Charge ahead. Plan now. 2015/2016 RETIREMENT AND TAX PLANNING ESSENTIALS

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1 Charge ahead. Plan now. 2015/2016 RETIREMENT AND TAX PLANNING ESSENTIALS

2 2015/2016 Retirement and Tax Planning Essentials Guide Your clients rely on your expertise to help them invest well, and to keep them compliant with all federal laws and mandates. This Guide provides quick reference to essential retirement and tax planning information you will need for 2015 and Keep it handy as you discuss and develop the best financial plans for your valued clients. CONTENTS IRA Annual Contribution Limits 3 Traditional IRA Deductibility Schedule 3 Roth IRA Eligibility 4 Federal Income Tax Rate Schedules 5 Retirement Plan Annual Limits 7 Uniform Life Table 7 Long-term Capital Gains and Dividend Tax Rates 8 AMT Exemptions and Phase-outs 8 Retirement Saver s Credit 8 Eligible Long-term Care Deductions 8 Health Savings Accounts 8 Common IRA-related Tax Forms 9 Social Security Schedules 10 Education Savings Tax Incentives 10

3 INDIVIDUAL RETIREMENT ACCOUNTS (IRAs) ANNUAL CONTRIBUTION LIMITS Contributions can be made to both Traditional and Roth IRAs (if eligible) in the same year. However, total contributions cannot exceed annual limits indicated. Year Under and Over 2015 $5,500 $6, $5,500 $6,500 TRADITIONAL IRA DEDUCTIBILITY SCHEDULE For individuals covered by an employer-sponsored plan If your filing status and age are: And your 2015 or 2016 MAGI 1 is: Then your 2015 or 2016 deduction is: Single and under age 50 Single and age 50 and over Married filing jointly and under age 50 Married filing jointly and age 50 and over Up to $61,000 Full $5,500 $61,000 to $71,000 Above $71,000 Partial $5,500 - [$5,500 x (MAGI - $61,000)]/$10,000 No deduction. Up to $61,000 Full $6,500 $61,000 to $71,000 Above $71,000 Partial $6,500 - [$6,500 x (MAGI - $61,000)]/$10,000 No deduction. Up to $98,000 Full $5,500 $98,000 to $118,000 Above $118,000 Partial $5,500 - [$5,500 x (MAGI - $98,000)]/$20,000 No deduction. Up to $98,000 Full $6,500 $98,000 to $118,000 Above $118,000 1 Modified Adjusted Gross Income (MAGI) is determined before any IRA deductions. For individuals not covered by an employer-sponsored plan Year Single Married filing jointly Partial $6,500 - [$6,500 x (MAGI - $98,000)]/$20,000 No deduction. Spouse is covered (Phase-out) 2015 Unlimited Unlimited $183,000 - $193, Unlimited Unlimited $184,000 - $194,000 3

4 ROTH IRA ELIGIBILITY If your filing status and age are: And your 2015 MAGI 1 is: Then your 2015 allowable contribution is: And your 2016 MAGI 1 is: Then your 2016 allowable contribution is: Up to $116,000 Full $5,500 Up to $117,000 Full $5,500 Single and under age 50 $116,000 to $131,000 Partial: [($131,000 - MAGI)/$15,000] x $5,500 $117,000 to $132,000 Partial: [($132,000 - MAGI)/$15,000] x $5,500 Above $131,000 No allowable contribution. Above $132,000 No allowable contribution. Up to $116,000 Full $6,500 Up to $117,000 Full $6,500 Single and age 50 and over Married filing jointly and under age 50 Married filing jointly and age 50 and over $116,000 to $131,000 Partial: [($131,000 - MAGI)/$15,000] x $6,500 $117,000 to $132,000 Partial: [($132,000 - MAGI)/$15,000] x $6,500 Above $131,000 No allowable contribution. Above $132,000 No allowable contribution. Up to $183,000 Full $5,500 Up to $184,000 Full $5,500 $183,000 to $193,000 Partial: [($193,000 - MAGI)/$10,000] x $5,500 $184,000 to $194,000 Partial: [($194,000 - MAGI)/$10,000] x $5,500 Above $193,000 No allowable contribution. Above $194,000 No allowable contribution. Up to $183,000 Full $6,500 Up to $184,000 Full $6,500 $183,000 to $193,000 Partial: [($193,000 - MAGI)/$10,000] x $6,500 $184,000 to $194,000 Partial: [($194,000 - MAGI)/$10,000] x $6,500 Above $193,000 No allowable contribution. Above $194,000 No allowable contribution. 1 Modified Adjusted Gross Income (MAGI) is determined before any IRA deductions. 4

