2013 TAX AND FINANCIAL PLANNING TABLES. An overview of important changes, rates, rules and deadlines to assist your 2013 tax planning.

Transcription

1 2013 TAX AND FINANCIAL PLANNING TABLES An overview of important changes, rates, rules and deadlines to assist your 2013 tax planning.

2 WHAT YOU WILL SEE IN THIS BROCHURE 2013 Income Tax Changes Tax Rates Key Tax Rules Important Deadlines THE IMPORTANCE OF TAX PLANNING Careful planning throughout the year can assist you in reducing the taxes you pay as well as help you achieve your financial goals. This guide provides an overview of tax rates, credits, deductions and related considerations that may apply to you. Tax planning should not be done in isolation, but instead should be driven by your overall financial goals and integrated with your total financial plan. By developing and implementing appropriate strategies to lessen or to shift current and future tax liabilities, you can improve your prospects of meeting long- and short-term objectives. For example, accurately projecting your income taxes can help you determine the cash flow available to you in the coming year. Keep in mind that tax laws are often complex and frequently change. As a consequence, you should consult your tax advisor before making investment and tax decisions. 1

3 2013 INCOME TAX CHANGES In early January, the American Taxpayer Relief Act of 2012 was passed by Congress and signed by the president in an effort to avoid the fiscal cliff. The act, referenced herein as ATRA 2012, essentially makes permanent the lower Bush-era tax cuts for all but certain high-income taxpayers, and extends certain small-business-friendly provisions, including small-business expensing and bonus depreciation. ATRA 2012 makes permanent the low tax rates on long-term capital gain and qualified dividend income for most taxpayers, and brings back certain deduction limitations that will affect highincome earners. The new law makes the estate and gift tax laws permanent, and sets the exemption amount for 2013 at $5.25 million (indexed for inflation) per person for estate, gift and generation-skipping taxes. ATRA 2012 did not extend the 2% reduction in payroll taxes (the payroll tax holiday ), and therefore taxes will increase for most all taxpayers in For high-income taxpayers, the 39.6% bracket was reinstated and the maximum long-term capital gains tax was raised back to 20%. The maximum rate for qualified dividends is also 20% for these taxpayers. The 39.6% bracket is indexed for inflation and begins at $450,000 for married taxpayers filing jointly, $425,000 for taxpayers filing as head of household, and $400,000 for taxpayers filing as single filers. For certain high earners, ATRA 2012 brings back the overall limitations on itemized deductions (the Pease limitation ) as well as the phaseout of personal exemptions (the PEP limitation ). For purposes of these two phaseouts, high earners are defined as having AGI of $300,000 for married filing jointly, $275,000 for heads of households, $250,000 for single filers, and $150,000 for the married filing separately. These thresholds are indexed for inflation. In addition, certain taxpayers will face an additional 3.8% surtax on net investment income and an additional 0.9% Medicare tax on wages. Generally, the 3.8% surtax will apply to investment income consisting of interest, dividends, annuities, royalties, capital gains and rents. The additional 3.8% tax and the additional 0.9% Medicare tax will apply to taxpayers whose modified adjusted gross income is more than $250,000 per year for taxpayers filing jointly, $200,000 for other taxpayers, and $125,000 for taxpayers filing married filing separately. These additional taxes were enacted under the Health Care and Education Reconciliation Act of 2010, and the threshold amounts are not indexed for inflation. 2 3

