What are catch-up contributions?

If you are 50 or older, or you will reach age 50 by the end of the year, you may be able to make contributions to your IRA or employer-sponsored retirement plan above the normal contribution limit. Catch-up contributions are designed to help you make up any retirement savings shortfall by bumping up the amount you can save in the years leading up to retirement.

Catch-up contributions can be made to traditional and Roth IRAs, as well as to 401(k) plans and certain other employer-sponsored retirement plans. But if you participate in an employer-sponsored retirement plan, check plan rules – not all plans allow catch-up contributions.

How much can you contribute as a catch-up contribution? It depends on the type of retirement plan you have and the tax year for which you are making the contribution.

401(k), 403(b), governmental 457(b) plans:*

  • $18,500 regular annual contribution and $6,000 catch-up contribution limit for 2018

SIMPLE plans:

  • $12,500 regular annual contribution limit and $3,000 catch-up contribution limit in 2017 and 2018

Traditional and Roth IRAs:

  • $5,500 regular annual contribution limit and $1,000 catch-up contribution limit in 2017 and 2018.

*403(b) and 457(b) plans also have special catch-up rules that may apply.

—Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Broadridge Investor Communication SolutionsWhat are catch-up contributions?
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Meet Denise Lies

Denise Lies is a senior administrative associate who primarily supports retirement plan administration. She enjoys cheering on her teenage sons and spending time on the farm where she grew up.

Below she shares a few things about herself–and her yummy recipe for taco soup.

Tell us about yourself.

I grew up on a small dairy farm about a mile outside of New Rockford, North Dakota. I moved to the Fargo area after high school to attend Minnesota State University Moorhead where I obtained a Bachelor of Science degree in accounting. I currently live in West Fargo (Go Packers!). I am married and have two sons, Tyler, who is 17, and Tanner, who is 14.

What do you like to do in your spare time?

I enjoy spending time in New Rockford on the family farm. I also enjoy watching football, especially the (North Dakota State University) Bison, and attending plays and musicals for West Fargo Theatre and Summer Arts Intensive. Our family is actively involved in Boy Scout Troop 279 and St. Andrew Lutheran Church in West Fargo, where I have been a confirmation memory leader for several years. I am a proud mom: after nine years of scouting, Tyler earned his Eagle Scout rank in April of 2017, and Tanner is well on the way to achieving his.

How long have you been at Heartland Trust Company?

Heartland Trust Company was my first job out of college. I was hired to work in the operations area for the trust department in January of 1993. I transitioned to the Retirement Plan Services area and have spent most of the last 25 years working in retirement plan operations and plan administration.

What is your favorite part about working for Heartland Trust Company?

I enjoy the challenge of keeping up on the always changing regulations for retirement plans and knowing we are making sure our clients’ retirement plans are in compliance with those regulations. I am grateful to have worked for Heartland Trust for the last 25 years. I come to work every day knowing that Heartland Trust truly values its employees and their clients.


  • 2 pounds ground beef
  • 1 small onion
  • 1 can (4 ounces) green chiles
  • 1 can hominy
  • 3 cans stewed tomatoes
  • 1 can kidney beans
  • 1 can pinto beans
  • 1 package taco seasoning mix
  • 1 package Ranch dressing mix
  • 1-½ cups water
  • Salt and pepper as desired

Brown ground beef and onion. Add remaining ingredients and simmer 20 to 30 minutes. Serve with chips, sour cream, and shredded cheddar cheese.

Heartland TrustMeet Denise Lies
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Are 529 college savings plans a good way to save for college?

Yes, they can be an excellent way to save for college. College savings plans are established by states and typically managed by an experienced financial institution designated by the state. Each plan has slightly different features.

A 529 college savings plan lets you save money for college in an individual investment account that offers federal tax advantages. You (or anyone else) can open an account in your child’s name and thereafter contribute as much money as you wish, subject to the plan’s limit.

The state’s selected money manager takes your contribution and invests it in one or more of the plan’s pre-established investment portfolios, which typically consist of mutual funds. Some plans automatically place your contribution in a portfolio that’s tailored to the age of your child. (The younger your child, the more aggressive the percentage of stocks. As your child grows older, the portfolio gradually shifts to more conservative investments.) Other plans let you choose the portfolio you want at the time you join the plan, without regard to your child’s age. This lets you take into account your risk tolerance and other factors that may be important to you.

