Endowment WealthManagement, Inc.Robert Riedl, CPA, CFP, AWMADirector of Wealth ManagementAmerican National Bank Bldg2200 N. Richmond St. Suite 200Appleton, WI 54911920-785-6010 x6011Rob@EndowmentWM.comwww.EndowmentWM.com

February 2016Changes to Social Security ClaimingStrategies

Filing Your 2015 Federal Income Tax Return

Quiz: Which Birthdays Are FinancialMilestones?

What are required minimum distributions(RMDs)?

EWM February 2016 NewsletterPlanning Your Financial FutureChanges to Social Security Claiming Strategies

See disclaimer on final page

The Bipartisan BudgetAct of 2015 included asection titled "Closure ofUnintended Loopholes"that ends two SocialSecurity claimingstrategies that havebecome increasinglypopular over the last

several years. These two strategies, known as"file and suspend" and "restricted application"for a spousal benefit, have often been used tooptimize Social Security income for marriedcouples.

If you have not yet filed for Social Security, it'simportant to understand how these new rulescould affect your retirement strategy.Depending on your age, you may still be able totake advantage of the expiring claiming options.The changes should not affect current SocialSecurity beneficiaries and do not apply tosurvivor benefits.

File and suspendUnder the previous rules, an individual who hadreached full retirement age could file for retiredworker benefits--typically to enable a spouse tofile for spousal benefits--and then suspend hisor her benefit. By doing so, the individual wouldearn delayed retirement credits (up to 8%annually) and claim a higher worker benefit at alater date, up to age 70. Meanwhile, his or herspouse could be receiving spousal benefits. Forsome married couples, especially those withdual incomes, this strategy increased their totalcombined lifetime benefits.

Under the new rules, which are effective as ofApril 30, 2016, a worker who reaches fullretirement age can still file and suspend, but noone can collect benefits on the worker'searnings record during the suspension period.This strategy effectively ends thefile-and-suspend strategy for couples andfamilies.

The new rules also mean that a worker cannotlater request a retroactive lump-sum paymentfor the entire period during which benefits were

suspended. (This previously available claimingoption was helpful to someone who faced achange of circumstances, such as a seriousillness.)

Tip: If you are age 66 or older before the newrules take effect, you may still be able to takeadvantage of the combined file-and-suspendand spousal/dependent filing strategy.

Restricted applicationUnder the previous rules, a married person whohad reached full retirement age could file a"restricted application" for spousal benefits afterthe other spouse had filed for Social Securityworker benefits. This allowed the individual tocollect spousal benefits while earning delayedretirement credits on his or her own workrecord. In combination with thefile-and-suspend option, this enabled bothspouses to earn delayed retirement creditswhile one spouse received a spousal benefit, atype of "double dipping" that was not intendedby the original legislation.

Under the new rules, an individual eligible forboth a spousal benefit and a worker benefit willbe "deemed" to be filing for whichever benefit ishigher and will not be able to change from oneto the other later.

Tip: If you reached age 62 before the end ofDecember 2015, you are grandfathered underthe old rules. If your spouse has filed for SocialSecurity worker benefits, you can still file arestricted application for spouse-only benefits atfull retirement age and claim your own workerbenefit at a later date.

Basic Social Security claiming options remainunchanged. You can file for a permanentlyreduced benefit starting at age 62, receive yourfull benefit at full retirement age, or postponefiling for benefits and earn delayed retirementcredits, up to age 70.

Although some claiming options are goingaway, plenty of planning opportunities remain,and you may benefit from taking the time tomake an informed decision about when to filefor Social Security.

Page 1 of 4

Filing Your 2015 Federal Income Tax ReturnWhether you're preparing your own tax returnor paying someone to do it for you, tax seasoncan be a stressful time of year. Make thingseasier on yourself by pulling all your informationtogether sooner rather than later--that includesa copy of last year's tax return, W-2s, 1099s,and any deduction records you have.