4 3.8% SURTAX ON UNEARNED INCOME The 3.8% surtax on unearned income applies to individuals, trusts and estates. Unearned income is defined as investment income such as income from interest, dividends, annuities, royalties, capital gains and other passive income. Two conditions must be met for the 3.8% surtax to apply. First, the taxpayer must have investment income, and second, the taxpayer s modified adjusted gross income (MAGI) must exceed the limits below, which are not indexed for inflation: $250,000 for taxpayers filing jointly $125,000 for taxpayers filing married filing separately $200,000 for other taxpayers For purposes of the 3.8% surtax, the MAGI limitation is simply the taxpayer s adjusted gross income (AGI) plus any excluded net foreign income. In general terms, AGI is the number at the bottom of the first page of a taxpayer s 1040 (line 37). If those two conditions are met, then the 3.8% surtax applies to the amount of the investment income, or if smaller, the difference between the taxpayer s MAGI and the limits listed above. For example, if a single taxpayer has $10,000 of dividend income and MAGI of $205,000, then the 3.8% surtax applies to $5,000. If the same taxpayer had MAGI of $211,000, the 3.8% surtax would apply to $10,000. Filing Status & Threshold MAGI Married Filing Jointly - $250,000 Married Filing Separately - 125,000 All Others - 200, % Surtax Applies to the Lesser of: Investment Income Investment Income Investment Income MAGI minus $250,000 MAGI minus 125,000 MAGI minus 200,000 The 3.8% surtax does not apply to distributions from tax-favored retirement plans such as IRAs or qualified plans, although distributions from taxfavored retirement plans may increase a taxpayer s MAGI over the limits discussed above and thereby potentially expose investment income to the 3.8% surtax. In general terms, the 3.8% surtax does not apply to active trades or businesses conducted by a sole proprietor, S corporation or partnership, or to the gains and losses on the sale of active trades or businesses. However, working capital is not treated as being part of an active trade or business for purposes of the 3.8% surtax. 0.9% TAX ON WAGES For 2013, and thereafter, an additional 0.9% Medicare tax will be imposed on wages of employees and on earnings of self-employed individuals. The 0.9% Medicare tax will apply to wages and self-employment earnings above the limits below, which are not indexed for inflation: 4 5

5 $250,000 for taxpayers filing jointly $125,000 for taxpayers filing married filing separately $200,000 for other taxpayers The 0.9% Medicare tax applies to employees, but not to employers. For joint filers, the tax applies to the spouses combined wages. For self-employed individuals, the 0.9% tax is not deductible. QUALIFIED CHARITABLE DISTRIBUTIONS ATRA 2012 extends IRA qualified charitable distributions (QCDs) through 2013 and retroactively reinstates IRA QCDs for There are three options to qualify a QCD for The first option to qualify a QCD for 2012 under ATRA 2012 was to have made a QCD sometime from January 1, 2012, to December 31, 2012, that met all of the qualifications for a QCD, even though the law was not in effect. The general requirements for a QCD are listed below. The second option under ATRA 2012 allows taxpayers who otherwise qualify for the favorable treatment to elect to treat certain QCDs made in 2013 as if the QCDs had been made in In order to qualify for this election, the QCD must be made after December 31, 2012, and before February 1, 2013, and must otherwise qualify as a QCD. That is to say, the taxpayer must make a distribution from an IRA or Roth IRA to a qualifying charity during January 2013, and make an election to have the January 2013 QCD treated as having been made in The third option under ATRA 2012 allows taxpayers to elect to treat certain 2012 IRA distributions as 2012 QCDs if the taxpayer transfers cash to a qualifying charity after the IRA distribution and before February 1, To qualify for this election, the 2012 IRA distribution must have occurred after November 30, 2012, and before January 1, 2013 (i.e., sometime during the month of December of 2012), and the taxpayer must transfer cash to a qualifying charity after the IRA distribution and before February 1, In addition, the transfer of cash must qualify as a QCD but for the fact that the cash was not transferred directly to a qualifying charity, so all the other requirements for a QCD must be met. In general, QCDs must be otherwise taxable distributions from an IRA or a Roth IRA, and the following conditions must be met: 1. The distribution must be made by the IRA trustee directly to the qualifying charity, other than a private foundation, donor advised fund or supporting organization; 2. The distribution must be made on or after the date that the IRA participant attains age 70.5; 3. The distribution must not exceed $100,000 per calendar year; and 4. The distribution must be otherwise deductible by the taxpayer, without regard to the AGI limitations for charitable deductions. 6 7

