Jews for Jesus Development Department Monthly Newsletter rom David Stone, Jews for Jesus of San Francisco, California, United States for Monday, 17 October 2016

Jews for Jesus Development Department Monthly Newsletter rom David Stone, Jews for Jesus of San Francisco, California, United States for Monday, 17 October 2016
Shalom to you, our partners in ministry. It is an honor to share with you the latest news from Washington, Savvy Living, Personal Planning, gift stories, finance news, and timely articles.
There are no "asks" in this eNewsletter as it is designed totally to be a helpful service to you. Feel free to share it with others in your family or your friends. If you would like me to send it directly to them please send me their email address.
This information is put together in a way to be a help in understanding what is happening in our economy so you can use it to your best advantage. I hope this information is useful to you.
If you have any questions or I can be of assistance to you please contact me.

David Stone

Director of Donor Relations

PERSONAL PLANNER

IRA and 401(k) Designated Beneficiary Options
Each year, IRA and 401(k)s are subject to required minimum distributions (RMDs). Because the distributions start at just under 4% at age 71 and then slowly increase, many IRA and 401(k) plans will continue to grow. While the distributions will eventually become larger, most individuals will eventually pass away with an IRA or 401(k) balance reasonably close to the value of their plan at age 70.
For this reason, the eventual distribution options for an IRA or 401(k) are quite important. For you and many other readers, the IRA or 401(k) may be the largest asset in your estate.
IRA and 401(k)s are transferred through a designated beneficiary that you select on your IRA or 401(k) custodian's form. The five common choices for designated beneficiary are the surviving spouse, children, charity, a trust for children or a trust for spouse and children.
1. Spouse as Beneficiary
The most common choice for a married couple is to select the surviving spouse as the designated beneficiary of an IRA or 401(k). When the IRA or 401(k) owner passes away, the surviving spouse has two choices with an IRA. He or she can receive payments under a one-life expectancy schedule or the IRA can be rolled over into his or her IRA.
Because the payments under the IRA schedule are frequently double the required payments with the rollover, nearly everyone rolls over the IRA into his or her own plan.
Assume that Harry Smith is the IRA owner and he passes away with Helen Smith as his designated beneficiary. Helen is age 68 when Harry passes away and rolls over the IRA into her plan.
When Helen reaches age 70½, she must start taking required minimum distributions. The minimum distribution must be taken by April 1 of the next year and is just under 4%. Her distribution will steadily increase as she becomes more senior.
Because Helen rolled over Harry's IRA into her IRA, she qualifies for the lower required minimum distributions under the uniform table. Helen often selects children or charities as designated beneficiaries.
If you are in a community property state and plan to leave your IRA to a trust or other beneficiary that is not your spouse, then it is essential to obtain a written consent from your spouse. In many states, attorneys who prepare estate plans will frequently use a waiver if the spouse is not the designated beneficiary of an IRA.
2. Children
For the surviving spouse, or in cases where there is a blended family, an IRA or 401(k), or any portion thereof, may be transferred to children.
There are two typical methods for designating children as beneficiaries. First, if each child receives a fraction of the plan, then each child may take distributions based on his or her own life expectancy.
Second, if there is a class designation with the IRA designated to a group of children or other heirs, then the age of the oldest beneficiary is used to determine the payouts.
It is best with several children to allocate a fractional share to each child. The opportunity to use the separate share method is quite important because of the payout calculation method. If a 60-year-old child is the beneficiary of an IRA, then he or she may take distributions over approximately 25 years. The distributions would start at age 61 at approximately 1/25th or 4%. Using a method of subtracting one from the denominator each year, the payments would steadily increase until the entire IRA is distributed at approximately age 86.
