Click here for a 10 min. presentation about the changes

If you haven’t already heard, Michigan pension recipients will have to start withholding income tax beginning January 1, 2012. Here is a quick overview:

What types of benefits are going to be taxed?

• defined benefit pensions
• IRA distributions
• most payments from defined contribution plans

Exemptions:

• Social Security
• Military retirement benefits
• Railroad retirement benefits

Withholding rates:

• Depend on the year of birth
• Born before 1946: no changes
• Born in 1946 through 1952: the first $20,000 for single filers or $40,000 for joint filers of all benefits may be deducted from Michigan taxable income. Benefits over the limits are taxable to Michigan.
• Born after 1952, all benefits are fully taxable and can’t be deducted from Michigan taxable income.
• Joint filers: use birth year of oldest spouse

Reporting at year end:

• Any Michigan withholding should be reported on a 1099-R Form 165
• Follow this link for instructions: http://www.michigan.gov/documents/taxes/78_370045_7.pdf

For more detailed information, view the presentation above or visit: http://www.michigan.gov/taxes/0,4676,7-238-43513_59451-263747–,00.html

Please note: this post is for informational purposes only and should not be construed as tax advice. Richmond Brothers, Inc. is a not a tax advisor; for more information or assistance please consult a tax advisor .

Whether you’re looking for a second opinion or your first financial consultant, here are some great tips on choosing a financial advisor from USAToday: http://usat.ly/rRDuVc.

Ed Slott also broke it down to five easy steps in his whitepaper. And, if you find these helpful, you may also want to review our webinar on how to find the right planner for you: http://www.richmondbrothers.com/video/Find_right_planner.wmv.

As always, please feel free to share this information with your family and friends!

If you’ve run out of ideas for your loved ones, check out this CNBC slide show for cool ideas that give back: https://www.cnbc.com/id/45246924

If you still need to make changes during Medicare Open Enrollment this year, we wanted to give you a quick reminder that you have less than a week left to do so. Changes must be made by Wednesday, December 7^th and will take effect on January 1, 2012.

What happens in open enrollment?

• You can elect to leave original Medicare (Parts A & B) for a Medicare Advantage Plan (Part C)
• You can also switch from a Part C plan back to the original Medicare Parts A & B
• Switch Medicare Advantage plans (whether they cover prescription drug plans or not)
• Change your prescription drug coverage (Part D) or join a prescription drug plan
• Drop Medicare prescription drug coverage completely

For more information, please view the Medicare tip sheet on Understanding Enrollment Periods: http://www.medicare.gov/Publications/Pubs/pdf/11219.pdf.

You may also wish to contact the Michigan Medicare/Medicaid Assistance Program at 800-803-7174 for personalized assistance or visit www.mmapinc.org.