Contour Financial, Inc.Cindy Menker, CFP®, CPA, MBAFinancial Planner9031 W 151st StreetSuite 107Orland Park, IL 60462708-460-3800Cindy@ContourFinancial.comContourFinancial.com

January 2019Key Retirement and Tax Numbers for 2019

Four Tips for Planning a Career Change

Women: Are you planning for retirementwith one hand tied behind your back?

Can a flexible work schedule help you stayin the workforce after having children?

Famous People Who Failed to Plan Properly

See disclaimer on final page

It's almost impossible tooverstate the importance oftaking the time to plan yourestate. Nevertheless, it'ssurprising how many Americanadults haven't done so. You

might think that those who are rich and famouswould be way ahead of the curve when itcomes to planning their estates properly,considering the resources and lawyerspresumably available to them. Yet there areplenty of celebrities and people of note whodied with inadequate (or nonexistent) estateplans.

Most recentlyThe Queen of Soul, Aretha Franklin, died in2018, leaving behind a score of wonderfulmusic and countless memories. But it appearsMs. Franklin died without a will or estate plan inplace. Her four sons filed documents in theOakland County (Michigan) Probate Courtlisting themselves as interested parties, whileMs. Franklin's niece asked the court to appointher as personal representative of the estate.

All of this information is available to the public.Her estate will be distributed according to thelaws of her state of residence (Michigan). Inaddition, creditors will have a chance to makeclaims against her estate and may get paidbefore any of her heirs. And if she ownedproperty in more than one state (according topublic records, she did), then probate will likelyhave to be opened in each state where sheowned property (called ancillary probate). Thesettling of her estate could drag on for years ata potentially high financial cost.

A few years agoPrince Rogers Nelson, who was better knownas Prince, died in 2016. He was 57 years oldand still making incredible music andentertaining millions of fans throughout theworld. The first filing in the Probate Court forCarver County, Minnesota, was by a womanclaiming to be the sister of Prince, asking thecourt to appoint a special administratorbecause there was no will or othertestamentary documents. As of November2018, there have been hundreds of court filings

from prospective heirs, creditors, and other"interested parties." There will be no privateadministration of Prince's estate, as the entireongoing proceeding is open and available toanyone for scrutiny.

A long time agoHere are some other notable personalities whodied many years ago without planning theirestates.

Pablo Picasso died in 1973 at the ripe old ageof 91, apparently leaving no will or othertestamentary instructions. He left behind nearly45,000 works of art, rights and licensing deals,real estate, and other assets. The division of hisestate assets took six years and included sevenheirs. The settlement among his nearestrelatives cost an estimated $30 million in legalfees and other related costs.

The administration of the estate of HowardHughes made headlines for several yearsfollowing his death in 1976. Along the way,bogus wills were offered; people claiming to behis wives came forward, as did countlessalleged relatives. Three states — Nevada,California, and Texas — claimed to beresponsible for the distribution of his estate.Ultimately, by 1983, his estimated $2.5 billionestate was split among some 22 "relatives" andthe Howard Hughes Medical Institute.

Abraham Lincoln, one of America's greatestpresidents, was also a lawyer. Yet when he methis untimely and tragic death at the hands ofJohn Wilkes Booth in 1865, he died intestate —without a will or other testamentary documents.On the day of his death, Lincoln's son, Robert,asked Supreme Court Justice David Davis toassist in handling his father's financial affairs.Davis ultimately was appointed as theadministrator of Lincoln's estate. It took morethan two years to settle his estate, which wasdivided between his surviving widow and twosons.

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Key Retirement and Tax Numbers for 2019Every year, the Internal Revenue Serviceannounces cost-of-living adjustments that affectcontribution limits for retirement plans andvarious tax deduction, exclusion, exemption,and threshold amounts. Here are a few of thekey adjustments for 2019.

Employer retirement plans• Employees who participate in 401(k), 403(b),

and most 457 plans can defer up to $19,000in compensation in 2019 (up from $18,500 in2018); employees age 50 and older can deferup to an additional $6,000 in 2019 (the sameas in 2018).

• Employees participating in a SIMPLEretirement plan can defer up to $13,000 in2019 (up from $12,500 in 2018), andemployees age 50 and older can defer up toan additional $3,000 in 2019 (the same as in2018).

IRAsThe combined annual limit on contributions totraditional and Roth IRAs increased to $6,000in 2019 (up from $5,500 in 2018), withindividuals age 50 and older able to contributean additional $1,000. For individuals who arecovered by a workplace retirement plan, thededuction for contributions to a traditional IRAis phased out for the following modifiedadjusted gross income (AGI) ranges:

2018 2019

Single/headof household(HOH)

$63,000 -$73,000

$64,000 -$74,000

Married filingjointly (MFJ)

$101,000 -$121,000

$103,000 -$123,000

Married filingseparately(MFS)

$0 - $10,000 $0 - $10,000

Note: The 2019 phaseout range is $193,000 -$203,000 (up from $189,000 - $199,000 in2018) when the individual making the IRAcontribution is not covered by a workplaceretirement plan but is filing jointly with a spousewho is covered.