6 The last condition requires the taxpayer to meet all charitable deduction requirements, including all of the substantiation rules. Distributions from a SEP IRA and SIMPLE IRA will not qualify as QCDs. If all conditions are met, then the QCD will also satisfy the taxpayer s RMD for the calendar year to which the QCD relates. QUALIFIED IN-PLAN CONVERSIONS TO ROTH 401(K) As of January 1, 2012, an employer with a qualified retirement plan that has a Roth salary deferral component, such as a Roth 401(k), may amend its qualified plan to provide that the employee may convert all or a portion of the employee s account into the employee s qualified Roth account. A plan amendment is required to permit these types of in-plan conversions, but an employer is not required to provide this type of in-plan conversion to its employees. As expected, the conversion amount is treated as a taxable distribution and will increase the taxpayer s AGI and taxable income. Therefore, the additional income may affect the taxpayer s tax liability and other tax attributes that are related to the taxpayer s AGI or taxable income, including but not limited to the effect of PEASE and PEP limitations, the medical care expense deduction, the phaseout of the AMT exemption, the amount of capital gains and qualified dividends subject to the lower tax rates, the 3.8% surtax on investment income, and if applicable, the client s Medicare Part B premiums and the amount of Social Security income subject to taxation. ALTERNATIVE MINIMUM TAX ATRA 2012 makes permanent the AMT exemption amount and indexes the exemption amount for inflation after The AMT exemption amounts are listed in the table below for 2012 and The AMT exemption amount will still be phased out, as before. The AMT exemption is reduced by 25% of the amount that AMT income exceeds the AMT threshold amounts noted in the table below. These thresholds are now indexed for inflation after The tax rates for computing the AMT tax have remained the same at 26% and 28%. However, the $175,000 figure that was used to apply the 28% rate is now indexed for inflation after 2012 and is $179,500 for joint, single, and estate and trust filing for Filing Status Married Filing Jointly and Surviving Spouses Single Filers and Head of Household Married Filing Separately AMT Exemption 2012/2013 $78,750/ 80,800 50,600/ 51,900 39,375/ 40,400 AMT Exemption Threshold 2012/2013 $150,000/ 153, ,500/ 115,400 75,000/ 76,950 AMTI Where AMT Exemption Eliminated 2012/2013 $465,000/ 477, ,900/ 323, ,500/ 238,

7 10% AGI FLOOR FOR MEDICAL EXPENSES For taxpayers who itemize their deductions, the 7.5% AGI floor for the deduction of medical expenses will be raised to 10% in However, if either the taxpayer or the taxpayer s spouse attains the age of 65 before the end of 2013, 2014, 2015 or 2016, then the 7.5% AGI floor will remain in place. For example, a person age 64 in 2013 would have a 10% AGI floor, and then turn 65 in 2014 and have 7.5% AGI floor. The treatment of the deduction for medical expenses will not change for AMT purposes. Age AGI Limitation 64 and under for the year 10% 65 or over in % 2013 TAX RATES Taxable income is income after all deductions, including either itemized deductions or the standard deductions, and exemptions. Personal Exemption $3,900 Standard Deduction Single $6,100; Head of Household $8,950; Joint $12,200 Extra deduction if blind or over 65 Single and Head of Household $1,500; all others $1,200 Single Taxable Income Pay Percentage on Excess Of Amount Above Less than $8,925 N/A 10.0% $0.00 8,925-36,250 $ % 8, ,250-87,850 4, % 36, , ,250 17, % 87, , ,350 44, % 183, , , , % 398, More than 400, , % 400, Married Filing Jointly/Surviving Spouse Taxable Income Pay Percentage on Excess Of Amount Above Less than $17,850 N/A 10.0% $ ,850-72,500 $1, % 17, , ,400 9, % 72, , ,050 28, % 146, , ,350 49, % 223, , , , % 398, More than 450, , % 450, Head of Household Taxable Income Pay Percentage on Excess Of Amount Above Less than $12,750 N/A 10.0% $ ,750-48,600 $1, % 12, , ,450 6, % 48, , ,150 25, % 125, , ,350 47, % 203, , , , % 398, More than 425, , % 425, PHASEOUT OF PERSONAL EXEMPTIONS ( PEP ) The personal exemption amount for 2013 is $3,900 per taxpayer, taxpayer s spouse and taxpayer s dependents. ATRA 2012 brings back the phaseout of the personal exemption (PEP) for taxpayers whose AGI is over certain threshold amounts. The PEP reduces the taxpayer s personal exemptions by 2% for every $2,500 (or fraction thereof) over the threshold amount. For married taxpayers filing separately, the reduction is 2% for every 11