Does your child have to take the stretch payout? No, and frequently children do not. Many CPAs have indicated to the author that their clients have passed away and given the children an opportunity to stretch out the payouts.
However, this plan is often not successful. Approximately one-half of the children take the distribution early, even though that means paying the income tax earlier and losing the benefit of the tax-free growth for the life expectancy of the child. Parents who wish to encourage lifetime IRA distribution for the child may choose to use a testamentary trust to hold the IRA and payout over the child's life expectancy.
3. Charity
For the IRA or 401(k) owner, the qualified plan is a wonderful benefit and a very good asset. However, for children, the IRA or 401(k) is transferred with a large "you owe the IRS" tax bill attached (with the exception of a Roth IRA that is income tax free). For the vast majority of qualified plans, the child will pay income tax. Worse yet, the IRA or 401(k) distributions may even push the child into a higher tax bracket.
With the income tax on the IRA or 401(k) and no income tax paid on the home, land or stocks, for children the IRA or 401(k) is a less desirable asset. In fact, many will consider this a "bad asset" because of the income tax on most IRA payouts to children.
For this reason, children would far prefer to receive a home, land or stock because there is no income tax bill attached. The wise planning decision is to transfer the home, stocks or land (the good assets) to children and the IRA or 401(k) to charity (the bad assets due to the income tax bill to children).
Because charities are tax exempt, there is no payment of income tax or estate tax. The charity receives the full value tax free. By transferring the IRA or 401(k) to charity, it is possible to turn a bad asset into a good asset.
4. "Give It Twice" Trust
A very good plan for parents who have made lifetime gifts to charity is to combine a benefit to children with a future benefit to charity. This plan is called a "Give It Twice" trust.
A charitable remainder trust may receive the IRA or 401(k) with no payment of income tax. The full value of the IRA or 401(k) may be invested for a term of up to 20 years. Income earned is taxable and that new income is paid to children for the selected term of years. At the end of the selected term, the charity receives the trust principal.
For example, Mary Smith had an $800,000 estate. She lived in a home worth $200,000, had a CD for $200,000 and $400,000 in her IRA. Her IRA was substantial because when her husband Bill passed away, she rolled over his IRA into hers so the combined IRA is now half of her estate.
Mary has two children and decides to transfer the home and CDs to the children in equal shares when she passes away. They each receive $200,000 in value from the home and CDs with no income or estate tax.
After Mary passes away, the $400,000 IRA is transferred into a charitable remainder trust. It receives the IRA proceeds and invests the full $400,000. The trust pays 5%, which is divided between the two children for a term of 20 years. At the end of 20 years, the trust principal plus growth is given to charity.
Mary felt very pleased because she had achieved several goals. First, she had provided both principal and income to her children. This is a very good plan because some children will need a period of time to improve their money management skills. Second, she saved all of the income tax on the IRA. Because the unitrust is tax exempt, it receives the entire IRA tax free. The trust earns income for the children for a term of 20 years and is then transferred tax free to charity.
Because the trust benefits the children with more than $400,000 in income and then is given to charity, it truly may be called a "give it twice" trust.
5. Trust for Spouse and Children
For individuals with larger estates, it may make good sense to create a trust for surviving spouse and then a term of years for children. The IRA is transferred after the first person passes away into the trust for the surviving spouse. The trust will distribute income for his or her lifetime and then to the children for a term of 20 years. Following the life of spouse plus 20 years for the children, the trust remainder is distributed to charity.
This trust has several benefits. First, it may save very large income taxes because the trust is tax exempt. Second, the trust can be a "net plus makeup" plan that allows the spouse to choose to save taxes by taking reduced income during life. This will allow the IRA to continue to grow and build up the trust so there is greater income to the children.
This plan is an excellent way to benefit the surviving spouse, children and charity.