5 FEDERAL INCOME TAX RATE SCHEDULES (TAX YEAR 2015) Single $0 $9,225 10% of taxable income $9,225 $37,450 $ plus 15% of the amount over $9,225 $37,450 $90,750 $5, plus 25% of the amount over $37,450 $90,750 $189,300 $18, plus 28% of the amount over $90,750 $189,300 $411,500 $46, plus 33% of the amount over $189,300 $411,500 $413,200 $119, plus 35% of the amount over $411,500 $413,200 No limit $119, plus 39.6% of the amount over $413,200 Married Filing Jointly or Qualifying Widow(er) $0 $18,450 10% of taxable income $18,450 $74,900 $1,845 plus 15% of the amount over $18,450 $74,900 $151,200 $10, plus 25% of the amount over $74,900 $151,200 $230,450 $29, plus 28% of the amount over $151,200 $230,450 $411,500 $51, plus 33% of the amount over $230,450 $411,500 $464,850 $111,324 plus 35% of the amount over $411,500 $464,850 No limit $129, plus 39.6% of the amount over $464,850 Married Filing Separately $0 $9,225 10% of taxable income $9,225 $37,450 $ plus 15% of the amount over $9,225 $37,450 $75,600 $5, plus 25% of the amount over $37,450 $75,600 $115,225 $14, plus 28% of the amount over $75,600 $115,225 $205,750 $25, plus 33% of the amount over $115,225 $205,750 $232,425 $55,662 plus 35% of the amount over $205,750 $232,425 No limit $64, plus 39.6% of the amount over $232,425 5 Head of Household $0 $13,150 10% of taxable income $13,150 $50,200 $1,315 plus 15% of the amount over $13,150 $50,200 $129,600 $6, plus 25% of the amount over $50,200 $129,600 $209,850 $26, plus 28% of the amount over $129,600 $209,850 $411,500 $49, plus 33% of the amount over $209,850 $411,500 $439,000 $115,737 plus 35% of the amount over $411,500 $439,000 No limit $125,362 plus 39.6% of the amount over $439,000 Estates and Trusts $0 $2,500 15% of taxable income $2,500 $5,900 $375 plus 25% of the amount over $2,500 $5,900 $9,050 $1,225 plus 28% of the amount over $5,900 $9,050 $12,300 $2,107 plus 33% of the amount over $9,050 $12,300 No limit $3, plus 39.6% of the amount over $12,300 Understanding income tax brackets While it s likely you will pay income tax at various rates or tax brackets throughout the year, the actual percentage of your income that goes to the IRS is often referred to as your effective tax rate. The rate you must pay on the last dollar you earn is usually much higher than your effective tax rate. For example, if half of your income is taxed at 10% and the other half at 15%, then your effective tax rate of 12.5% means that 12.5 cents of every dollar you earned this year goes to the IRS.

6 FEDERAL INCOME TAX RATE SCHEDULES (TAX YEAR 2016) Single $0 $9,275 10% of taxable income $9,275 $37,650 $ plus 15% of the amount over $9,275 $37,650 $91,150 $5, plus 25% of the amount over $37,650 $91,150 $190,150 $18, plus 28% of the amount over $91,150 $190,150 $413,350 $46, plus 33% of the amount over $190,150 $413,350 $415,050 $119, plus 35% of the amount over $413,350 $415,050 No limit $120, plus 39.6% of the amount over $415,050 Married Filing Jointly or Qualifying Widow(er) $0 $18,500 10% of taxable income $18,550 $75,300 $1,855 plus 15% of the amount over $18,550 $75,300 $151,900 $10, plus 25% of the amount over $75,300 $151,900 $231,450 $29, plus 28% of the amount over $151,900 $231,450 $413,350 $51, plus 33% of the amount over $231,450 $413,350 $466,950 $111, plus 35% of the amount over $413,350 $466,950 No limit $130, plus 39.6% of the amount over $466,950 Married Filing Separately $0 $9,275 10% of taxable income $9,275 $37,650 $ plus 15% of the amount over $9,275 $37,650 $75,950 $5, plus 25% of the amount over $37,650 $75,950 $115,725 $14, plus 28% of the amount over $75,950 $115,725 $206,675 $25, plus 33% of the amount over $115,725 $206,675 $233,475 $55, plus 35% of the amount over $206,675 $233,475 No limit $65, plus 39.6% of the amount over $233,475 6 Head of Household $0 $13,250 10% of taxable income $13,250 $50,400 $1,325 plus 15% of the amount over $13,250 $50,400 $130,150 $6, plus 25% of the amount over $50,400 $130,150 $210,800 $26,835 plus 28% of the amount over $130,150 $210,800 $413,350 $49,417 plus 33% of the amount over $210,800 $413,350 $441,000 $116, plus 35% of the amount over $413,350 $441,000 No limit $125,936 plus 39.6% of the amount over $441,000 Estates and Trusts $0 $2,550 15% of taxable income $2,550 $5,950 $ plus 25% of the amount over $2,550 $5,950 $9,050 $1, plus 28% of the amount over $5,950 $9,050 $12,400 $2, plus 33% of the amount over $9,050 $12,400 No limit $3,206 plus 39.6% of the amount over $12,400 Understanding income tax brackets Tax brackets show you the tax rate you will pay on each portion of your income. For example, if you are single, the lowest tax rate of 10% is applied to the first $9,275 of your income. The next portion of your income is then taxed at 15%, and so on, up to the top of your taxable income. The progressive tax system ensures that all taxpayers pay the same rates on the same levels of taxable income. The overall effect is that people with higher incomes pay higher taxes.