8 $1,250 over the threshold amount. There is no limit in the PEP reduction, and a taxpayer may lose all of his or her personal exemptions. The threshold amounts will be indexed for inflation after Filing Status Threshold Full Phaseout Married Filing Jointly $300,000 $422,500 Head of Household 275, ,500 Single 250, ,500 Married Filing Separately 150, ,250 LIMITATIONS ON ITEMIZED DEDUCTIONS ( PEASE LIMITATION ) For 2013, ATRA 2012 reinstates the IRC Sec. 68 Overall Limitation on Itemized Deductions ( Pease limitation ) for taxpayers who itemize and who have adjusted gross income limits in excess of certain thresholds. The overall reduction is equal to 3% of the taxpayer s AGI in excess of the threshold, or if lower, 80% of the amount of allowable itemized deductions. The threshold is indexed for inflation for future years, and the threshold is $300,000 for married filing jointly (MFJ) and surviving spouses, $275,000 for head of households (HOH), $250,000 for single filers, and $150,000 for married filing separately (MFS). The Pease limitation does not apply to investment interest expenses, medical expenses, casualty and theft losses, and gambling losses. In addition, the Pease limitation does not apply to estates or trusts. For many taxpayers, the Pease limitation will reduce itemized deductions by $3,000 for every $100,000 of AGI over the threshold amount. The threshold amounts will be indexed for inflation after Threshold AGI MFJ $300,000 HOH 275,000 Single 250,000 MFS 150,000 Reduction is the Lesser of: 3% of AGI minus threshold QUALIFIED DIVIDEND INCOME 80% of Allowable Itemized Deductions ATRA 2012 indefinitely extended the favorable long-term capital gains tax rates for qualified dividend. To qualify, the taxpayer must have held the stock for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date, and the dividend must be paid from a domestic corporation or certain qualified foreign corporations. As such, taxpayers under the 25% bracket will have a 0% qualified dividend tax rate. For taxpayers in the 25% bracket and up, the maximum qualified dividend tax rate will be 15%. However, for taxpayers whose income falls in the 39.6% bracket, the maximum rate will be 20%. For these latter high-income taxpayers, the additional 3.8% surtax discussed above will also apply, raising the effective maximum tax rate to 23.8%. Dividend income that is not qualified dividend income will be taxed at ordinary income rates

