The Jacobs Financial Group

Six Retirement Planning Tips for Those Over Age 50

Entering your 50s and behind in your retirement planning goals? Don’t fret. You’ve still got time to get your financial plan back on track.

There are many steps that older investors can take to better prepare themselves financially for retirement. Here are six tips that may help you make the most of your final working years.

• Catch up. If you have access to a 401(k) or other workplace-sponsored plan at work, make the $5,500 catch-up contribution that is available to participants aged 50 and older. Note that you are first required to contribute the annual employee maximum, $17,500 for 2013, before making the catch-up contribution.

• Fund an IRA. Investors aged 50 and older can contribute $6,500 annually (the $5,500 annual contribution plus an additional catch-up contribution of $1,000 for 2013). An investor in his or her 50s who contributes the maximum amounts to both a 401(k) and an IRA could accelerate retirement savings by more than $25,000 a year.

• Consider dividends. If you do not have access to a workplace-sponsored retirement plan, or you already contribute the maximum to your qualified retirement accounts, consider stocks that offer dividend reinvestment. Reinvesting your dividends can help to grow your account balance over time.

• Make little cuts. Consider how you can trim expenses while continuing to enjoy life. Some suggestions for quick savings: eliminate or reduce premium cable channels that you do not watch, memberships that you do not use regularly, and frequent splurges on dining out or coffee runs. An extra $100 a month saved today could make a big difference down the road.

• Review strategies for postponing retirement. You may be able to learn new skills that could increase your marketability to potential employers. Even a part-time job could reduce your need to deplete retirement assets.

• Don’t give up. Many pre-retirees falsely believe that there is nothing they can do to build retirement assets and, as a result, do nothing. Remember that you control how much you invest and, in many areas, how much you spend. Make a plan – and stick with it.

March 2013 — This column is produced and is provided by The Jacobs Financial Group. (02-13)

Investing in Sectors: Risks and Returns

Sector funds target specific industries and economic niches to seek above-average returns.  With the opportunity for greater returns comes greater risk, as these funds typically are prone to fluctuate in value more than diversified, multi-sector funds.

Sector funds may invest solely in specific industries, such as utilities, technology, financial services, health care, and manufacturing. They may also invest in commodities, such as oil and gold. Additionally, there are sector funds that invest in specific international markets, such as Germany and China.

Many investors look to sector funds to gain exposure to industries that may appear to offer exceptional potential. Top-down investors and market timers look first for industries that often perform well in certain economic cycles and then seek to predict which industry will be next in the “rotation.” Because of their higher potential volatility, it may be prudent to limit investments in individual sectors to no more than 10% of an overall equity portfolio.

Some investors choose a contrarian strategy, seeking value in sectors that have been passed over by the rest of the market. Another strategy is the tilted index. Passive investors will invest in a market index seeking to avoid the inefficiencies of picking individual stocks. By adding shares of sector funds that outperform the market, you may outperform the index overall.

Evaluating Sector Funds

Whatever strategy you use in choosing a sector fund, be careful not to chase past returns. A high-flying sector may be at its peak. The table below shows the top three performing sectors from the S&P 500 for the past five years. As you can see, it’s rare for one sector to lead the pack year after year.

You should also be aware that even if the name of the fund is the same, not all sector funds are alike. Stock/cash allocations, sector segment weights, top holdings, portfolio size, past performance, yield, and portfolio turnover are among the criteria used to compare funds that invest in the same sector.

• Stock/cash allocations refer to the percentage of a fund’s assets that is actually invested in the chosen sector. In addition to cash, funds may invest in bonds, or even stocks from other sectors. Although these investments may increase performance or decrease risk, you should be aware of the portfolio’s composition.

• Many sectors can be divided into subsectors and industries, and sector weight refers to the percentage of assets invested in each.

• Portfolio turnover measures trading aggressiveness and often exceeds 100% in a single year.

• Although past performance is no guarantee of future results, the longer the return period the better. Look at returns over at least a five-year period, if available. Investors should ideally compare how funds performed in a variety of different market climates and be prepared for the volatility inherent in many sector funds.

• Yield is just one component of total return, but high yield can mean less reliance on capital gains. This often points to lower volatility.

As with any investment, be sure to get a copy of the fund’s annual report and prospectus before investing. You should also consult with your financial professional to help determine the suitability of sector funds in your overall portfolio.

