55 who are not enrolled in Medicare.

• Schedule your appointment with your tax preparer. Many tax preparers are happy to start booking appointments now, even for March and April, so they can better plan out their busy tax season. Having an appointment on the books also gives you a hard deadline for preparing all of your documents so you aren’t tempted to procrastinate. Just bear in mind that if you have non-retirement brokerage accounts, you may not want to schedule an appointment before the end of February since the deadline for mailing 1099-B forms is not until February 18th.

It’s easy to get overwhelmed by the amount of preparation that goes into an annual tax filing but getting a head start can ease the stress.

*Generally, Roth IRA contributions are not tax deductible, however, you could qualify for the savers credit, which may entitle you to a partial tax credit if you fall within certain income limits. Ask your tax advisor for more information.

End of The Year Tax Planning

There are only a couple of weeks left in 2013. It may seem impossible —that the year has flown by too quickly— but the calendar doesn’t lie. Here are seven things to consider doing before the year’s over to possibly reduce your 2013 tax burden.

1. Sell stocks with losses. If you have an investment that’s a loss for you right now and you don’t think it’s going to come back, you might want to sell it in order to write the loss off against other investment income. Remember to be considerate of wash sale rules, which state that in order to get the deduction, you can’t buy a “substantially similar” position in the 30 days before or after the sale.

2. Hold off on selling stock that’s increased in value. If you want to avoid paying taxes on your gains, wait until the calendar turns and January 1, 2014 rolls around before you sell any stock or other investments with gains.

3. Pay certain expenses. If you have any expenses that can result in a tax deduction, such as property or estimated taxes, don’t wait until 2014 to pay them if you can use the deduction in 2013.

4. Pay for classes. If you’re planning to take any classes in college during the 2014 spring session, make sure you’re enrolled and your classes are paid for by the end of December. That way, you can take advantage of the American Opportunity or Lifetime Learning tax credits for 2013 (assuming you haven’t already maxed these credits out).

5. Think about donating to charity. If you itemize your deductions, then now’s a great time to add in a few last-minute charitable contributions for 2013. If you want to give your favorite charity an extra bump, you might talk to human resources to see if your employer matches contributions.

6. Go to the doctor. Wait—this is a post about end-of-the-year tax planning, not medical treatment, right? Okay, that’s true, but if you itemize your deductions, you may qualify for medical expense deductions for the treatment you pay for in 2013, which could make an extra trip to the doctor worth its weight in stethoscopes.

7. Don’t take that last distribution. If you’re planning on taking a distribution from your Traditional IRA or other taxable distribution this month, you might consider holding off a few weeks so that you don’t have that added tax burden in 2013.

At Kramer Wealth Managers, we want to help make tax time simple and stress-free. Contact us today to find out how we can help you better manage your tax burden in 2014.

This material is intended for informational purposes only and should only be relied upon when coordinated with individual professional advice. Neither FSC Securities Corporation nor its representatives offer tax or legal advice. For assistance with these matters, please consult your tax or legal advisor.

Do Coupons Make You Overspend?

What would you do to shave a few dollars off your weekly grocery bill? To many people, spending an hour cutting coupons from the Sunday paper sounds like the perfect way to reduce spending. Unfortunately, coupons aren’t always the money-saving tools they seem to be. Sometimes, they actually encourage you to spend more than you would if you didn’t have them.

 How Coupons Can Hurt

Manufacturers don’t offer coupons because they want to be generous—they do it because they want to encourage new consumers to buy their products. That means their goal is not to help you save money, but to encourage you to spend on items you wouldn’t normally buy.

If a coupon encourages you to purchase a product that you don’t need because it’s cheaper than it otherwise would be, then it’s doing more harm than good to your budget.  Likewise, if you spend more than you normally would on products you aren’t likely to use, simply because you have a coupon, then these discounts could end up draining your checking account without providing any real value.

 Making Coupons Count

For most people, grocery shopping is a pretty routine event. While you may alternate meals and ingredients from week to week, chances are good that you consistently buy certain brands and items each and every month. When you have a coupon for one of these regularly purchased items, using it will save you money. The difference here is that you were going to buy the item before you had the coupon, so its discount represents a true savings.

Another way coupons can help is if they reduce the cost of a more expensive brand than you’d normally buy. But remember, you’ve only got a limited number of coupons, so if you decide to permanently switch to the more expensive brand after trying it, your overall grocery spending will increase.

Seemingly small, unnecessary expenses, such as those incurred when you overspend with coupons, can reduce the amount you’re able to set aside for retirement. They can also impact the longevity of your retirement savings. Careful budgeting and well-planned spending, on the other hand, are two great ways to stay on your WealthPath. Money-saving coupons can also help, but only when you make certain that you aren’t allowing the coupon to dictate your purchasing decisions.

Social Security and Medicare Numbers for 2014

New figures announced

The Social Security Administration (SSA) has announced that Social Security and SSI beneficiaries will receive a 1.5% cost-of-living (COLA) adjustment for 2014. According to the SSA’s announcement, after the COLA adjustment, the estimated average retirement benefit will rise from $1,275 in 2013 to $1,294 in 2014.