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SAVVY LIVING

How Much Does a Funeral Cost?
How much does an average funeral and body burial cost? I need to make funeral arrangements for my aunt, who's terminally ill. I would like to have a cost idea going in so I can plan and budget appropriately.
It definitely pays to know what charges to expect when pre-planning a funeral. Most people don't have a clue and can often be upsold thousands of dollars worth of extra services they may not want or need. Here's a breakdown of what to expect.
Funeral Prices
The first thing you need to be aware of is that funeral costs will vary considerably depending on your geographic location, the funeral home you choose and the funeral choices you make. With that said, here's what an average funeral costs nationwide according to recent data from the National Funeral Directors Association.
Professional services fee: This is a basic non-declinable fee that covers the funeral provider's time, expertise and overhead. Estimated cost: $2,000.
Transfer of the remains: This is for picking up the body and taking it to the funeral home. Estimated cost: $310.
Embalming and body preparation: Embalming is usually mandatory for open-casket viewing, otherwise it's not required unless the body is going to be transported across state lines. Estimated cost: $695. Other body preparations, which include hairdressing and cosmetics can cost $250.
Funeral viewing and ceremony: If the viewing and funeral ceremony is at the funeral home, you'll be charged for use of the chapel and any necessary staff. Estimated cost: $420 for viewing and $495 for funeral ceremony.
Metal casket: This is a big money maker for funeral homes, with markups of up to 300% over the wholesale price. Estimated cost: $2,395.
Funeral transportation: The use of hearse and driver to transport the body to the cemetery can cost $318. Use of a service car/van can cost $143.
Memorial printed package: This includes printed programs and memorial guest book. Estimated cost: $155.
In addition to these costs, there are a number of other related expenses such as flowers for the funeral (around $200 to $400), the newspaper obituary fee ($100 to $600 or more), the clergy honorarium ($200 to $300) and extra copies of the death certificate ($5 to $35 per copy depending on the state).
Also don't forget a number of large cemetery costs like the plot or mausoleum fee, the vault or grave liner that's required by most cemeteries and the opening and closing of the grave—all of these can average between $2,000 and $4,000. The gravestone can typically cost between $1,000 and $3,000.
All told, the average total cost of a funeral today can be $11,000 or more.
Ways to Save
If your aunt's estate can't afford this, there are ways to save. For starters, you should know that prices can vary significantly by funeral provider, so it's wise to shop around.
If you need some help finding an affordable provider, your area funeral consumers alliance program may be able to refer one to you. See Funerals.org/local-fca or call 802-865-8300 for contact information.
There are also free websites you can turn to, like Parting.com that lets you compare prices, andFuneralDecisions.com that will provide estimates from local funeral homes based on what you want.
When evaluating funeral providers, be sure you get an itemized price list of services and products so you can accurately compare and choose what you want.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
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YOUR PLAN
Property Turns Into Income

Miranda lived in the family home where she and her spouse had raised their three children. After her spouse passed away, Miranda found it increasingly difficult to care for her property.
Miranda's grandson came often to visit and help with chores around the house. On one such visit, he helped Miranda "surf" the Internet. She enjoyed reading the weekly finance updates and donor stories on her favorite charity's planned giving website. On one such visit, Miranda learned that she could make a gift of her home to the charity and receive income for life.
Miranda: I called the gift planner and asked her how a charitable remainder trust works. She said that when the time came for me to move out of my home, I could give it to my favorite charity and set up a special kind of trust. The trust would provide me with income for the rest of my life and I would receive a tax deduction for my gift.
Miranda thought that she might want to move to a condominium with less upkeep. Her financial advisor reviewed the plan and said that the income she received from the charitable remainder trust would be enough to cover her living expenses.
Miranda: After visiting real estate websites with my grandson, I found a condominium nearby that was perfect for me. I called the gift planner and said that I was ready to move out of my home and set up the charitable trust.
Miranda was thrilled that she could turn her property into income to meet her future needs and receive a charitable deduction for her gift.
*Please note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your unitrust benefits may be different, you may want to click here to view a color example of your benefits.
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WASHINGTON NEWS

