the humanity behind the numbers

Quarterly Market Review: January – March 2017

The Markets (as of market close March 31, 2017)

Riding the momentum following the presidential election, stocks surged for much of the first quarter of 2017. Buoyed by the anticipation of tax cuts and policies favorable to domestic businesses, the benchmark indexes listed here reached historic highs throughout the quarter. At the end of January, the Dow reached the magic 20000 mark for the first time, while the tech-heavy Nasdaq gained almost 4.50% for the month. The trend continued in February, as stocks posted solid monthly gains. The Dow closed the month with a run of 12 consecutive daily closings that reached all-time highs. The S&P 500 also achieved… Click here to read the rest of this market summary, Quarterly Market Review: January-March 2017.

Market Month: February 2017

The Markets (as of market close February 28, 2017)

Equities continued their positive trend in February as each of the benchmark indexes listed here posted monthly gains. The Dow recorded 12 record highs in February and posted a monthly gain of 4.77% — its best month since November. The S&P 500 (3.72%) and Nasdaq (3.75%) each climbed over 3.50% for the month. For the S&P 500, February marked… Click here to read the rest of this market summary, Market Month: February 2017.

Market Month: January 2017

The Markets (as of market close January 31, 2017)

Investors were cautious for much of the month, likely waiting to see what President Trump would do during his first few weeks in office. After a slow close to December, equities picked up the pace during the early part of January as each of the indexes listed here closed the first full week of the month posting gains of nearly 1.0% or more. The market moved… Click here to read the rest of this market summary, Market Month: January 2017.

Annual Market Review 2016

Overview

The year 2016 likely will be remembered for the election of Donald Trump as the 45th president of the United States and the Brexit vote. This year also saw the Fed raise interest rates for the first time since last December, noting that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since midyear. While inflation remains… Click here to read the rest of this market summary, Annual Market Review 2016.

Market Month: November 2016

The Markets (as of market close November 30, 2016)

The economy picked up the pace in November, as did the stock market. After getting off to a sluggish start during the early part of the month, equities soared following the results of the presidential election. Each of the indexes listed here reached record highs during the month. The Russell 2000 posted the largest monthly gain, reaching double digits. Energy stocks jumped… Click here to read the rest of this market summary, Market Month: November 2016.

Five Medicaid Long-Term Care Myths

November 17, 2016

Many people want to know how they would ever be able to afford long term care costs that can range anywhere from $50,000 to $120,000 per year. Few people can pay this from their regular income and retirement nest eggs can be quickly depleted. Long-term care insurance is very expensive and difficult for older people to get. Many people look to Medicaid to cover these costs but few people understand the complicated rules surrounding Medicaid eligibility. We will take a look at a few of the myths related to Medicaid.

Myth: Medicare and my supplemental health insurance will pay for nursing home care

Truth: Medicare will only pay for 20 days of full coverage and even then, only if you have spent at least three days in the hospital and then need skilled care. Then you can get an additional 80 days of partial coverage, for a total of 100 days. After 100 days, Medicare coverage stops and you are responsible for the full cost.

Myth: Medicaid will pay for all long-term care services

Truth: Unlike Medicare which is a federal program, Medicaid is a joint program by the Feds and the States. While the Medicaid minimum guidelines are established at the federal level, each State administers their own Medicaid plans and the benefits vary greatly from state to state. Some states will ONLY cover skilled nursing home care or home care for patients who would qualify for nursing home care. Other states may cover some additional services such as assisted living facilities, and in home services but many do not.

Myth: If I have to go to a nursing home, the government will take my money and my house

Truth: Medicaid is designed to be a safety net for people who can not afford to pay for long term care. It is expected that if you have assets, they will need to be “spent down” on your care before the government will start paying. So in order to qualify for Medicaid, your income and assets must below certain thresholds. If you have more than these thresholds, the government will not seize your property. You simply won’t qualify for benefits.

If there is a reasonable chance you will return home after getting nursing home care, the state will generally allow you to keep your home and still qualify for Medicaid. However, once a person receiving benefits passes away, the state can try to get the money back that that they paid in benefits from the person’s estate.

If a Medicaid recipient is married, it doesn’t necessarily mean they must spend ALL joint assets on long term care. The non-disabled spouse is allowed to keep half of the couple’s assets, up to a maximum of $119,220 in 2016. In addition, the non-disabled spouse, called the community spouse, can remain in the house, even if the value exceeds the $119,200 threshold. Disabled siblings or children would also be allowed to retain the house if they already lived there prior to the Medicaid recipient’s disability.