9 LONG-TERM CAPITAL GAINS RATES ATRA 2012 indefinitely extends the favorable tax rates for long-term capital gains. As such, taxpayers below the 25% bracket will have a 0% long-term capital gains tax rate. For taxpayers in the 25% bracket and up, the maximum capital gain tax rate will be 15%. However, for taxpayers whose income falls in the 39.6% bracket, the maximum rate will be 20%. For these latter high-income taxpayers, the additional 3.8% surtax discussed above will also apply, raising the effective tax rate to 23.8%. The 39.6% bracket is indexed for inflation and begins at $450,000 for married taxpayers filing jointly, $425,000 for taxpayers filing as head of household, and $400,000 for taxpayers filing as single filers. Holding Period Assets Held One Year or Less Assets Held More Than One Year and Sold by Individuals in the 39.6% Bracket Assets Held More Than One Year and Sold by Individuals in the 25% to 35% Brackets Assets Held More than One Year and Sold by Individuals in the 15% Bracket or Below Maximum Rate Effective Maximum Rate with 3.8% Surtax 39.6% 43.4%* 20.0% 23.8%* 15% 18.8%** 0% 0% * The additional 3.8% Medicare surtax will apply to these taxpayers. ** The additional 3.8% Medicare surtax may apply to these taxpayers. EDUCATION Contribution Amounts to Coverdell: $2,000 per beneficiary. This amount is phased out from $190,000 to $220,000 for married filing joint, and $95,000 to $110,000 for single filers. Gifts to 529 Plan: Gifts can be front loaded up to $70,000 (5 years x $14,000 annual exclusion) and $140,000 for married couples who split gifts. Front loading uses the annual gift tax exclusion for the current year and the next four years. American Opportunity Credit: Up to 100% of the first $2,000, and 25% of the next $2,000, for a total of $2,500 maximum credit per eligible student per year, with reduction for MAGI between $80,000 and $90,000 for single filers, and $160,000 and $180,000 for joint filers. Lifetime Learning Credit: Up to 20% of the first $10,000 (per taxpayer) of qualified expenses paid in 2013, with reduction for MAGI between $53,000 to $63,000 for single filers and $107,000 to $127,000 for joint filers. Qualified Tuition and Related Expenses: This is an above-the-line deduction. $4,000 for a taxpayer whose AGI does not exceed $65,000 for single filers and $130,000 for married filing joint, and $2,000 for taxpayers whose AGI does not exceed $80,000 for single filers and $160,000 for married filing joint. For taxpayers over the $80,000/160,000 AGI limit, no deduction is allowed

10 Student Loan Interest Deduction: $2,500 abovethe-line deduction, with reduction for MAGI between $60,000 to $75,000 for single filers and $125,000 to $155,000 for married filing jointly. Modified AGI U.S. Savings Bond Interest Exclusion: $74,000 to $89,700 for single filers and $112,050 to $142,050 for married filing jointly. Bonds must be titled in the name of the parents only, owner must be age 24 or older at the time of issue, proceeds must be used for qualified postsecondary education expenses of the taxpayer, the taxpayer s spouse or the taxpayer s dependent. NETTING PROCESS Determine whether you have a net short-term or net long-term capital gain or loss on the sale of stock. 1. Net your short-term gains and short-term losses. 2. Net your long-term gains and long-term losses. 3. Net your short-term gain/loss against long-term gain/loss. 4. For gains, you must pay tax on all gains each year. For losses, you may only deduct up to $3,000 of excess losses against ordinary income per year. 5. Carry over any remaining losses to future tax years. Child Tax Credit Year Tax Credit 2013 $1,000 per eligible child KIDDIE TAX RULES The Kiddie Tax rules require the unearned income of a child or young adult be taxed at the greater of the child s or parents marginal tax bracket once the unearned income exceeds $2,000. Under the Kiddie Tax rules, the first $1,000 in unearned income is not subject to tax. The next $1,000 of unearned income is taxed at the child s rate. Then, any unearned income of more than $2,000 is taxed at the parents marginal rate. The Kiddie Tax rules apply to unearned income of the following: A child under age 18 at the end of each tax year An 18-year-old whose earned income does not exceed one-half of his or her support A 19- to 23-year-old full-time student whose earned income does not exceed one-half of his or her support 16 17