October 17 Income Tax Return Deadline
In IR-2016-130 the Service published reminders for 13 million taxpayers who filed for a six month extension. Most tax returns on extension are due on October 17, 2016.
There are several exceptions. Military personnel serving in Afghanistan, Iraq or other combat areas may wait for 180 days after departing the combat zone to file and pay taxes due. In addition, there are certain disaster relief areas in Florida, Louisiana and West Virginia that have extensions. Check www.irs.gov if an extension applies to you as a resident of one of those states.
The IRS has included a number of filing tips for taxpayers on extension.
1. Tax Credits – Check to see if you are a lower income person who qualifies for the earned income tax credit (EITC). Other low-income persons may qualify for the savers credit if they fund an IRA, 401K and file Form 8880. Those who are funding students in higher education programs may qualify for the American Opportunity Tax Credit, which is claimed on Form 8863.
2. Health Care – If you have used the Health Insurance Marketplace, you may be eligible for the premium tax credit. You must file and reconcile any advance credit payments. If you do not have health insurance and are not otherwise exempt, you may be subject to the Shared Responsibility Payment.
3. eFile – Of the tax returns filed so far in 2016, over 87% or 128 million of the 147 million returns were eFiled. eFiling is quick and secure. If your income is $62,000 or less, you could qualify for the IRS Free File Program.
4. Payments – The IRS Direct Pay Plan is a very quick and secure way to pay your tax bills or make online estimated tax payments. You may also make payments with a debit or credit card, or enroll to use the Electronic Federal Tax Payment System.
5. Need Tax Relief – Some taxpayers are struggling to pay their taxes. They may call the IRS and if the tax bill is $50,000 or less, they could use the Online Payment Agreement. This permits monthly payments for a period of up to 72 months. Some taxpayers with financial problems may qualify for a reduced tax payment. You can use the Offer in Compromise Pre-Qualifier on www.irs.gov to see if you are permitted to pay a reduced amount.
6. Before Filing Checks – You should check you return prior to filing and always retain one copy for your records. If your withholding for 2015 resulted in a large refund or substantial tax bill, you may wish to adjust your withholding for the balance of 2016. If you are employed and have a substantial tax amount due, you can ask your employer to increase your withholding for the balance of the year. Refunds can be tracked using the "Where's My Refund" section on www.irs.gov.
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FINANCES

Stocks - Delta's Revenue Drops

Delta Air Lines (DAL) announced its latest quarterly earnings on Thursday, October 13. Both revenue and profits were down from the prior year's quarter.
The company reported revenue of $10.48 billion for the quarter, down 5.6% from the same period last year. Analysts expected revenue of $10.53 billion.
"Delta's resiliency stood out this quarter as we worked through the outage, continued revenue headwinds, and volatile fuel prices to produce the industry's best operational reliability and service for our customers along with solid margins, cash flows and returns for our owners," said Delta CEO Ed Bastian. "With our focus on building a more sustainable and durable business, we will be taking a cautious approach to 2017 by keeping our capacity in line with the December quarter's 1% growth level."
Delta reported net income of $1.26 billion, or $1.69 per share. During the same period last year the company reported net income of $1.32 billion, or $1.65 per share.
The second largest airline in the U.S. suffered from a technology outage over four days in August, forcing it to cancel more than two thousand flights. Delta revealed that the outage cut into its quarterly income by roughly $150 million.
Delta Air Lines (DAL) shares ended the week at $40.24, up 2.1% for the week.
Wells Fargo Reports Mixed Results
Wells Fargo & Co. (WFC) released its quarterly earnings on Friday, October 14. The company reported an increase in revenue but a drop in profits amidst a scandal in which employees created fake accounts.
The bank, one of the largest in the U.S., reported revenue of $22.3 billion, beating analysts' expectations of $22.2 billion. During the same period last year, the company reported revenue of $21.9 billion.
"I am deeply committed to restoring the trust of all of our stakeholders, including our customers, shareholders, and community partners," said Wells Fargo President and new CEO Tim Sloan. "We know that it will take time and a lot of hard work to earn back our reputation, but I am confident because of the incredible caliber of our team members. We will work tirelessly to build a stronger and better Wells Fargo for generations to come."
Net income for the quarter was $5.6 billion or $1.03 per share. This is down from $5.8 billion or $1.05 per share last year.
Wells Fargo's retail banking business was hurt this quarter by revelations that several thousand employees had been fired for creating fake accounts in customers' names. The company noted a 24% drop in mortgage referrals and a decrease of 30% in the number of new checking accounts from September to August. In the wake of this scandal, bank CEO John Stumpf retired this week and was replaced by President and COO Tim Sloan.
Wells Fargo & Co. (WFC) shares ended the week at $44.71, down 2.1% for the week.
Reed's Reports Rising Revenue
Reed's Inc. (REED) reported its quarterly earnings on Thursday, October 13. The soda company's sales showed an increase from the prior year's quarter.
Net sales for the quarter were $12.3 million. This is an increase of 15% from $10.7 million in net sales during the same period last year.
"We are clearly back on track and continue to generate sales momentum for our Reed's and Virgil's natural craft sodas," said Reed's Founder and CEO Chris Reed. "We had a record third quarter for revenues and returned to achieving positive operating profits for the first time in almost two years. Our EBITDA turned positive and increased by more than $2.3 million during the quarter."
The company reported a net loss of $219,000, or $0.02 per share. This is an improvement from a net loss of $2.5 million, or $0.19 per share, during the same quarter last year.
Reed's produces and sells a variety of sodas, carried by natural food markets, such as Whole Foods. The company experienced difficulty last year when several items were out of stock for a significant period of time. This resulted in the company losing several distribution outlets. Reed's is now in the process of recovering from last year's losses and reestablishing its relationship with retailers.
Reed's Inc. (REED) shares ended the week at $4.24, up 3.6% for the week.
The Dow started the week of 10/10 at 18,283 and closed at 18,138 on 10/14. The S&P 500 started the week at 2,160 and closed at 2,133. The NASDAQ started the week at 5,318 and closed at 5,214.