File on timeThe filing deadline for most individuals isMonday, April 18, 2016. That's becauseEmancipation Day, a legal holiday inWashington, D.C., falls on Friday, April 15, thisyear. If you live in Massachusetts or Maine, youhave until Tuesday, April 19, 2016, to file afederal income tax return because Patriots'Day, a legal holiday in both states, is celebratedon April 18.

If you're not able to file your federal income taxreturn by the due date, you can file for anextension using IRS Form 4868, Application forAutomatic Extension of Time to File U.S.Individual Income Tax Return. Filing thisextension gives you an additional six months(until October 17, 2016) to file your federalincome tax return. You can also file for anautomatic six-month extension electronically(details on how to do so can be found in theForm 4868 instructions).

Note: Special rules apply if you're living outsidethe country, or serving in the military outsidethe country, on the regular due date of yourfederal income tax return.

Pay what you oweOne of the biggest mistakes you can make isnot filing your return because you owe money.If the bottom line on your return shows that youowe tax, file and pay the amount due in full bythe due date if at all possible. If you absolutelycannot pay what you owe, file the return andpay as much as you can afford. You'll oweinterest and possibly penalties on the unpaidtax, but you will limit the penalties assessed byfiling your return on time, and you may be ableto work with the IRS to pay the unpaid balance(options available may include the ability toenter into an installment agreement).

It's important to understand that filing for anautomatic extension to file your return does notprovide any additional time to pay your tax.When you file for an extension, you have toestimate the amount of tax you will owe; youshould pay this amount by the April 18 (April 19if you live in Massachusetts or Maine) due date.If you don't, you will owe interest, and you mayowe penalties as well. If the IRS believes thatyour estimate of taxes was not reasonable, itmay void your extension.

Limited planning opportunities may stillbe availableThough the opportunity for many potentialtax-saving moves closed on December 31, thewindow is still open for IRA contributions. Yougenerally have until the April due date of yourfederal income tax return to make contributionsto a traditional or Roth IRA for the 2015 taxyear. That means there's still time to set asideup to $5,500 ($6,500 if you're age 50 or older)in one of these tax-advantaged savingsvehicles.

Note: To contribute to either a traditional or aRoth IRA for 2015, you (or, if you file a jointreturn, your spouse) must have receivedtaxable compensation during the year. Providedthat you did not reach age 70½ by the end ofthe year, you're able to contribute to atraditional IRA. Eligibility to contribute to a RothIRA depends on your filing status and income.

With a traditional IRA, you're generally able todeduct the full amount of your contribution,provided that you're not covered by a 401(k) oranother employer-sponsored retirement plan; ifyou or your spouse is covered by an employerplan, the ability to deduct some or all of yourcontribution depends on your filing status andincome. With a Roth IRA, there's no up-frontdeduction, so contributing won't affect your2015 tax situation, but it's still worth consideringgiven that future qualified Roth distributions arefree of federal income tax.

You also have until the due date of your return,including any extension, to undo("recharacterize") a 2015 Roth IRA conversion.For example, if you converted a fully taxabletraditional IRA worth $100,000 to a Roth IRA in2015 and that Roth IRA is now worth only$50,000, the $100,000 will be included on your2015 federal income tax return. If yourecharacterize the conversion, however, it's asthough it never happened--you have atraditional IRA worth $50,000, and no income ortax resulting from the conversion. If you dorecharacterize a 2015 Roth conversion in 2016,you're allowed to convert those dollars (and anyearnings) back to a Roth IRA after a 30-daywaiting period (taxes due as a result of such areconversion would be included on your 2016federal income tax return).

You don't have to do it aloneWhen it comes to your taxes, you want to makesure that you get it right. A tax professional cananswer any questions you have, help youevaluate your situation, and keep you apprisedof any legislative changes that might affect you.

Filing deadline for mostindividuals:

• Monday, April 18, 2016

• Tuesday, April 19, 2016, ifyou live in Massachusetts orMaine

• Monday, October 17, 2016,if you file for an automaticsix-month extension by theoriginal due date

Page 2 of 4, see disclaimer on final page

Quiz: Which Birthdays Are Financial Milestones?When it comes to your finances, somebirthdays are more important than others. Takethis quiz to see if you can identify the ages thatmight trigger financial changes.