Myth: I can transfer money to my spouse or children to qualify for Medicaid

Truth: Medicaid will look back five years from the date of your application to see if you have transferred or gifted any assets to other people. If they find you have, they will disqualify you from receiving benefits for a period of time called a penalty period.

However, gifts to disabled children, including deaf children, are considered exempt transactions and are not subject to the penalty period.

Myth: If I qualify for Medicaid, I can choose any facility I want

Truth: Not all facilities accept Medicaid benefits so you may not have as many options as you would with private pay. In addition, many will limit the number of Medicaid beds in their facilities, although some states prohibit this. Medicaid will also not pay for a private room so if you wish to have a private room, you would have to pay out of pocket for that additional cost.

At Kramer Wealth Managers, we can help navigate the financial impact of long term care expenses and help you prepare for the unexpected. The Medicaid system is complex and should be navigated with the help of an experienced Elder Law Attorney (find one at www.nelf.org). For more information on Medicaid, go to www.medicaid.gov.

Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed and the accuracy of the information should be independently verified. The information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Federal tax laws are complex and subject to change. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Market Month: October 2016

The Markets (as of market close October 31, 2016)

Trading in the early part of October saw equities respond negatively to rumors of a pullback on stimulus measures by the European Central Bank, which ultimately proved to be unfounded. Each of the indexes listed here closed the first week of October below their respective September closing values, except for the Global Dow, which eked out a marginal gain. Markets continued their tailspin during the second week of October led by the Global Dow and Nasdaq, each of which lost close to 1.5%… Click here to read the rest of this market summary, Market Month: October 2016.

Options when Inheriting an IRA

November 2, 2016

Some assets, such as cash, are simple to pass on to heirs. Other assets, such as IRAs, have certain rules and conditions that change depending on the distribution method chosen and the relationship of the beneficiary.

There are two main categories of IRA beneficiary: spousal and non-spousal. Today, let’s review the choices for each.

Non-Spousal Options

Lump sum distribution: With a lump-sum distribution, all the assets in the deceased individual’s IRA are immediately dispersed to the beneficiary. The beneficiary is left with no further IRA assets and will be taxed on the full amount of the distribution. The amount of the full distribution is added to all of their other income for that year and will be taxed according to their federal and state tax bracket.

Transfer to an inherited IRA: With an inherited IRA, the beneficiary moves assets into a new account that allows them to take penalty-free distributions. The beneficiary must begin taking distributions called Required Minimum Distributions (RMD) based on their age and life expectancy. The IRS has a formula for calculating the amount. This allows the beneficiary to spread the tax liability out over their lifetime as they are only taxed on the amount they withdraw each year, and not on the remaining balance. An inherited IRA account must be established and distributions must start by December 31st of the year following the deceased owner’s date of death. If it is not established within this time frame, the account must be distributed fully within five years.

5-year rule: If RMD distributions have not been established by December 31st of the year following the date of death, then the entire account balance must be distributed by the fifth anniversary of the date of death. Discretionary withdrawals can be taken at any point within the first five years, but any balance remaining on the fifth anniversary will be distributed to the beneficiary and fully taxable.

No money can be added to an Inherited IRA or decedent’s IRA, nor can it be commingled with other IRAs owned by the beneficiary.

Spousal options

Spouses can choose from all the options above, but they also have one additional choice. They can treat the IRA as their own with a spousal transfer. This moves the inherited IRA assets over to the IRA of the spouse and it means that the penalties for early withdrawal will apply if the surviving spouse is under age 59½. They do not have to take RMDs until they reach 70½.

At Kramer Wealth Managers, we can help review all your options and determine which one makes the most tax- and income-efficient choice. Contact us today to get started.

While the tax or legal information provided is based on our understanding of current laws, this information is not intended as tax or legal advice. Federal tax laws are complex and subject to change. Neither FSC Securities Corporation nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Quarterly Market Review: July – September 2016

The Markets (as of market close September 30, 2016)

The second quarter provided a bumpy ride for investors. Following the upheaval caused by the Brexit vote in June, July kicked off the third quarter by ending the month in favorable fashion, as each of the indexes listed here posted month-to-month gains, led by the Russell 2000 (5.90%) and the Nasdaq (6.60%). Stocks held their own for July, despite falling energy shares, as crude oil prices (WTI) sank from around $49 per barrel to under $42 by the close of July. As money moved into… Click here to read the rest of this market summary, Quarterly Market Review: July-September 2016.