March 2013 — This column is produced and is provided by The Jacobs Financial Group. (02-13)

Incentive Trusts: Setting Guidelines for Your Heirs

An incentive trust is an estate planning tool that allows the trust grantor to reward heirs for desired behavior. It also allows the grantor to impose appropriate penalties for undesirable activities.

Some common themes contained in incentive trusts:

• Education: Incentive trusts have been used to provide extra support to those heirs who pursue advanced degrees, focus on designated fields of study, or attend specified institutions. Some trusts are designed to reward instances of outstanding scholarship and academic achievement. Some permit withholding support from those who fail to meet minimum levels of accomplishment.

• Moral and family values: Some trusts are intended to promote family life by providing income support payments to heirs who choose to stay at home with children. Some trusts offer beneficiaries bonuses for childbearing, foster care, or adoption. Some withhold benefits from those heirs who might be convicted of a crime or fail a prescribed drug or alcohol screening test.

• Business and vocational choices: Entrepreneurs can use trusts to provide incentives to those heirs who commit to helping carry on a family business. Trusts can be designed to encourage or discourage career choices specified by the trust creator. Trusts can also be used to offer focused financial support to those beneficiaries who opt to follow paths that are personally and socially rewarding yet generally less lucrative.

• Charitable and religious opportunities: Some trusts are designed to encourage religious behavior by requiring specific observances. Some trusts provide funds for dues or other costs associated with religious participation. Some subsidize those heirs who choose missionary work or other religious vocations. Some provide matching funds for heirs’ contributions to favored organizations.

Incentive trusts can provide many of the same benefits as other trust structures. For example, by placing assets in a properly designed trust, you can move them out of your estate in order to manage tax liabilities more efficiently. You can also ensure that assets will be managed professionally and held in safe custody through a stable financial institution.

Key Limitations
Just as you have broad discretion as a parent or guardian, you have great latitude when you create an incentive trust. But there are limits. The trust cannot, of course, require blatantly illegal activity; neither can it provide incentives for actions that might be deemed contrary to public policy — violating the unwritten laws of the community. For example, a trust generally cannot provide incentives for a beneficiary to divorce an unpopular mate, nor can it be used to undercut existing voluntary separation, child support, or other domestic arrangements generally permitted by law in your state.

Incentive trusts may be subject to what is called the rule of perpetuities, a legal concept that says trusts must be liquidated at some definite interval after their creation. This rule is enforced in many, but not all, states. It applies to trusts that are created in the state where the rule is enforced (you may generally create a trust in any state, not just the state in which you reside). As a consequence, you’ll want to be sure that any trust you do create can last for as long as needed to achieve your goals.

Certain types of incentive trusts may also be subject to the generation skipping transfer (GST) tax. Where an incentive trust fits the complex definition of a GST, the rules limit the aggregate amounts that can be placed in the trust without incurring a tax of about half of the value in the trust. In some trust scenarios, life insurance can augment the amounts permitted under GST rules.

Creating an effective incentive trust involves complex legal, tax, and investment management choices. This article offers only an outline; it is not a definitive guide to all possible consequences and implications of any specific trust option. For this reason, be sure to seek advice from knowledgeable legal and financial professionals.

March 2013 — This column is produced and is provided by The Jacobs Financial Group. (02-13)

Will You Be in the 1%? Surviving an IRS Audit


The IRS audited approximately 1.6 million individual tax returns filed in 2011. That amounts to just over 1.1% of 141 million individual returns filed that year. However, just over one-quarter of those audits involved face-to-face meetings with IRS auditors. The rest were conducted through the mail.

Filers earning less than $100,000 had a 1% chance of being audited. Among filers with income exceeding $200,000, the audit rate was 3.93%; for those earning more than $1 million, it climbed to 12.5%. Self-employed taxpayers who filed a Schedule C and reported gross receipts of at least $100,000 were audited at a 4% rate.

What Triggers an Audit?
The following are some of the red flags that could alert the IRS, aside from earning a lot of money:

• Running a cash business
• Claiming the home-office deduction
• Self-employment
• Deducting business meals, travel, and entertainment
• Failing to report all taxable income
• Claiming 100% business use of a vehicle
• Making large charitable contributions
• Claiming a rental loss
• Taking larger than usual deductions

What the IRS Looks For?
Whether the IRS requests a face-to-face meeting or chooses to conduct its audit through correspondence, the following issues may arise:

• Unreported income – The IRS will assess taxes on any “missing” amount plus interest and penalty charges — regardless of whether the omission was accidental or intentional. A finding of significant fraud could even result in criminal prosecution and jail time.