College savings plans are popular because they combine many desirable tax features with the ability to use the money at any accredited college in the country or abroad. Your contributions grow tax deferred, and if withdrawals are used to pay the beneficiary’s qualified education expenses, the earnings are completely free from income tax at the federal level. Many states also add their own tax benefits, such as tax deductions for contributions and exemption of the earnings from state income tax. However, if a withdrawal isn’t used to pay the beneficiary’s qualified education expenses (known as a nonqualified withdrawal), the earnings portion is subject to a 10 percent federal penalty and is taxed as income at the rate of the person who receives the withdrawal (a state penalty may also apply).

There are no income limits that determine whether you are eligible to open a college savings plan account – everyone is eligible. And if your child decides not to go to college or gets a full scholarship, the money in the plan can be transferred to a qualified family member without penalty.

But investment returns aren’t guaranteed. If your investment portfolio performs poorly, you’re still bound by the investment decisions of the plan’s money manager, unless the plan lets you change the investment strategy for your existing contributions, which it may do twice per calendar year. College savings plans are also free to let you change your investment option for future contributions. If your plan doesn’t provide this flexibility, then you are allowed by federal law to roll over your college savings plan account to a different 529 plan (college savings plan or prepaid tuition plan) without penalty once every 12 months.

You are not limited to your own state’s college savings plan. Most states allow anyone to participate in their plan. You may also participate in the college savings plan of more than one state.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in each issuer’s official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.

—Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Broadridge Investor Communication SolutionsAre 529 college savings plans a good way to save for college?
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Caring for Your Aging Parents

Caring for your aging parents is something you hope you can handle when the time comes, but something you probably hope you never have to do. Caring for your aging parents means helping them plan for the future, and this can be overwhelming, both physically and emotionally. When the time comes for you to take care of your parents, you may be certain of only two things: Your parents need you, and you need help.

Start planning

Talk to your parents about the future. Start caring for your aging parents by talking with them about their needs and wishes if they are able. In some cases, however, they may not be willing to talk to you about their future, either because they are afraid to face it or because they resent your interference. If this is the case, you may need to do as much planning as you can without them, or, if their safety or health is in danger, step in as caregiver anyway.

Prepare a personal data record. The first step you should take is to ask your parents to help you prepare a personal data record (if they are unable to help you, you’ll have to search for the information yourself). A personal data record is a document that lists information that you might need in case your parents become incapacitated or die. Information that should be included is financial information, legal information, medical information, insurance information, and information regarding professional advisors and the location of important records.

When Marcia and her mother prepared a personal data record, Marcia realized that her mother did not have a durable power of attorney or health care proxy in case she became incapacitated and could not make decisions about her medical care. The next day, Marcia made an appointment with her mother’s lawyer to discuss this issue.

Get advice. You can’t know everything, and you probably don’t have enough time to learn everything you need to know to care for your parents. That’s why you should seek advice from professionals. Some advice will be free, and some you will have to pay for. If you live far from your parents or are too overwhelmed to handle all your parents’ affairs, you can hire a geriatric care manager who will evaluate your parents’ situation, suggest options, and coordinate professionals who can help. In addition, talk to your employer. Some employers have set up employee assistance programs that offer advice and assistance to people who are dealing with personal challenges, including caring for aging parents.

Get support. Don’t try to care for your parents alone. Many local and national caregiver support groups and community services are available to help you cope with caring for your aging parents. If you don’t know where to start finding help, call the Eldercare Locator, an information and referral service sponsored by the federal government that can direct you to resources available nationally or in your area. Call the Eldercare Locator at (800) 677-1116.

What kind of advice will you need?

Housing and health care advice

If your parents are like many older individuals, where they live will depend upon how healthy they are. As your parents grow older, their health may deteriorate so much that they can no longer live on their own. At this point, you may need to find them in-home health care or health care within a retirement community or nursing home. On the other hand, you may want them to move in with you. In addition, you will need information on managing the cost of health care, long-term care insurance, major medical insurance, Medicare, and Medicaid.


Financial advice

If your parents need help managing their finances, you may need to contact professionals whose advice both you and your parents can trust, including one or more of the following individuals or organizations.


