2013 Second Quarter Client Commentary

“Live so that when your children think of fairness,
caring, and integrity, they think of you.”

– H. Jackson Brown, Jr. is an American author best known for his inspirational book,
Life’s Little Instruction Book
, which was a New York Times Bestseller


Second Quarter 2013 | PLANNING COMMENTARY

April is a good time each year to reflect on what strategies are being implemented or furthered to reduce future taxes for your family.  Many of the most onerous taxes in the code have become even more penalizing with the passage of the American Taxpayer Relief Act (the name is not indicative of its goal) for high net worth families that fail to act and plan well into the future.  While the lifetime exemption amount for estates was preserved for the time being (now $5.25M per individual in 2013) the maximum federal estate tax rate increased from 35% to 40%.  Income taxes rose in a number of ways.  Now that some time has lapsed since the passage of this bill we can see clearer the continued intentions in Washington to increase income and estate taxes even further.  Planning and strategy implementation needs to look even farther into the future to offset this growing trend.

Given these facts and as the tax figures due on April 15 become better known by all, deductions and credits that are available today are being closely evaluated by taxpayers.  This is particularly the case due to the tax act mentioned above, which raised taxes of some type on 77 percent of U.S. households.  It’s important to remember that you can play by the rules and keep your integrity while still being tax smart!

For example, IRAs represent one specific area in the tax code that should be used for current and future tax planning.  The deadline for making most IRA contributions is April 15, regardless of whether you file for an extension.  One exception to that rule is the SEP-IRA and Keogh plans which can be funded by the extended due date of your return when properly filing for an extension.  Each of these vehicles has its own unique set of requirements that must be met to properly make a contribution, but when followed these vehicles can be a very powerful planning tool over time.  A couple over age 50 who qualifies for 2012 and 2013 contributions to Roth IRAs, for example, could contribute a combined $25,000 to these accounts today and begin enjoying income tax-free growth on that entire balance!

For details or questions about the American Taxpayer Relief Act, planning to deal with ever-rising taxes, or IRAs of any type (including contribution limits, requirements and whether making a contribution to a particular type of IRA may make sense) please call or email our team.  We are always available as a resource.


With the release of our March 31st investment performance reports, we are introducing Lipper Active Indices™ to benchmark against the returns of each investment category in client portfolios.  We believe the Lipper Indices provide a truer comparison for the types of investments we use and the asset allocation strategies we manage.  The integrity of portfolio performance reporting is dependent upon comparison to appropriate indices.  We discovered that Lipper applies a rigorous classification process to construct indices that are highly correlated with actual mutual fund holdings to more accurately monitor the performance of actively managed portfolios.

We also believe we have improved the comparison and benchmarking process for our clients’ overall portfolio return (shown as household return on our report).  The benchmark for the portfolio is now being constructed with a static-weighted allocation.  The specific weights used are determined using a neutral asset allocation strategy that matches the risk level of the portfolio.  With this change the neutral allocation weightings for each asset class in the portfolio do not change over time.  In the past, each time we made an asset allocation change, the benchmark return was recalculated assuming the new allocation had existed over each time period measured.  Although this form of comparison was adequate, we do not believe it properly illustrated how tactical adjustments to allocations actually impacted performance.  By comparing household returns to a neutral benchmark allocation that doesn’t change, we can better see how our tactical changes affect portfolio performance and further improve the integrity of our performance reporting.


The information in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements. The information does not attempt to examine all the facts and circumstances that may be relevant to an individual’s financial needs. Payne Wealth Partners, Inc. is not soliciting any action based on these statements.

Contact Our Offices

Payne Wealth Partners, Inc.
Keystone Financial Consulting
601 N Cross Pointe Blvd
Evansville, IN 47715
Phone: 812-477-6221
Toll Free: 888-477-6221
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