2019 Annual Limits for Tax and Wealth Planning

The Internal Revenue Service recently announced the annual inflation adjustments for a number of tax provisions for 2019. These went into effect January 1, 2019 and are not intended to be used for 2018 tax returns.

We fully recognize that most of our clients are currently preparing their 2018 taxes and we encourage you to revisit some of the major changes associated with the 2017 Tax Cuts and Jobs Act that will impact 2018 tax planning.

Enclosed you will find the 2019 Annual Limits Guide from the College for Financial Planning®, which is a reference for a variety of tax and wealth planning figures. We manage assets for a broad range of clients who are at different stages of their lives, so we recognize that some of the information may not be pertinent to you.

The changes for 2019 are not nearly as comprehensive as last year. Here are a couple highlights that may impact your planning this year:

  • There are still seven tax rates, but the brackets have changed slightly to adjust for inflation and wage growth

  • Traditional, Roth and SEP IRA contribution limits have increased in 2019 as have 401(k) plan employee contribution limits plus catch-up provisions (see retirement plans section of the 2019 Annual Limits Guide). The income limits for funding IRAs and Roth IRAs have also increased

  • Annual gift tax exclusion remained $15,000 for individuals and $30,000 for couples

  • The federal transfer (gift, estate and generation-skipping) tax basic exclusion increased to $11.4 million from $11.18 million

  • The standard deduction increased to $24,400 for married filing jointly and $12,200 for individuals. Taxpayers age 65 and older or taxpayers with vision loss may be eligible for an additional $1,300 deduction

  • Medicare Part A, B and D monthly premiums have increased

  • The Social Security wage base increased to $132,900 and the Social Security cost-of-living adjustment for 2019 is 2.8 percent, up from $128,400 and 2 percent respectively

  • The Qualified Charitable Distribution remains in place, allowing IRA owners who are 70 ½ or older to donate up to $100,000 annually directly from their IRA to qualifying public charities

We recognize that achieving a better understanding of how the 2017 Tax Cuts and Jobs Acts will impact your needs and goals may cause some angst and frustration. You’re not alone. Last May, we shared some perspective on how clients can navigate the complexity of tax planning.

As in past years, we take this opportunity to encourage you to review and update your estate plans, particularly if you haven’t done so in the last five years. Marriage, divorce, birth, a child reaching adult-age, changes in health, an acquisition or a sale of assets can affect the accuracy of your documents and therefore your intentions.

It is important to have a valid will or trust that provides clear and appropriate instructions to your personal representative and heirs; one that ensures your assets will be distributed in keeping with your wishes. A good estate plan may reduce your estate tax liability and can prevent, if desired, your assets from being subject to probate. Please contact your portfolio manager if you would like assistance updating the titles on your accounts or beneficiary designations and we will help you with the process.

This is also an excellent time to revisit your financial goals and objectives. Ferguson Wellman and West Bearing have planning resources and forecasting tools to help you address your short- and long-term goals as well as important questions regarding retirement, gifting and lifestyle. We are pleased to provide this complimentary planning service to all our clients. Your portfolio manager can initiate this process for you and coordinate with your accountant and estate planning attorney when appropriate. 

Any tax or estate planning information in this communication is not intended or written by Ferguson Wellman Capital Management or West Bearing Investments to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein. And advice in this communication is limited to the conclusions specifically set forth herein and is based on the completeness and accuracy of the stated facts, assumptions and/or representations included.  In rendering our advice, we may consider tax authorities that are subject to change, retroactively and/or prospectively, and any such changes could affect the validity of our advice.  We will not update our advice for subsequent changes or modifications to the law and regulations, or to the judicial and administrative interpretations thereof.

This information in the links to College for Financial Planning were not published by Ferguson Wellman or West Bearing.  We do not take any responsibility for reviewing, updating or insuring accuracy of information included in the information. Ferguson Wellman and West Bearing disclaim responsibility for the legality of materials and copyright compliance on other publications or websites. This is provided for informational purposes only.