11-29-18 Columns

Take advantage of tax diversification As an investor, you will have access to accounts that are taxed differently from one another. And it’s possible you could benefit from tax diversification by owning accounts in these three categories: Tax-deferred – Tax-deferred accounts include the traditional IRA and a 401(k) or similar employer-sponsored retirement plan. When you invest in tax-deferred vehicles, your money can grow faster than if it were placed in an account on which you paid taxes every year. You also may get a tax deduction for contributions you make today. When you start taking withdrawals from these tax-deferred accounts, typically during retirement, the money is usually taxed at your ordinary income tax rate. Taxable – Taxable investments are those held in a standard brokerage account, outside your IRA or 401(k). While you can put virtually all types of investments into a taxable account, you may want to focus on those considered to be most tax-efficient. So, you could include individual stocks that you plan to hold, rather than actively trade, because you will not get taxed on the capital gains until you sell. You also might consider mutual funds that do little trading and generate fewer capital gain distributions. This is important not only in terms of controlling taxes, but also because the taxes on these distributions can reduce your investments’ real rate of return. Tax-free – When you invest in a Roth IRA/Roth 401(k), you don’t get an immediate tax deduction, but your earnings, as well as your withdrawals, are tax-free, provided you do not start taking withdrawals until you’re 59-1/2 and you have had your account at least five years. (However, income restrictions do apply to Roth IRAs.) So, given the difference in how taxes are treated in these accounts, how can you choose where to put your money? For example, when would you contribute to a Roth IRA or Roth 401(k), rather than a traditional, tax-deferred IRA or 401(k)? If you are in a high tax rate now and expect it to be lower in retirement, a traditional IRA may make more sense, as you potentially get a sizable benefit from the tax deduction. But if you are in a lower tax rate now, you have most of your retirement investments in tax-deferred accounts, and/or you can afford to forego the immediate tax deduction, you might find that the Roth IRA/Roth 401(k), with its tax-free withdrawals and earnings, ultimately will make more sense for you. But since no one can predict where tax rates will go in the future, having money in different types of accounts – i.e., tax diversification – can be beneficial. If you only focus on traditional, tax-deferred accounts, you could end up with larger tax bills than you anticipated when you retire and start tapping into these accounts, particularly when you must start taking withdrawals – called “required minimum distributions” – when you reach 70-1/2. By having money in accounts with different tax treatments, you may have more flexibility in structuring your withdrawals during retirement, based on your year-to-year tax situation. There’s no formula for achieving an ideal tax diversification. You’ll want to consider your own needs and circumstances in choosing the right mix of taxable, tax-deferred and tax-free accounts. Ultimately, taxes should not drive all your investment decisions – but they should not be ignored, either. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Give wisely this holiday season Many families give back during the holidays by donating to charity. Earlier this week was Giving Tuesday, marking the unofficial kickoff to the holiday charitable giving season. It also marked the unofficial start of scam artists trying to take advantage of your holiday generosity to steal your money or identity. I encourage all Southwest Michigan families to be mindful of scams and fake charities and to take steps to protect their personal information — such as keeping browser and security software up-to-date, using only legitimate and secure websites and being wary of clicking on unfamiliar links on social media. A few simple rules to follow to avoid most scams are to never give out your credit card, bank account or Social Security numbers and to never open email from unknown senders. Beware of charities that refuse to answer questions about the organization or where your money will go; charities with names that resemble better-known charities; and anyone using high-pressure tactics to get you to make a quick decision or feel guilty about not contributing. Attorney General Bill Schuette and various nonprofit groups have put together a “Giving Wisely” brochure to help donors make wise charitable gifts. The free publication is available at www.michigan.gov/ag under the Resources tab. Residents can search for charities to support on the AG’s Charitable Trust site at www.mi.gov/agcharities and can also check on charities by using Charity Navigator, GuideStar or the BBB Wise Giving Alliance. I encourage residents to consider giving back this holiday season. With precautions, it’s a decision you will never regret. As always, I look forward to hearing your comments and feedback on the important issues facing Michigan. You can contact me at 517-373-6960.

