Thought You'd Like to See This:
The New Tax Numbers For 2011:
Things to Consider

A number of figures used in tax and retirement planning have been updated for 2011. Most limits for pension and IRA contributions have been unchanged. For example:

1. The maximum contribution that can be made to a defined contribution plan in 2011 under Section 415 is the lesser of $49,000 or 100 percent of compensation—the same limit as in 2010.

2. The limit on employee elective deferrals to Section 401K and Section 403b plans has remained at $16,500 in 2011. The limit for Section 457 plan salary reductions has likewise kept steady at $16,500.

3. The maximum elective deferral for a SIMPLE or 401 K SIMPLE plan is $11,500 in 2011.

4. The limit on IRA contributions remains at $5,000 for 2011. Those 50 and older can still contribute an extra $1,000 under the special catch-up provision.

Here are a few of the income tax changes:

1. The standard deduction for joint filers and surviving spouses who do not itemize in 2011 is $11,600, up from $11,400 in 2010. For heads of household, the deduction is $8,500, and for unmarried individuals it’s $5,800. The aged and the blind get an additional $1,150 or $1,450 added to their standard deductions, depending on their filing status.

2. The personal exemption phase-out and itemized deductions phase-out have been eliminated for 2011 by the tax compromise passed late last year.

And here are some other items that may be important to you.

1. The social security tax rate for individuals has been reduced to 5.65% in 2011. The rate for employers remains at 7.65%. The rate for self-employed individuals has also been reduced—to 15.3%. The taxable wage base for the OASDI portion is $106,800 in 2011. Any additional compensation over that limit is subject to only the Medicare portion of 1.45%.

2. In 2010, the federal annual gift tax exclusion amount has remained at $13,000. The lifetime gift tax exemption has increased to $5 million.

3. The federal estate tax exemption has been increased to $5 million for 2011, as has the generation skipping tax exemption.

These changes may affect your retirement plan, your income tax planning and your estate plan. I recommend you take time to review those plans in light of the new numbers.

Please contact us at 504-212-3440 or estateplanning@lawealthplan.com to set up an appointment with Todd or Chip to discuss tax planning or other matters of financial concern.