• Personal expenses vs. business expenses — Be prepared to prove that expenses you’ve claimed for business purposes were not actually personal expenses. Auditors pay particular attention to deductions related to entertainment, meals, travel, and transportation. If you own a business, keep all receipts and be ready to answer questions about the connection between each expense and your business.

• Industry insights — Business owners should also keep in mind that the IRS has a Market Segment Specialization Program (MSSP) designed to train its employees about the intricacies of dozens of specific business niches, ranging from Alaskan commercial fishing to car washes and the scrap metal industry. Fortunately, the MSSPs Audit Technique Guides are available online (www.irs.gov; look under the “Businesses” heading), so you can check to see whether your industry is included in the program. If it is, studying the relevant guide might help you get inside the head of your auditor, so to speak.

Even if you don’t expect the worst during your audit, there are several reasons it’s still a good idea to enlist the services of an experienced tax professional to help you navigate the process. For example, a professional is probably more familiar with the complexities of ever-changing tax laws than you, and is also less likely to let emotions cloud his or her judgment. In addition, letting a pro speak on your behalf reduces the chance that you will accidentally volunteer information that could hurt your case.

This article is not intended to provide tax advice and should not be treated as such. Each individual’s tax situation is different. You should contact your tax professional to discuss your personal situation.

March 2013 — This column is produced and is provided by The Jacobs Financial Group. (02-13)

Same-Sex Marriage: The Financial Pros and Cons 


For same-sex couples contemplating marriage, tying the knot confers many legal rights and benefits. Since 2004, nine states and the District of Columbia permit same-sex marriage. But from a financial perspective, such benefits are limited since gay marriages are currently not recognized under federal law. In fact, same-sex marriage has both pros and cons when it comes to finances.

The Good News
For those living in a state that permits gay marriage there are a number of benefits.

• You may pay less state income tax. Traditional married couples have the option of filing their federal and state tax returns jointly. That means they can share deductions for children, mortgage payments, and other items that can generate significant state tax savings, especially for couples with lower incomes. The same applies to same-sex couples in states that recognize gay marriage, however, only at the state level.

• Your health insurance bill could go down. Shared coverage can save thousands of dollars a year in health insurance premiums. Some insurance companies require marriage for shared coverage. Others may offer coverage to domestic partners and same-sex unions, but the value of a partner’s benefits may have to be reported as taxable income. Although rules vary by state, same-sex couples generally qualify for shared coverage in states that recognize gay marriage, and need not report benefits as taxable income on the state level.

• You’ll be first in line to inherit your spouse’s assets. Under most states’ laws, a spouse is the first in line of inheritance, even in the absence of a will. Surviving spouses can also make certain critical decisions following the death of a spouse.

• You won’t owe state estate taxes if your spouse dies. Spouses of traditional marriages generally don’t pay estate tax on either the state or federal level for amounts inherited. For same-sex spouses in states that recognize gay marriage, no state “death tax” will apply. However, on the federal level, estate taxes may still apply since the IRS does not recognize same-sex spouses.

• You may benefit from financial protections in the case of divorce. Like traditional married couples, same-sex married couples are subject to a state’s divorce laws, which typically require equitable distribution of assets and spousal support or alimony. Such protections can be viewed as a positive or a negative, depending on whether you’d be the receiver or payer.

The Bad News

• You won’t enjoy any of the federal tax benefits of marriage. This includes the right to file jointly or claim spousal exemption from the federal estate tax. Nor can you establish a joint IRA or other tax-advantaged retirement savings account.

• Filing your income taxes will be more complex. Same-sex married couples may file their state tax returns jointly, but still need to file separate federal tax returns (either as single or head of household). That means you cannot piggyback your state tax filing off your federal return, making tax preparation even more complex, time consuming, and costly than it already is.

• You cannot collect residual Social Security benefits. For traditional married couples, the Social Security benefits of a deceased spouse go to the surviving spouse. Widowed spouses, as well as those who divorced after at least 10 years of marriage, are entitled to their spouse’s Social Security benefits if they are greater than their own. None of this is the case with same-sex married couples, who are entitled to none of these survivor benefits.