Protecting seniors from long-term care costs Last week, I introduced the Protecting Married Seniors from Impoverishment Act with Congresswoman Debbie Dingell (D-MI) to extend financial protections to seniors who receive long-term care in their home or community setting. In order to maintain Medicaid eligibility, beneficiaries with a spouse needing long-term care or services, may be put in a situation where they need to “spend down” their resources, or potentially bankrupt themselves in order to get the care they need. Spousal impoverishment protections in Medicaid for care at home or in the community are due to expire in a few weeks at the end of the year.

My bipartisan bill would permanently extend spousal impoverishment protections for Medicaid beneficiaries receiving long-term care in a home or community-based services here in Michigan and across the county. To learn more about my work protecting seniors and other important legislative issues, please visit my website: upton.house.gov or call my offices in Kalamazoo (269-385-0039), St. Joseph/Benton Harbor (269-982-1986), or Washington, D.C. (202-225-3761).

Season of thanks I hope everyone enjoyed a wonderful Thanksgiving holiday with family and friends. I was fortunate to be able to spend time with extended family and enjoy the nicer weather while it lasted. Whether you travelled, stayed home, or volunteered this year, it is important we all spend time remembering what brings us together and how fortunate we are. While politics can be divisive, it is important that we move forward and come together to create bipartisan solutions to the problems we face every day. I look forward to working across the aisle again next term to help make Michigan an even better place to live, work, and raise a family. As the holiday season continues, please also consider doing something kind for someone else. Local food pantries and shelters are always in need of nonperishable food items, winter clothing, and other essential items. I am thankful for the opportunity to continue serving you and will continue to work tirelessly on your behalf in Lansing. I hope you will continue to reach out to me whenever I can be of assistance to you. I will be having more opportunities for you to meet with me in the community in the coming months, and I encourage you to contact my office for more information. Thank you to everyone who has attended coffee hours or contacted my office over the last two years to express their thoughts. I am always interested to hear what is on your mind, and even if we do not always agree, I truly value your concerns and suggestions. If you have any questions or concerns please do not hesitate to contact my office toll free at 1-800-577-6212 or via email at BethGriffin@house.mi.gov.

Antibiotic awareness Antibiotic resistance is one of the most urgent threats to the public’s health. Antibiotic resistance occurs when bacteria develop the ability to defeat the drugs designed to kill them. Each year in the United States, at least 2 million people get infected with antibiotic-resistant bacteria, and at least 23,000 people die as a result. Antibiotics save lives, but any time antibiotics are used, they can cause side effects and lead to antibiotic resistance. About 30 percent of antibiotics, or 47 million prescriptions, are prescribed unnecessarily in doctors’ offices and emergency departments in the United States, which makes improving antibiotic prescribing and use a national priority. Antibiotics are only needed for treating certain infections caused by bacteria. We rely on antibiotics to treat serious infections, such as pneumonia, and life-threatening conditions including sepsis, the body’s extreme response to an infection. Effective antibiotics are also needed for people who are at high risk for developing infections. Some of those at high risk for infections include patients undergoing surgery, patients with end-stage kidney disease, or patients receiving cancer therapy (chemotherapy). Antibiotics do not work on viruses, such as those that cause colds, flu, bronchitis, or runny noses, even if the mucus is thick, yellow, or green. Antibiotics are only needed for treating infections caused by bacteria, but even some bacterial infections get better without antibiotics. Antibiotics aren’t needed for many sinus infections and some ear infections. Antibiotics save lives, and when a patient needs antibiotics, the benefits usually outweigh the risk of side effects and antibiotic resistance. Talk with your healthcare professional about the best treatment for yours or your loved one’s illness. If you need antibiotics, take them exactly as prescribed. Respiratory viruses usually go away in a week or two without treatment. Ask your healthcare professional about the best way to feel better and get relief from symptoms while your body fights off the virus. To stay healthy and keep others healthy: Clean your hands; cover coughs; stay home when sick; get recommended vaccines, such as the flu vaccine.