11 INDIVIDUAL RETIREMENT ACCOUNTS Generally, traditional IRA contributions are fully deductible unless you or your spouse are covered by a workplace retirement plan, in which case the following deduction phaseouts apply. If neither individual nor spouse is covered by a plan, you can deduct up to $5,500 each or MAGI, whichever is less. Traditional IRA: Deductibility of Contributions Status Married Filing Jointly (covered spouse) Single Married Filing Jointly (non-covered spouse)* Modified Adjusted Gross Income Deduction $0 $95,000 $5,500 Maximum 95, ,000 Partial More than 115,000 None $0 $59,000 $5,500 Maximum 59,000 69,000 Partial More than 69,000 None $0 $178,000 $5,500 Maximum 178, ,000 Partial More than 188,000 None * Applies to individuals whose spouses are covered by a workplace plan but who are not covered themselves. Roth IRA: Eligibility of Contributions Contributions made to a Roth IRA are not deductible, unlike contributions made to a traditional IRA, and there is no age restriction on making contributions. An individual may contribute up to $5,500 to the Roth IRA, subject to income phaseout limits. Status Married Filing Jointly Single and Head of Household Modified Adjusted Gross Income Contribution $0 178,000 $5,500 Maximum 178, ,000 Partial More than 188,000 None $0 112,000 $5,500 Maximum 112, ,000 Partial More than 127,000 Catch-Up Contributions None If you have either a traditional or Roth IRA and attain age 50 or older during the tax year, an additional $1,000 may be contributed. IRA & Roth Contribution Maximum contribution 401(k) Contributions Catch-up contribution $5,500 $1,000 Employee maximum deferral contribution Catch-up contribution if age 50 or older $17,500 $5,500 Simple IRA Contribution Employee maximum deferral contribution Catch-up contribution if age 50 or older $12,000 $2,500 Individual annual limit (415 for DC plans): $51,000 Maximum compensation limit: $255,000 Key EE limit: $165,000 for less than 1% owners or $1 for more than 5% owners HCE limit: $115,

12 SOCIAL SECURITY Maximum monthly benefit for an individual who reached full retirement age in 2013 and earned the maximum wage base amount or more for the last 35 years is $2,533. Earnings Test Annual Exempt Amount For those under full retirement age for the entire year: $15,120* For months before reaching full retirement age in the year full retirement age will be reached: $40,080** Beginning with month reaching full retirement age: No limit * If your earnings exceed this, then $1 of benefits is withheld for every $2 you earn above $15,120 ** If your earnings exceed this, then $1 of benefits is withheld for every $3 you earn above $40,080 Taxation Thresholds Up to 50% taxed Up to 85% taxed MD/Joint $32,000 44,000 More than $44,000 Single 25,000 34,000 More than 34,000 Taxable wage base: $113,700 ESTATE, GIFT AND GST TAX Under ATRA 2012, the estate, gift and generation-skipping tax exemption equivalent amount is unified for all three transfer taxes and is permanently extended and indexed for inflation. The exemption amount for 2013 is $5,250,000. The maximum estate and gift tax rate in 2013 will be 40%. ATRA 2012 also extended the concept of portability as it existed in 2011 and 2012, meaning that a surviving spouse may receive a deceased spouse s unused exemption amount if the appropriate elections are made with the IRS. For 2013 the unified credit, which is the amount of tax credit used to determine the exemption equivalent amount, is $2,045,800 for an exemption equivalent amount of $5,250,000. For 2013, the annual gift tax exclusion will be $14,000 per person. The annual exclusion gift for non-citizen spouses will be $143,000. The estate and gift tax rate table is depicted below. The generation-skipping transfer tax (GSTT) rate is the highest marginal estate tax rate of 40%. Tax Bracket Percentage Of Amount Over Not Over Pay On Excess Above $0 $10,000 $0 18% $0 10,000 20,000 1,800 20% 10,000 20,000 40,000 3,800 22% 20,000 40,000 60,000 8,200 24% 40,000 60,000 80,000 13,000 26% 60,000 80, ,000 18,200 28% 80, , ,000 23,800 30% 100, , ,000 38,800 32% 150, , ,000 70,800 34% 250, , , ,800 37% 500, ,000 1,000, ,300 39% 750,000 $1,000,000 $345,800 40% $1,000,