These represent only a few key financial plusses and minuses of same-sex marriage. According to the Government Accountability Office, there are more than 1,000 rights and protections that are conferred to U.S. citizens upon marriage by the federal government, that are not available to their same-sex counterparts. Also note that tax rules vary from state to state, even among those states that do recognize same-sex marriages. So if you’re gay and thinking of tying the knot, do it for love, not money.

February 2013 — This column is produced and is provided by The Jacobs Financial Group. (01-13)

Will You Outlive Your Assets? 


Many Americans do not realize that one of the greatest risks to their financial security in retirement may be outliving their money. According to pension mortality tables, at least one member of a 65-year-old couple has a 72% chance of living to age 85 and a 45% chance of living to age 90. This suggests that many of us will need to plan carefully to ensure that we don’t outlast our assets.

The first step in tackling longevity risk is to figure out how much you can realistically afford to withdraw each year from your personal savings and investments. You can tap the expertise of a qualified financial professional to assist you with this task or you can use an online calculator to help you estimate how long your money might last.

One strategy to help make your money last is to withdraw a conservative 4% to 5% of your principal each year. However, your annual withdrawal amount will depend on a number of factors, including the overall amount of your retirement pot, your estimated length of retirement, annual market conditions and inflation rate, and your financial goals. For example, do you wish to spend down all of your assets or pass along part of your wealth to family or a charity?

Tips to Consider
No matter what your goals, there are ways to potentially make the most out of your nest egg. Here are a few suggestions.

• Start a cash reserves fund. You’ll likely need ready access to a cash reserve to help pay for daily expenditures. A common rule of thumb is to keep at least 12 months of living expenses in an interest-bearing savings account, though your needs may vary. Then, consider refilling your cash reserve bucket on an annual basis by selectively liquidating different longer-term investments, timing gains and losses to offset one another whenever possible.

• Be aware of interest rates. Responding to the current interest rate environment is one way to potentially squeeze more income from your savings and stretch out the money you’ve accumulated for retirement. For example, if rates are trending upward, you might consider keeping more money in short-term certificates of deposit (CDs). The opposite strategy may be employed when rates appear to be declining.

• Look into income-generating investments. Most retirees need their investments to generate income. Bonds and dividend-paying stocks may help fill this need. “Laddering” of bonds – purchasing bonds with varying maturity dates at different times – can potentially create a steady income stream while helping reduce long-term interest exposure. Dividend-paying stocks potentially offer the opportunity for supplemental income by paying part of their earnings to shareholders on a regular basis. Additionally, investing an equity-income mutual fund, which generally holds many dividend-paying stocks, may help reduce risk compared with investing in a handful of individual stocks.

February 2013 — This column is produced and is provided by The Jacobs Financial Group. (01-13)

Looking for Yields? Consider Foreign Bonds 


Investors in the hunt for higher yields have to search far and wide and consider avenues they may not have investigated before. One investment type that may be worth a look is foreign bonds and foreign bond funds.

Investing in foreign bonds can have a number of advantages, including that the returns from foreign bonds are typically higher than returns offered via U.S. Treasury securities. However, Treasury securities are guaranteed as to the timely payment of principal and interest, which cannot be guaranteed for many foreign bonds. What’s more, the monetary and budget policies of many foreign nations are often unsynchronized with those of the United States, which can help your portfolio diversification.

There are many types of foreign bonds, both from government entities as well as corporations.

• Eurobonds - A eurobond is a bond issued and traded in a country other than the one in which its currency is denominated – not always a European nation. Eurobonds give issuers the flexibility to choose the country in which to offer their bond according to that country’s regulatory constraints. They are usually issued in more than one country of issue and traded across international financial markets. But they are unsecured, leaving bondholders without the first claim to the issuer’s assets in case of default.

• Global Bonds - A global bond is a type of bond that is issued in multiple markets in different currencies. By issuing global bonds, a government or corporation is able to attract funds from a wider set of investors and potentially reduce its cost of borrowing.

• Sovereign Debt - Issued by national governments, sovereign bonds are generally among the safest investments in most countries. Even if countries are not particularly creditworthy, their sovereign bonds are usually safer than their other domestic alternatives.