The Centers for Medicare & Medicaid Services (CMS) has also announced next year’s Medicare costs. The standard monthly Medicare Part B premium will be $104.90 in 2014, the same as in 2013. However, beneficiaries with higher incomes (individuals with taxable incomes of more than $85,000 and couples with taxable incomes of more than $170,000) will pay more than $104.90 per month because they must pay an income-related surcharge.


Other important Social Security and Medicare figures are listed below.

  • The amount of taxable earnings subject to the Social Security tax (called the maximum taxable earnings limit) will increase to $117,000 from $113,700 in 2013.
  • The annual retirement earnings test exempt amount for beneficiaries under full retirement age will increase to $15,480 from $15,120 in 2013. If a beneficiary has earnings that exceed the exempt amount, $1 in benefits will be withheld for every $2 in earnings above the exempt amount.
  • The annual retirement earnings test exempt amount that applies during the year a beneficiary reaches full retirement age will increase to $41,400 from $40,080 in 2013. If a beneficiary has earnings that exceed this amount, $1 in benefits will be withheld for every $3 in earnings above the exempt amount.
  • The amount of earnings needed to earn one Social Security credit will increase to $1,200 from $1,160 in 2013.

  • 2014 Medicare figures

  • The Medicare Part B deductible will be $147, the same as in 2013.
  • The monthly Medicare Part A premium for those who need to buy coverage will cost up to $426, down from $441 in 2013. However, most people don’t pay a premium for Medicare Part A.
  • The Medicare Part A deductible for inpatient hospitalization will be $1,216, up from $1,184 in 2013.

    Beneficiaries will pay an additional daily co-insurance amount of $304 for days 61 through 90, up from $296 in 2013, and $608 for stays beyond 90 days, up from $592 in 2013.

  • Beneficiaries in skilled nursing facilities will pay a daily co-insurance amount of $152 for days 21 through 100 in a benefit period, up from $148 in 2013.

    Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013.

    A New Era in Wealth Management

    Final logo_7.3.13

    Dear Valued Customers, Clients, Friends and Colleagues,

    We’re proud to announce that Kramer Financial is now Kramer Wealth Managers. As many of you know, the way we serve clients has continued to evolve over the past few years. Our new identity had to satisfy our heritage and all of the existing expectations of what our brand stands for while also addressing the evolution in thinking we’ve undergone recently.

    So please welcome our new look. It was a labor of love to shift from the old to the new but it was a healthy process of discovering once again what we are, who we serve, and how we want our story to be told. We now look as great on the outside as we operate on the inside. Yes, it’s a new era at Kramer Financial.
    As you’ll notice, we have changed “Financial” to “Wealth Managers” in the logo and there is an important reason for it. By addressing that we are indeed “Wealth Managers” we are signifying that we are actively engaged in the process of advising, guiding and managing our clients needs every bit as much as we are their wealth. We are here to serve you.

    To keep things clear, we’ll cover some basics:

    • We have the same exceptional team

    • We continue to offer the same services

    • We are in the same locations – Frederick and Austin

    • We have the same phone numbers

    Thank you all for your continued support and enthusiasm during this exciting time for us.
    We are delighted with the new look and thrilled to be here to serve you.

    Yours Sincerely,

    Lee Kramer

    Dave Frank

    Danny Lacey

    Stephanie Summers

    The Changing World of Personal Finance

    The world of personal finance is changing and some financial service firms are changing with it.  For the thousands of firms that don’t change to keep up with the trends; I fear they will slowly become obsolete in the years to come.  And for firms like mine, firms that are indeed changing with the times, the changes we are making are important, they are not minor and they are incredibly exciting.  For consumers who are wanting and needing this evolution in financial services, they will see changes in the quality and style of service that better addresses a new set of priorities.

    I believe this stems from five significant changes in our society that will begin a new era for personal finance.  These shifts are lasting, they are unexpected and they will transform not only the financial services industry, but also personal finance for generations of working Americans.

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    Government Shutdown commentary

    Our clients have received a lot of confusing information about what is happening in the global markets, economies and governments. For many people, this confusion has led to an uncertainty about where to focus, when to be concerned, and when to simply shut out the “noise” of information overload. We have been getting many inquiries from our clients who are concerned about the federal government shutdown and the upcoming debt ceiling decision. In consideration of general investors’ experiences with the bear markets of 2000-02 and 2008, we understand their concerns, and we are happy to offer our thoughts.

    We believe that a short-term government shutdown will have a minor impact on the economy, and at the same time, no one can accurately forecast the consequences of a default on our debt. It does not matter what an investor reads from widely dispersed articles or sees on TV shows; forecasting is impossible and futile. At a conference for financial advisors last week, several of the Kramer Financial staff heard an update from Bob Benmosche, who is President and CEO of AIG, regarding his meeting with President Obama on October 2nd. Mr. Benmosche was optimistic that both sides understand what is at stake as it relates to the debt ceiling and are determined not to allow a default to take place.

    It is important to remember that major financial and economic crises have happened over the years. For example, the following crises (just to name a few) occurred*:

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