Questions1. Eligibility for Medicare coverage begins atwhat age?

a. 62

b. 65

c. 66

2. A child can stay on a parent's healthinsurance plan until what age?

a. 18

b. 21

c. 26

3. At this age individuals who are makingcontributions to a traditional or Roth IRA oran employer-sponsored retirement plan canbegin making "catch-up" contributions.

a. 50

b. 55

c. 60

d. 66

4. This age is most often associated withdrops in auto insurance premiums.

a. 18

b. 25

c. 40

d. 50

5. Individuals who have contributed enoughto Social Security to qualify for retirementbenefits become eligible to begin collectingreduced benefits starting at what age?

a. 62

b. 65

c. 66

d. 70

6. To obtain a credit card, applicants underthis age must demonstrate an independentability to make account payments or have acosigner.

a. 16

b. 18

c. 21

Answers1. b. 65. Medicare eligibility begins at age 65,although people with certain conditions ordisabilities may be able to enroll at a youngerage. You'll be automatically enrolled inMedicare when you turn 65 if you're alreadyreceiving Social Security benefits, or you cansign up on your own if you meet eligibilityrequirements.

2. c. 26. Under the Affordable Care Act, a childmay retain his or her status as a dependent ona parent's health insurance plan until age 26. Ifyour child is covered by your employer-basedplan, coverage will typically end during themonth of your child's 26th birthday. Check withthe plan or your employer to find out exactlywhen coverage ends.

3. a. 50. If you're 50 or older, you may be ableto make contributions to your IRA oremployer-sponsored retirement plan above thenormal contribution limit. These "catch-up"contributions are designed to help you make upa retirement savings shortfall by bumping upthe amount you can save in the years leadingup to retirement. If you participate in anemployer-sponsored retirement plan, checkplan rules--not all plans allow catch-upcontributions.

4. b. 25. By age 25, drivers generally see theirpremiums decrease because, statistically,drivers younger than this age have higheraccident rates. Gaining experience andmaintaining a clean driving record should leadto lower premiums over time. However, there'sno age when auto insurance rates automaticallydrop because rates are based on many factors,including type of vehicle and claims history, andvary by state and insurer; each individual'ssituation is unique.

5. a. 62. You can begin receiving SocialSecurity retirement benefits as early as age 62.However, your benefits will be reduced by asmuch as 30% below what you would havereceived if you had waited until your fullretirement age (66 to 67, depending on youryear of birth).

6. c. 21. As a result of the Credit Card Act of2009, credit card companies cannot issue cardsto those under age 21 unless they can showproof that they can repay the debt themselvesor unless someone age 21 or older with theability to make payments cosigns the creditcard agreement.

What is the birthday rule?

The birthday rule may be usedby health insurers to coordinatebenefits when a dependentchild is covered by the healthplans of both parents and theparents are married or livingtogether. The plan of theparent whose birthday fallsearlier in the calendar year isgenerally the primary plan,providing benefits and payingclaims first, and the plan of theother parent providessecondary coverage. If theparents share the samebirthday, primary coverage isprovided by the plan that hascovered one parent thelongest.

Source: National Association ofInsurance Commissioners,naic.org

Page 3 of 4, see disclaimer on final page

Endowment WealthManagement, Inc.Robert Riedl, CPA, CFP, AWMADirector of Wealth ManagementAmerican National Bank Bldg2200 N. Richmond St. Suite 200Appleton, WI 54911920-785-6010 x6011Rob@EndowmentWM.comwww.EndowmentWM.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

IMPORTANT DISCLOSURES

The information presented byEndowment Wealth Management,Inc. is not specific to anyindividual's personal circumstancesand should not be taken aspersonal investment advice, norshould it be construed as a firmrecommendation.

To the extent that this materialconcerns tax matters, it is not intendedor written to be used, and cannot beused, by a taxpayer for the purpose ofavoiding penalties that may be imposedby law. Each taxpayer should seekindependent advice from a taxprofessional based on his or herindividual circumstances.