• Yankee Bonds - Yankee bonds are U.S. dollar-denominated bonds issued by foreign governments and corporations and sold in the United States. American investors can purchase the securities of foreign issuers without being subject to price swings caused by variations in currency exchange rates. As a result, Yankee bond prices are influenced primarily by changes in U.S. interest rates and the financial condition of the issuer.

Investment Risks
As with all types of investments, there are a number of risks associated with foreign bonds.

• Currency risk - Any time you hold a foreign currency, you are subject to currency risk, which is the potential for loss due to fluctuations in exchange rates. Currency risk can literally turn a profit on a foreign investment into a loss.

• Sovereign risk - This is the risk of a government becoming unwilling or unable to meet its loan obligations, or reneging on loans it guarantees. This risk is especially present in emerging markets, where governments are more likely to be unstable.

• Inflation risk - As inflation rises, bonds that have already been issued lose value in the secondary market. In an inflationary environment, bonds issued more recently are usually more attractive because they’ll often have higher interest rates, as central banks such as the U.S. Federal Reserve and European Central Bank often raise rates in response to inflation fears.

• Interest rate risk – As interest rates rise, bond prices fall as investors are able to realize greater yields by buying newly issued debt that reflects the higher interest rate.

• Liquidity risk - As with many U.S. corporate bonds, it can be difficult to find a buyer for an international government or corporate bond.

Which foreign bonds or bond funds best complement your portfolio will depend on a number of factors, including your existing holdings and appetite for risk.

February 2013 — This column is produced and is provided by The Jacobs Financial Group. (01-13)

Investing on the Margins? What to Know Before You Do 


A margin account can be a valuable tool for investors seeking flexibility in managing their portfolios. Margin accounts offer convenience, sophistication, and an integrated approach that allows you to fully capitalize on market opportunities. But investing on margin isn’t for everybody. It involves elevated risk and is not appropriate for many situations.

How It Works

Like buying a house or car with the help of a loan, investing on margin simply means purchasing securities with borrowed funds. To purchase a stock on margin, you first need to have a margin account with a broker. Depending on the account, different securities may be permitted different levels of margin purchases. For example, you may be allowed to buy up to 75% of one stock on margin, while another may only allow up to 40%.

Margin accounts are typically subject to minimum account balances, which are often based on the loan-to-value ratio of the account (LTV). A margin call occurs when the total loan amount outstanding exceeds the security value of your investment portfolio. A margin call may occur due to a reduction to an LTV held within your investment portfolio. Alternatively, adverse market movements causing a decline in your investment portfolio may trigger a margin call.

To meet a margin call you would need to reduce your loan by depositing funds, provide additional approved investments to increase the security value of your investment portfolio, and/or sell sufficient investments to reduce your overall LTV level. If you do not meet a margin call within the specified time period, your broker may sell sufficient investments held by you to bring your loan back to an acceptable level.

Margin Strategies

To use margin successfully, it helps to set certain parameters and follow the best practices of seasoned margin investors.

• Use margin for appropriate assets. Your investing goals for a given investment account should dictate whether or not a margin investing strategy is appropriate. An everyday trading account seeking long-term growth that is used for multiple purposes might be the most appropriate, especially if you are an active trader.

• Be selective. As with any investment, it pays to know what you are investing in before you buy it. This is particularly important in a margin purchase, where a wrong guess can cost much more. Consider companies with strong fundamentals and those in growth industries with an established track record of long-term growth. Using margin accounts for the latest hot stock or to chase momentum stocks is risky.

• Keep it short. Investment professionals typically recommend limiting margin purchases to short periods of time. Consider setting one- or two-month windows for margin purchases so that you are not exposed for too long a period to unforeseen price drops or market corrections. And keep in mind that you are paying interest on your borrowed funds, which will lower your net investment return.

• Avoid margin calls. A margin call can force you to sell a holding at an inopportune time, locking in losses or missing out on a rally. Worse yet, your broker could liquidate your account for you. To avoid this situation, calculate up front your minimum maintenance requirement – typically 30% of the current value of the account – and make sure it does not go below this limit.

• Know when to get out. This holds true on both the winning and losing sides of a trade. If you’ve purchased a stock on margin that has subsequently had a good run, don’t get greedy. Likewise, set a limit as to how much of a loss you are willing to take before you sell, and stick to it. One of the most common mistakes investors make is to hold on to a loser too long.

A margin strategy executed prudently can be a valuable tool. But you have to be disciplined, know what you’re doing, and accept a high amount of risk.