13 Trusts and Estates Income Tax Rates TAXABLE YIELD EQUIVALENTS If taxable Income Is: Not over $2,450 Over $2,450 to $5,700 Over $5,700 to $8,750 Over $8,750 to $11,950 Over $11,950 BUSINESS Corporate Tax Rates Your tax is: 15% of taxable income $ % of the excess over $2,450 $1, % of the excess over $5,700 $2, % of the excess over $8,750 $3, % of the excess over $11,950 Tax Exempt Yields 15% 25% 31% 36% 39.6% Taxable income over Not over Tax rate $0 $50,000 15% 50,000 75,000 25% 75, ,000 34% 100, ,000 39% 335,000 10,000,000 34% 10,000,000 15,000,000 35% 15,000,000 18,333,333 38% 18,333, % Corporate dividend exclusion Corporations are eligible for a 70% dividendsreceived deduction for dividends received from domestic corporations whose stock was held for more than 45 days. Section 179 expensing qualifying businesses can expense up to $500,000. Standard mileage rate: 56.5 cents per mile for business miles UNIFORM LIFETIME TABLE For the majority of IRA participants, the following table is used for determining a participant s required minimum distributions (RMDs). There is an exception when a spousal beneficiary is more than 10 years younger than the participant and is the sole beneficiary on January 1. In this case, a different table is used. To calculate your RMD, first find the age you will turn in 2013 and the corresponding applicable divisor. Then divide the prior year-end balance of your IRA account by the divisor. The resulting number is the dollar figure you will need to remove from your IRA to meet your RMD for the current year

14 For example, if you are now 82, your applicable divisor is If the balance in your IRA as of December 31 of last year was $235,000, divide that amount by The result is $13, This is the amount of your RMD for the current year. Applicable Applicable Applicable Age Divisor Age Divisor Age Divisor and over PRESENT VALUE OF A LUMP SUM What if you know you will need $10,000 accumulated 10 years from now? How much money do you need to invest today at an average interest rate of 8% to obtain your goal? Looking at the table below, go to 10 years and then across to 8%. You see that $0.463 invested today at 8% should yield $1 in 10 years. Since you want $10,000, multiply $0.463 by $10,000 to arrive at $4,630. Years 5% 6% 8% 10% 12% FUTURE VALUE OF A LUMP SUM If you invest $10,000 at an interest rate of 8%, how much will your investment be worth in 10 years? By referring to the table, you find that $1 invested today at 8% would grow to $2.159 in 10 years. Since you invested $10,000, multiply $2.159 by $10,000, giving you $21,590. Years 5% 6% 8% 10% 12%

15 PRESENT VALUE OF A SERIES OF ANNUAL PAYMENTS How much money would you need to invest today at an interest rate of 8% to provide $10,000 per year for 10 years? Looking at the chart below, to receive $1 per year for 10 years at 8%, you would need to invest $ Multiply that figure by $10,000 to get $67,100, the amount which you would need to invest. Years 5% 6% 8% 10% 12% FUTURE VALUE OF A SERIES OF ANNUAL PAYMENTS If you deposit $5,000 in an annuity at the end of each year for 10 years at an 8% interest rate, you would have $72,435 ($5,000 x $14.487) in your account at the end of the 10th year. Years 5% 6% 8% 10% 12% IMPORTANT DEADLINES Quarterly taxes due: January 15, April 15, June 17, September 16 Corporate return deadline: March 15 for calendar year filers RMD deadline: April 1, 2014, for those turning 70½ in 2013, December 31 thereafter. Tax deadline: April 15, 2013, for 2012 returns; October 15, 2013, for extension SIMPLE IRA establishment: October 1, 2013 QP establishment: December 31, 2013 Last day to recharacterize a Roth conversion if you filed your taxes timely: October 15, 2013 Double-up deadline: November 29, 2013 Last date for conversion, RMD, lock in gains/ losses, make contributions to 529 plans, gift: December 31, 2013 The information provided in this brochure is based on internal and external sources believed reliable; however, the accuracy and completeness of the information is not guaranteed and the figures may have changed since the time of printing. Examples are hypothetical illustrations and not intended to reflect the actual performance of any particular security. Please consult your tax advisor for questions relating to your individual situation

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