  • Your financial planner
  • Your banker
  • Your investment counselor
  • Your tax attorney
  • The Social Security Administration

Legal advice

Legal advisors can help you plan for your parents’ incapacity (including preparing documents such as power of attorneys, medical directives, and living wills), contact nursing home ombudsmen, set up and monitor guardianship, prepare wills, give tax advice, and provide bill payment and representative payee assistance. Many states provide funds for the delivery of free legal services to the elderly and many attorneys specialize in elder law, so finding legal advice shouldn’t be difficult.


What kinds of support and community services will you need?

Caring for your aging parents will be easier if you know what kinds of support and community services are available and where to locate them. The following is a list of the kinds of support and community services you can find locally and nationally, along with specific suggestions of who to contact for information.

Adult day care

If you need to work or run errands and you can’t leave your parents alone, consider using adult day care. These programs are located in hospitals, churches, temples, nursing homes, or community centers. Many are private nonprofit organizations. Adult day care can be expensive but is sometimes subsidized by the government, and fees may be based on a sliding scale. In addition, Medicare, Medicaid, long-term care insurance, or your health insurance may pay part of the cost.


Caregiver support groups (self-help)

Many self-help groups are available to provide information and emotional support on broad topics (such as aging) or specific topics (such as heart disease). You may find these support groups helpful if you know little about caring for your aging parents. Such groups might also provide an opportunity to help others by sharing your experiences.


Caregiver training/health education

You may feel better about taking care of your parents if you are armed with knowledge. You may want to complete First Aid courses or take classes in gerontology.


Geriatric assessment

If you are uncertain of your parent’s mental or physical capabilities, ask his or her doctor to recommend somewhere you can take your parent to undergo an assessment. These assessments can be done at hospitals or clinics. Your parent will be evaluated to determine his or her capabilities. The evaluation determines whether the individual can take care of himself or herself on a day-to-day basis, including such things as bathing, dressing, eating, using the telephone, doing housework, and managing money. Based on this evaluation, you and your parent will receive advice regarding care options.


Respite care

When you are caring for your aging parents, you may feel guilty or even resentful because you don’t have limitless energy. Taking care of your parents is hard work, however, and everyone needs a break once in a while. If you are caring for your aging parents, look into respite care. Medicaid may pay for some respite-care services.


Financial and tax considerations

Caring for your aging parents is not only an emotional burden for you but may be a financial one as well, depending upon how well off your parents are and how much caring for them costs. Because many adults today are becoming first-time parents in their thirties, and others are remarrying and rearing second families, increasing numbers of adults are finding themselves in the “sandwich generation.” They face having to pay expenses for growing children (including college expenses), plan for their own retirement, and support their aging parents financially. Thus, it’s important to plan not only your parents’ finances, but your own as well.

Financial planning for your parents

Making sure that your parents won’t outlive their money is a critical step in ensuring that your own finances will remain sound. In particular, you’ll need to make sure that your parent is receiving all the benefits to which he or she is entitled and that his or her money is invested wisely. You’ll also need to create a financial profile for your parents, a statement that includes income, expenses, and net worth. If, after considering your parent’s financial condition, it’s clear that they won’t have enough resources to pay for their own care, you’ll need to find ways to supplement their income. You may need to look at Supplemental Security Income (SSI), for instance, or ask other relatives for help. You’ll also have to determine how much financial support you can give your parents (see below).

Financial planning for you

Besides caring for your parents, you have a lot of other financial obligations. Before you can determine the best way to help your parents financially, you’ll have to look at your own financial picture. Not only will you need to consider your current expenses, but you’ll have to look down the road a few years, considering how much you’ll need to save for your own retirement and, perhaps, for your child’s education. Tip: Due to the complexities inherent in providing adequately for several generations in the same family, consider seeking the advice of a financial professional.

Tax benefits for children supporting aging parents

Federal income tax law provides several tax benefits to you if you are supporting your parents financially. If you have a dependent care account at work, you can put pretax dollars into the account that you can use to pay for some costs associated with caring for your dependent parents. You may be able to claim an exemption for your parents as dependents, and you may be entitled to claim a dependent care credit. In addition, you may be able to file your taxes as head of household and deduct medical expenses you paid for your parents. For more information consult your tax advisor.

—Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Broadridge Investor Communication SolutionsCaring for Your Aging Parents
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Building Trust in Our Business

People often say the one constant in our lives is change. This has certainly been true in the financial industry. It’s hard to keep track of who’s who and who’s where. What is the bank or insurance company’s new name? Which broker is with which firm, and in which office are they located?

This leads to the big question: How can their clients receive the personal attention they deserve?