7 RETIREMENT PLAN ANNUAL LIMITS Limit IRAs IRA Contribution Limit $5,500 $5,500 IRA Catch-up Contributions $1,000 $1,000 IRA AGI Deduction Phase-out Starting at Joint Return $98,000 $98,000 Single or Head of Household $61,000 $61,000 SEP SEP Minimum Compensation $600 $600 SEP Maximum Compensation $265,000 $265,000 SEP Maximum Contributions $53,000 $53,000 SIMPLE Plans SIMPLE Maximum Contributions $12,500 $12,500 Catch-up Contributions $3,000 $3, (k), 403(b), Profit-Sharing Plans, etc. Annual Compensation Limit $265,000 $265,000 Elective Deferrals $18,000 $18,000 Catch-up Contributions $6,000 $6,000 Defined Contribution Limits $53,000 $53,000 Other Highly Compensated Employee $120,000 $120,000 Defined Benefit Limit $210,000 $210,000 Key Employee $170,000 $170, Elective Deferrals $18,000 $18,000 Social Security Taxable Wage Base $118,500 $118,500 UNIFORM LIFE TABLE This table is used for calculating Required Minimum Distributions (RMDs) from qualified retirement plans and Traditional IRAs for account holders whose spouse is not more than 10 years younger. Age Distribution Period Age Distribution Period

8 LONG-TERM CAPITAL GAINS AND DIVIDEND TAX RATES A target area in the president s budget proposal. Should watch % income bracket 20% 39.6% income bracket 20% 25% to 35% income brackets 15% 25% to 35% income brackets 15% 10% and 15% income brackets 0% 10% and 15% income brackets 0% AMT EXEMPTIONS AND PHASE-OUTS Filing Status Exemption Phase-out Threshold 2015 Married filing jointly $83,400 $158,900 Single/Head of Household $53,600 $119, Married filing jointly $83,800 $159,700 Single/Head of Household $53,900 $119,700 RETIREMENT SAVER S CREDIT Tax Thresholds (MAGI) Credit Individual Head of Household Married filing jointly % $0 to $18,250 $0 to $27,375 $0 to $36, $18,251 to $19,750 $27,376 to $29,625 $36,501 to $39, $19,751 to $30,500 $29,626 to $45,750 $39,501 to $61,000 0 $30,501 or more $45,751 or more $61,001 or more % $0 to $18,500 $0 to $27,750 $0 to $37, $18,501 to $20,000 $27,751 to $30,000 $37,001 to $40, $20,001 to $30,750 $30,001 to $46,125 $40,001 to $61,500 0 $30,751 or more $46,126 or more $61,501 or more HEALTH SAVINGS ACCOUNTS (HSAs) HSA Annual Contributions Self coverage, individual under age 55 $3,350 $3,350 Self coverage, individual age 55+ $4,350 $4,350 Family coverage $6,650 $6,750 Out-of-Pocket Spending on HSA-Compatible HDHPs Self coverage $6,450 $6,550 Family coverage $12,900 $13,100 Minimum Deductible Amount for HSA-Compatible HDHPs Self coverage $1,300 $1,300 Family coverage $2,600 $2,600 ELIGIBLE LONG-TERM CARE DEDUCTIONS Maximum Long-Term Care Premiums Eligible for Itemized Medical Deduction Age 40 or less Over $380 $710 $1,430 $3,800 $4, $390 $730 $1,460 $3,900 $4,870 8

