Effective January 1, 2012, Michigan requires Schwab to withhold state income tax on certain qualified pension and retirement distributions unless the participant is eligible to and elects out of withholding. As a result, beginning on March 19, 2012, Schwab will begin to withhold the mandatory 4.35% from all retirement distributions if the proper forms are not received from eligible clients.

On February 15, 2012, all impacted clients with an active tax withholding election and/or an active standing instruction on their account where the state taxes are zero or below 4.35% will be mailed notification from Schwab by letter of the Michigan state tax requirement. Instructions will be included on how to update tax withholding information. 

Additionally any payment(s) received as of January 1, 2012 may have the 4.35% withheld.

Please contact us if you receive these documents from Charles Schwab and you have questions or would like assistance in filling out the forms.

 A fresh new year is a great time to up your contributions to a retirement plan.  Some limitations have changed for 2012 and it is important for everyone that wants to do the maximum contributions to up their contributions in order to do just that.  Contact us today if you have any questions on your limits or your current retirement plan options.

• 401(k), 403 (b), most 457 plans and the federal government’s Thrift Savings Plan have increased to $17,000 from $16,500
• Catch-up contributions for those aged 50 and over for the above mentioned plans remains at $5,500
• Simple IRA Plan contribution limit remains at $11,500 and the catch-up contribution limit for Simple IRA Plans remain at $2,500
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000 and $66,000 in 2011.  For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $92,000 to $112,000, up from $90,000 to $110,000.  For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $173,000 and $183,000, up from $169,000 and $179,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $173,000 to $183,000 for married couples filing jointly, up from $169,000 to $179,000 in 2011.  For singles and heads of household, the income phase-out range is $110,000 to $125,000, up from $107,000 to $122,000.  For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.

For complete information,click here to go to irs.gov

A recent article from Morningstar.com covers this topic.  Many peoplewonder what is the best way to give financial gifts or teach their children or grandchildren the right way of investing and saving.  Whether you are looking to teach them how to invest or save or you are wanting to assist them with college costs, there are many choices out there.  RFM Financial Solutions can also help assist you in financial gifts to minors as well as educate you on the best option for you and your family situation.

Click here to read the article by Christine Benz

Utilizing this benefit offered by your employer is an essential key to saving for retirement.  This money is withheld pre-tax from your paycheck, which will lower your taxable income for that year (or post-tax if participating with a Roth 401(k)).  This money will grow tax-free until it is time for you to retire.  Many employers contribute to these plans with matching and/or profit sharing.  It is very important to understand your employer’s retirement plan so you are maximizing your contributions to get the maximum amount of match/profit sharing from your employer.

Contact us today if you need assistance determining the best plan for contributing to your employer’s retirement plan.

Tune in to CMU Public Television at 7:30 p.m. Thursday, Nov. 17, for a new episode of its “Ask the Specialists” series. “Ask The CPAs” is hosted by Robert F. Murray & Company’s Mike Harter and features professional advice from MC Kostrzewa & Company’s CPA Michael Kostrzewa and Robert F. Murray & Company’s CPA Paul B. Murray. Viewers can call in during the program at 800-727-9268, email brook2c@cmich.edu before the show, or tweet the production crew at @WCMU_AskThe. More information at wcmu.org.

There are a lot of tools out there for creating a budget, Excel, pen and paper, past spending, etc.  Kiplinger.com has a great basic home monthly worksheet.  It is a good way to get you started on getting your finances in order!

Click here to go to the on-line worksheet.

People seem to be hedging their risks by purchasing insurance policies against identity theft, gadget obsolescence, having twins, kidnapping and divorce!  Seem unreal?  It is too real actually.  Anne Kadet of SmartMoney magazine published an article regarding these strange but true insurance policies.

Click here to read the full article.

Here is a great KIP TIP from Cameron Huddleston, Contributing Editor, Kiplinger.com, regarding monitoring your elderly parents’ mail.

Financial scams are everywhere we turn. Elderly people are bombarded with donation solicitations in the mail. Now mind you, the majority of these solicitations are legitimate organizations, lobbying groups and political parties, but it can be very overwhelming with the volume that elderly people receive.

To help your parents, start by asking them which organizations matter most to them and try to develop a giving plan for only those groups. The next step is to register your parents with the Direct Marketing Association and removing their names from its national mailing list. This is free if you register on-line. This will not stop all solicitations, but at least slow it down a bit.

http://www.kiplinger.com/columns/kiptips/archives/why-you-should-monitor-your-elderly-parents-mail.html

Liz Ann Sonders, Senior Vice President, Chief Investment Strategist with Charles Schwab & Co., Inc. has written a nice commentary article regarding the recent announcement by the fed of “Operation Twist”.

Please click here to read this commentary.

According to the Privacy Rights Clearinghouse, hackers were able to retrive more than 13 million sensitive records this year alone.  Unfortunately, most companies or people do not know the extent of what has been taken.  Take the following precautions to help avoid this misfortune.

1. Always keep your firewall, anti-malware and antivirus software up-to-date.
2. Be sure to pick passwords that are very strongly coded.  Use upper and lower case letters, numbers punctuation marks and symbols.  NEVER use common words or names.  There are free programs out there that will generate and store all of your log-in credentials on your personal computer.
3. If one account has been compromised, act like they all have been and watch over all statements.  If your Social Security number has been taken, be sure to place a security freeze on your credit report.
4. Be sure to be surfing the web using https://.  Also, try to not use public Wi-Fi to log into sensitive accounts.
5. Don’t be a clicker…bad things can happen when you click on a suspicious download or pop-up.

Just take a few extra steps to save yourself some major headaches!!