The modified AGI phaseout ranges forindividuals to make contributions to a Roth IRAare:

2018 2019

Single/HOH $120,000 -$135,000

$122,000 -$137,000

MFJ $189,000 -$199,000

$193,000 -$203,000

MFS $0 - $10,000 $0 - $10,000

Estate and gift tax• The annual gift tax exclusion for 2019 is

$15,000, the same as in 2018.• The gift and estate tax basic exclusion

amount for 2019 is $11,400,000, up from$11,180,000 in 2018.

Kiddie taxUnder the kiddie tax rules, unearned incomeabove $2,200 in 2019 (up from $2,100 in 2018)is taxed using the trust and estate income taxbrackets. The kiddie tax rules apply to: (1)those under age 18, (2) those age 18 whoseearned income doesn't exceed one-half of theirsupport, and (3) those ages 19 to 23 who arefull-time students and whose earned incomedoesn't exceed one-half of their support.

Standard deduction

2018 2019

Single $12,000 $12,200

HOH $18,000 $18,350

MFJ $24,000 $24,400

MFS $12,000 $12,200

Note: The additional standard deductionamount for the blind or aged (age 65 or older)in 2019 is $1,650 (up from $1,600 in 2018) forsingle/HOH or $1,300 (the same as in 2018) forall other filing statuses. Special rules apply ifyou can be claimed as a dependent by anothertaxpayer.

Alternative minimum tax (AMT)

2018 2019

Maximum AMT exemption amount

Single/HOH $70,300 $71,700

MFJ $109,400 $111,700

MFS $54,700 $55,850

Exemption phaseout threshold

Single/HOH $500,000 $510,300

MFJ $1,000,000 $1,020,600

MFS $500,000 $510,300

26% rate on AMTI* up to this amount, 28%rate on AMTI above this amount

MFS $95,550 $97,400

All others $191,100 $194,800

*Alternative minimum taxable income

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Four Tips for Planning a Career ChangeChanging careers can be rewarding for manyreasons, but career transitions don't always gosmoothly. Your career shift may take longerthan expected, or you may find yourselftemporarily out of work if you need to go backto school or can't immediately find a job.Consider these four tips to help make thefinancial impact of the transition easier.

1. Do your homeworkBefore you quit your current job, make sure thatyou clearly understand the steps involved in acareer move, including the financial andpersonal consequences. How long will it takeyou to transition from one career to the next?What are the job prospects in your new field?How will changing careers affect your incomeand expenses in the short and long term? Willyou need additional education or training? Willyour new career require more or fewer hours?Will you need to move to a different city orstate? Is your spouse/partner on board?

You should also prepare a realistic budget andtimeline for achieving your career goals. If youhaven't already done so, build an emergencycash reserve that you can rely on, if necessary,during your career transition. It's also a goodtime to reduce outstanding debt by paying offcredit cards and loans.

Assuming it's possible to do so, keep working inyour current job while you're taking steps toprepare for your new career. Having a stablesource of income and benefits can make theplanning process much less stressful.

2. Protect your retirement savingsMany people tend to look at their retirementsavings as an easy source of funds whenconfronted with new expenses or a temporaryneed for cash. But raiding your retirementsavings, whether for the sake of convenience,to raise capital for a business you're starting, orto satisfy a short-term cash crunch, maysubstantially limit your options in the future.Although you may think you'll be able to makeup the difference in your retirement accountlater — especially if your new career offers ahigher salary — that may be easier said thandone. In addition, you may owe income taxesand penalties for accessing your retirementfunds early.

3. Consult others for adviceWhen planning a career move, consider talkingto people who will understand some of thehurdles you'll face when changing professions

or shifting to a new industry or job. This mayinclude a career counselor, a small-businessrepresentative, a graduate school professor, oran individual who currently holds a job in yourdesired field. A financial professional can alsohelp you work through the economics of acareer move and recommend steps to protectyour finances.

4. Consider going back to schoolYou might be thinking about pursuing additionaleducation in order to prepare for your newcareer. But before applying to graduate school,ask yourself whether your investment will beworthwhile. Will you be more marketable afterearning your degree? Will you need to take outsubstantial loans?

In your search for tuition money, look first toyour current employer. Some employers mightcover the full cost of tuition, while others maycap reimbursement at a dollar amount.Generally, you'll be able to exclude up to$5,250 of qualifying educational assistancebenefits from your taxes.

In addition, it's likely that you'll have to satisfyother requirements set by your employer to beeligible for reimbursement benefits. These mayinclude, and are not limited to:

• Discussing course of study with a manager orsupervisor prior to enrolling (and receivingapproval)

• Pursuing a degree or training that is jobrelated

• Maintaining a minimum grade-point average• Working a certain length of time for the

company before taking advantage of thebenefit

• Meeting eligibility requirements for regularbenefits

Check with your human resources departmentto learn more about tuition reimbursementqualifications. Be sure to find out whether youcan continue to work at your company whileyou attend school part-time.