February 2013 — This column is produced and is provided by The Jacobs Financial Group. (01-13)

Simple Strategies for Savings

One of the few positive aspects of the recent recession has been getting Americans to refocus on saving. With so many taking hits due to job losses, investment losses, and home losses, putting together a strategy for savings has become important. But we’ve still got a long way to go. In a recent survey, 71% of respondents said they were saving too little.

So how can you save more? The steps below should help you put a plan in motion.

Step One: Set a Goal

How much should you save? It depends on a number of factors, including:

• How much debt you have.
• Your job security.
• Whether you have a spouse and children.
• How much you’re currently saving for retirement and your children’s education.

Before the recession, many experts recommended keeping three to six months of living expenses in reserve in case of emergencies. Now, many have changed that recommendation to six to twelve months. It may also make sense to keep a second fund for future purchases, such as a new car or the down payment on a home.

Step Two: Set a Savings Strategy

First, examine your monthly living expenses. Factor in mortgage or rent, utilities, food, clothing, insurance, and entertainment. Also include credit card and other loan payments as well as other regular savings goals, such as retirement and college. If you don’t have any income left over to set aside, consider areas where you could reduce your spending.

Be sure to set up an automatic contribution from your paycheck or checking account into the savings vehicle you choose. Keeping the money separate will reduce the chances of you tapping into the funds.

Step Three: Set an Investment Strategy

Emergency money should be deposited where you can readily access it, such as a bank or credit union savings account or a money market account. Try to avoid CDs as they can charge penalties for early withdrawals. To find the best interest rate, look at various institutions and consider online banks. For your “major purchases” account, you can have a bit more flexibility. Consider CDs, short-term Treasury bills, and bond mutual funds.

January 2012 — This column is produced and is provided by The Jacobs Financial Group. (12-12)

Long-Term Care Insurance: Is It a Good Idea?

There is a good possibility that you or your spouse will eventually require some form of long-term care. According to the U.S. Department of Health and Human Services, about 70% of people aged 65 or older will enter a nursing home for some period of time during their lifetimes.

Whether you or your spouse will be among this group is impossible to predict. But it is wise to consider how you might pay for long-term care and whether long-term care insurance (LTC) is a good idea for you.

Long-term care policies are complex and vary widely. But in general, LTC insurance typically covers the following:

• Nursing home care
• Adult day care
• Visiting nurses
• Assisted living
• In-home assistance with daily activities

LTC includes a range of nursing, social, and rehabilitative services for people who need ongoing assistance due to a chronic illness or disability. LTC insurance can be used by anyone at any age who suffers an accident or debilitating illness, but it most frequently is used by older adults who need assistance with essential physical needs, such as bathing, dressing, or eating.

Cost of Care

Perhaps the first consideration is determining the potential cost of long-term care. Below is a summary of average current costs.

• $200/day for a semi-private room in a nursing home
• $222/day for a private room in a nursing home
• $3,300/month for care in an assisted living facility (for a one-bedroom unit)
• $19/hour for a home health aide
• $18/hour for homemaker services
• $61/day for care in an adult day health care center

With health care costs rising every year, these expenses can be expected to grow substantially over time. Furthermore, neither Medicare nor Medicare supplemental coverage, also known as Medigap insurance, typically cover long-term care. Medicaid will cover a large share of such services but only if you meet stringent financial and functional criteria. What’s more, most employer-sponsored or private health insurance plans follow the same general rules as Medicare. Therefore, most people who need long-term care must pay for some or all of it on their own.

Cost of Insurance

Like life insurance, LTC insurance policy premiums largely depend on your age and health. If you take out a policy when you are young, you can expect to pay comparatively low premiums during the life of the plan, while starting a new policy when you are older will entail significantly higher monthly premiums. A 65-year-old in good health can expect to pay between $2,000 and $3,000 a year for a policy that covers nursing home care and home care, with premiums adjusted for inflation.

Most long-term care policies sold today are federally tax qualified, which means the premiums paid and out-of-pocket expenses for long-term care may be applied to the medical expense deduction of the federal tax code. (Typically, taxpayers may deduct the portion of medical and dental expenses that exceed 7.5% of adjusted gross income.) Additionally, long-term care benefits received are not taxed as income up to certain limits.

January 2012 — This column is produced and is provided by The Jacobs Financial Group. (12-12)