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Bonds - Treasury Yields Continue to Rise

Treasury yields rose this week on investor anticipation of increased inflation and a potential Fed interest rate hike. Despite a selloff this week, yields remain at historic lows.
China reported its producer-price index this week, showing that factory prices rose for the first time since 2012. The U.S. producer-price index also rose by 0.3% in September. With this unexpected uptick in inflation, many investors are shifting their capital from bonds to more risky investments such as stocks.
The 10-year Treasury note began the week at 1.77% and rose to a high of 1.8% on Wednesday as investors sold off bonds, driving prices down and yields up.
At the Federal Open Market Committee meeting in September, the Fed declined to raise rates but indicated that the next hike would be coming very soon. Fed Funds futures, which are used by traders to make bets on interest rate policy, currently show a 60% chance of a rate hike at the Fed's December meeting.
Eric Rosengren, President of the Federal Reserve Bank of Boston, notes that the Fed may step in, noting, "if one were concerned about the historically low 10-year Treasury and commercial real estate capitalization rates, perhaps because of potential financial stability concerns, the balance sheet composition could be adjusted to steepen the yield curve."
The 10-year Treasury note yield finished the week of 10/10 at 1.79%, while the 30-year Treasury note yield was 2.56%.

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CDs and Mortgages - Mortgage Rates Rise Slightly

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, October 13. The report revealed interest rates have risen from last week.
The 30-year fixed rate mortgage averaged 3.47% this week, up from 3.42% last week. During this time last year, the 30-year fixed rate mortgage averaged 3.82%.
This week, the 15-year fixed rate mortgage averaged 2.76%, up from last week's 2.72%. The 15-year fixed rate mortgage averaged 3.03% one year ago.
"This week the 10-year Treasury yield continued its climb as an increasing number of financial market participants foresee a December rate hike after a series of positive economic data releases," said Sean Becketti, Chief Economist at Freddie Mac. "The 30-year fixed-rate mortgage moved up 5 basis points to 3.47% in this week's survey, the first increase in one month. Even though we've seen economic activity pick up, consumer price inflation and implied inflation expectations remain below the Federal Reserve's 2% target."
Based on published national averages, the money market account finished the week of 10/10 at 0.52%. The 1-year CD finished at 1.19%.

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Thank you for your interest in planned giving. To access any of our resources, please go to our website.
Your Brother in Yeshua (Jesus),
David Stone
Jews for Jesus
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Jews for Jesus

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San Francisco, California 94102, United States
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