9 COMMON IRA-RELATED TAX FORMS 2015 Forms Mailed to You Form Must mail-by date What the form reports IRS Form 1099-R 2/1/16 Distributions Direct rollovers from qualified plans Conversions Removal of excess contributions Earnings on excess contributions IRS Form /1/16 Contributions Rollovers Recharacterizations Conversions 2015 Forms You May Need to File Along with IRS Form 1040 Form Must mail-by date What the form reports IRS Form /15/16 Non-deductible contributions you made to Traditional IRAs Distributions from Traditional, SEP, or SIMPLE IRAs, if you have ever made non-deductible contributions to Traditional IRAs Conversions from Traditional, SEP, or SIMPLE IRAs to Roth IRAs Distributions from Roth IRAs IRS Form /15/16 Additional taxes on IRAs, other qualified retirement plans, modified endowment contracts, Coverdell ESAs, QTPs, Archer MSAs and HSAs 9

10 Social Security Schedules TAX RATES ON SOCIAL SECURITY BENEFITS Based on Modified Adjusted Gross Income (MAGI) Thresholds Under full retirement age (One dollar in benefits will be withheld for every $2 in earnings above the limit.) 50% taxable if over 1 85% taxable if over 1 Married filing jointly $32,000 $44,000 Single $25,000 $34,000 1 Applicable if total of one-half of benefits and all other income is more than listed amount or if married filing separately and lived with spouse at any time during the year. SOCIAL SECURITY BENEFIT REDUCTIONS Based on Earnings 2015 and 2016 $15,720 EDUCATION SAVINGS TAX INCENTIVES Coverdell Education Savings Accounts (Education IRAs) Contribution Limit: $2,000 MAGI Phase-Out Range for Contributions to Coverdell Education Savings Accounts Married filing jointly $190,000 to $220,000 $190,000 to $220,000 Single $95,000 to $110,000 $95,000 to $110,000 American Opportunity Tax Credit MAGI Phase-outs Married filing jointly $160,000 to $180,000 $160,000 to $180,000 Others $80,000 to $90,000 $80,000 to $90,000 Exclusion of U.S. Savings Bond Income MAGI Phase-outs Married filing jointly $115,750 to $145,750 $116,300 to $146,300 The year an individual reaches full retirement age (Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit.) At full retirement age (Beginning the month an individual attains full retirement age) MAXIMUM COMPENSATION SUBJECT TO FICA TAXES $41,880 No reduction Others $77,200 to $92,200 $77,500 to $92,550 Student Loan Interest Deduction Maximum Deduction: $2,500 MAGI Phase-outs Married filing jointly $130,000 to $160,000 $130,000 to $160,000 Single $65,000 to $80,000 $65,000 to $80, and 2016 OASDI (Soc. Sec.) Maximum $118,500 HI (Medicare) Maximum OASDI tax rate No Limit 12.4% self-employed, 6.2% employees HI tax rate: 2.9% self-employed, 1.45% employees. High income earners also pay an additional 0.9% in Medicare taxes on earnings above certain amounts. About the Social Security Administration Social Security delivers a broad range of services online at socialsecurity.gov and through a nationwide network of more than 1,400 offices that include regional offices, field offices, card centers, teleservice centers, processing centers, hearing offices, the Appeals Council, and State and territorial partners, the Disability Determination Services. Social Security also has a presence in U.S. embassies around the globe. 10

11 For more information, please call BNY Mellon Retirement personnel act as licensed representatives of MBSC Securities Corporation (a registered brokerdealer) to offer securities, and act as officers of The Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds as well as to offer separate accounts managed by BNY Mellon Investment Management firms. This material is not intended as an offer to sell or a solicitation of an offer to buy any security, and it is not provided as a sales or advertising communication and does not constitute investment advice. MBSC Securities Corporation, a registered broker-dealer, FINRA member and wholly-owned subsidiary of The Bank of New York Mellon Corporation, has entered into agreements to offer securities in the U.S. on behalf of certain BNY Mellon Investment Management firms and as distributor of the above mutual funds. BNY Mellon Investment Management is one of the world s leading investment management organizations, and one of the top U.S. wealth managers, encompassing BNY Mellon s affiliated investment management firms, wealth management service and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. BNY Mellon does not offer tax or legal advice. Please consult with your tax or legal advisor before investing. The preceding discussion is not intended or written to be used, and cannot be used by any person, for the purpose of avoiding U.S. federal tax penalties MBSC Securities Corporation The Dreyfus Corporation and MBSC Securities Corporation are subsidiaries of The Bank of New York Mellon Corporation. MBSC Securities Corporation, a registered broker-dealer, is the distributor for the Dreyfus Funds. BNYMR-ITPGDEA

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