Students attending graduate school on at leasta half-time basis are eligible for Uncle Sam'sthree major student loans: the Stafford Loan,Perkins Loan, and graduate PLUS Loan. Also,at tax time, you might qualify for certain taxbenefits, such as the Lifetime Learning credit.For more information, see IRS Publication 970,Tax Benefits for Education.

In January 2018, the mediannumber of years that wageand salary workers hadbeen with their currentemployer was 4.2 years.

Source: Employee TenureSummary, U.S. Bureau ofLabor Statistics (September20, 2018), bls.org.

Page 3 of 4, see disclaimer on final page

Contour Financial, Inc.Cindy Menker, CFP®, CPA,MBAFinancial Planner9031 W 151st StreetSuite 107Orland Park, IL 60462708-460-3800Cindy@ContourFinancial.comContourFinancial.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018

This is a resource that will answer yourmost important financial question, namely:

• If employed – When can I retire?

• If not employed – Can I stay retired?

Contour Financial will answer thisquestion, suggest alternative scenarios, ifneeded, and implement investmentstrategies in order to reach yourobjectives.

Customized strategies are developed andimplemented. Personalized service isprovided by Certified Financial Planners(CFP) and/or Certified Public Accountants(CPA) to clients. Investment, retirement,tax planning & preparation, estate,insurance, cash flow and educationplanning are all integral parts to theprocess.

Contour Financial is a private wealthmanagement business located in OrlandPark, Illinois. We work primarily withmiddle income and wealthy clients. As along-term National Association of PersonalFinancial Advisors (NAPFA) fee-only firm,all compensation is fully disclosed. Forclients seeking investment managementby our firm, assets are held at CharlesSchwab Institutional, an industry leader.

Can a flexible work schedule help you stay in theworkforce after having children?Yes, it just might be the key.Your job is the foundation forgeneral financial security,including retirement. In

addition to providing you with a steady salaryand valuable employee benefits, it typicallybrings with it the ability to save in atax-advantaged employer-sponsored retirementplan like a 401(k), and if you're lucky, apension. It also allows you to start qualifying forSocial Security retirement benefits.

Women and men may start out on relativelyequal financial footing in their 20s. But whenchildren come along, women are much morelikely to take time out of the workforce to carefor them.1 A common refrain is "my salarywould just go to daycare costs anyway, sowhat's the point?" This is often true. But it'sreally not fair for one parent to assume soleresponsibility for child-care costs; it is a sharedfinancial responsibility that both parents shouldtake on.

Many women want to keep at least one foot inthe workforce after having children, not only forfinancial reasons but also for career mobilityand personal fulfillment. If you'd like to keep

working but can't accommodate the traditional,40-hour-per-week, in-office schedule, considerrequesting a modified schedule if your joballows it. This could mean telecommuting fromhome one or more days per week, having aflexible work schedule (such as 11 a.m. to 7p.m.), working part-time, or some combinationthereof. In many cases, a flexible workarrangement can be the difference betweenstaying in the workforce or having to leave it, soconsider exploring this possibility before youexit prematurely.

Think about what your ideal work arrangementwould be and request a meeting with yourmanager to discuss your well-thought-outproposal. This plan should include a trial periodafter which both sides can come back to thetable and evaluate how things are working.Employers are increasingly recognizing thatflexible schedules are key to having a diverse,gender-neutral workforce. In the end, asking fora flexible schedule might just allow you to keepthat steady salary and continue saving forretirement.

1) U.S. Department of Labor Blog, Women andRetirement Savings, March 2017

Women: Are you planning for retirement with one handtied behind your back?Women can face uniquechallenges when planning forretirement. Let's take a look atthree of them.

First, women frequently step out of theworkforce in their 20s, 30s, or 40s to care forchildren — a time when their job might just bekicking into high (or higher) gear.

It's a noble cause, of course. But consider this:A long break from the workforce can result inseveral financial losses beyond the immediateloss of a salary.

In the near term, it can mean an interruption insaving for retirement and the loss of anyemployer match, the loss of other employeebenefits like health or disability insurance, andthe postponement of student loan payments. Inthe mid term, it may mean a stagnant salarydown the road due to difficulties re-entering theworkforce and/or a loss of promotionopportunities. And in the long term, it maymean potentially lower Social Securityretirement benefits because your benefit isbased on the number of years you've workedand the amount you've earned. (Generally, you

need about 10 years of work, or 40 credits, toqualify for your own Social Security retirementbenefits.)

Second, women generally earn less over thecourse of their lifetimes. Sometimes this can beexplained by family caregiving responsibilities,occupational segregation, educationalattainment, or part-time schedules. But that'snot the whole story. A stubborn gender pay gaphas women earning, on average, about 82% ofwhat men earn for comparable full-time jobs,although the gap has narrowed to 89% forwomen ages 25 to 34.1 In any event, earningless over the course of one's lifetime oftenmeans lower overall savings, retirement planbalances, and Social Security benefits.

Third, statistically, women live longer thanmen.2 This means women will generally needto stretch their retirement savings and benefitsover a longer period of time.

1) Pew Research Center, The Narrowing, ButPersistent, Gender Gap in Pay, April 2018

2) NCHS Data Brief, Number 293, December 2017

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