These materials are provided forgeneral information and educationalpurposes based upon publicly availableinformation from sources believed to bereliable—we cannot assure the accuracyor completeness of these materials.The information in these materials maychange at any time and without notice.If you have any questions please callour offices at 920-785-6010.

Should I delay taking my first RMD?Your first RMD from atraditional IRA and anemployer retirement plan mustbe taken for the calendar yearin which you turn 70-1/2.

However, if you're still working, you can delayRMDs from your current employer's plan untilthe year you retire (but only if allowed by theplan and you are not a 5% owner).

In general, you must take your RMDs no laterthan December 31 of each calendar year toavoid a serious tax penalty equal to 50% of theamount you failed to withdraw. However, aspecial rule applies to your first RMD. You havethe option of delaying your first distribution untilApril 1 of the following calendar year.

You might delay taking your first distribution ifyou expect to be in a lower income tax bracketin the following year, perhaps because you'reno longer working or will have less income fromother sources. However, if you wait until thefollowing year to take your first distribution, yoursecond distribution must be made on or byDecember 31 of that same year.

For example, assume you have a traditionalIRA and you turn 70½ in 2016. You can takeyour first RMD during 2016 or you can delay ituntil April 1, 2017. If you choose to delay yourdistribution until 2017, you will have to take tworequired distributions in that year, one for 2016and one for 2017. This is because yourdistribution for 2017 cannot be delayed until thefollowing year.

Receiving your first and second RMDs in thesame year may not be in your best interest.Since this "double" distribution will increaseyour taxable income for the year, it will probablycause you to pay more in federal and stateincome taxes. It could even push you into ahigher federal income tax bracket for the year.

In addition, the increased income may result inthe loss of certain tax exemptions anddeductions that might otherwise be available toyou.

Obviously, the decision to delay your firstrequired distribution can be important. Your taxprofessional can help you decide whetherdelaying the RMD makes sense for yourpersonal tax situation.

What are required minimum distributions (RMDs)?Traditional IRAs and employerretirement plans such as401(k)s and 403(b)s offerseveral tax advantages,including the ability to defer

income taxes on both contributions andearnings until they're distributed from the plan.

But, unfortunately, you can't keep your moneyin these retirement accounts forever. The lawrequires that you begin taking distributions,called "required minimum distributions" orRMDs, when you reach age 70½ (or in somecases, when you retire), whether you need themoney or not. (Minimum distributions are notrequired from Roth IRAs during your lifetime.)

Your IRA trustee or custodian must either tellyou the required amount each year or offer tocalculate it for you. For an employer plan, theplan administrator will generally calculate theRMD. But you're ultimately responsible fordetermining the correct amount. It's easy to do.The IRS, in Publication 590-B, provides a chartcalled the Uniform Lifetime Table. In mostcases, you simply find the distribution period foryour age and then divide your account balanceas of the end of the prior year by the distributionperiod to arrive at your RMD for the year.

For example, if you turn 76 in 2016, yourdistribution period under the Uniform LifetimeTable is 22 years. You divide your accountbalance as of December 31, 2015, by 22 toarrive at your RMD for 2016.

The only exception is if you're married and yourspouse is more than 10 years younger thanyou. If this special situation applies, use IRSTable II (also found in Publication 590-B)instead of the Uniform Lifetime Table. Table IIprovides a distribution period that's based onthe joint life expectancy of you and yourspouse.

If you have multiple IRAs, an RMD is calculatedseparately for each IRA. However, you canwithdraw the required amount from any of yourIRAs. Inherited IRAs aren't included with yourown for this purpose. (Similar rules apply toSection 403(b) accounts.) If you participate inmore than one employer retirement plan, yourRMD is calculated separately for each plan andmust be paid from that plan.

Remember, you can always withdraw morethan the required amount, but if you withdrawless you will be hit with a penalty tax equal to50% of the amount you failed to withdraw.

Page 4 of 4