Just a reminder: As our organization continues to grow, we are still the original Heartland Trust Company. We are still independent, still locally owned, and still headquartered in Fargo. We set our own policies, make our own decisions, and answer our own phones. All of our employees live in, participate in, and support our local communities.

For 28 years, Heartland Trust’s experienced staff has staked their personal reputations and financial well-being on assisting clients with meeting their personal and financial goals. When our customers deal with us, they know they receive unbiased, focused, individual attention. These qualities stem from the values Heartland Trust lives by as an independent provider of financial services. We are not associated with any parent company, broker-dealer, or mutual fund company.

Webster’s Dictionary uses the follow words to define TRUST:

  1. Assured reliance on the character, strength, or trust of someone or something
  2. A basis of reliance, faith, or hope
  3. Confident hope
  4. Financial credit.

We strive to build TRUST in the way we do business, in the way we conduct ourselves, and in the time-tested and proven investment principles we use to build our client portfolios.

Each client, whether an individual, company, or foundation, has its own unique goals and aspirations when it comes to investing money. As we all have learned from human nature, people like to see things grow and it hurts to lose something. This easy-to-understand concept is a good analogy for how we approach taking care of other people’s money. Ultimately, we want to know what you are passionate about.

Our investment principles revolve around risk, quality (companies and credit), value, and diversification. When it comes to helping each individual client invest to meet their goals, we focus on asset allocation, sticking with high-quality investments and rebalancing to maintain the correct ratio of stocks to bonds in your portfolio.

Keeping all of this in mind, we can accommodate those looking for aggressiveness and growth or those looking for safety and income – and everyone in between.

What does this mean for investors? Investing should be long-term in nature (not only to make money, but also keep it!) and should also be transparent and understandable. Markets are bound to go up and go down over time. This means that your investments will go up and down. Having a game plan and sticking to it is the best approach.

In 2017, the economy steadily expanded and the bull market continued. But, as we were reminded earlier this month, there will always be corrections to the market. The natural cycle of any market is to go up and down. At times, the market dips and rebounds can feel like a roller coaster, but they are normal and should be expected. Stick to the game plan.

At Heartland Trust, we promise to work diligently to keep up with changing world economies so we can communicate with you about how they might impact your investments and goals.

Brian HalversonBuilding Trust in Our Business
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Giving to Charities in 2018

“I am not going to give to charity in 2018 because I can no longer receive a tax deduction for my gift.” This was the comment shared while I discussed the new 2018 tax laws with a development officer colleague who works at one of our great local nonprofit organizations.

Wanting clarification, I asked more questions to determine the context of the statement. It was made by an unnamed donor who felt he and his wife were not going to be able to give in 2018 to the organization that they had supported regularly for a number of years. He was basing his opinion on reports they had seen on TV and read in the newspaper.

In my mind there is a greater story to be told. Politics aside, for an overwhelming majority of people, the new tax law will increase their overall tax deductions and should put more money into their pockets. That money can be used, in whole or in part, to support their charities of choice.

For many, the new tax law is like getting credit for a gift they have not yet made.

Simply, the standard deduction in 2017 for a married couple who was filing jointly was $12,700. If you did not break that threshold with itemized deductions (charitable gifts, mortgage interest, etc.) that was the amount you were able to use.

In 2018, that standard deduction has been increased to $24,000 for married filing jointly. Thus, a majority of people will not reach that amount through itemization and will receive a larger deduction than they have experienced in the past.

In my many visits and interactions with nonprofits, an overwhelming majority of donors from our part of the world do not give solely for the charitable tax deduction. They give for the joy and fulfillment that comes in supporting life-changing organizations that are profoundly impacting those in need in our communities.

Here are other ways you can still efficiently and effectively continue to support the incredible nonprofit organizations in our region.

Give from your IRA accounts

If you are at least 70½ years old, the federal government allows you to give up to $100,000 annually, directly from your IRA (Individual Retirement Account) to the charity or charities of your choice. By doing so, you avoid the distribution being taxed as income. The gift also would satisfy your Required Minimum Distribution (RMD) for the year up to $100,000. Gifts must be made directly from the IRA custodian to the charity.

Gift appreciated stock

It is still very beneficial to give appreciated assets like stocks to charity to avoid paying capital gains tax. If you sell the appreciated asset, you have to pay capital gains tax on the transaction (current market value of the asset minus the amount paid for it equals capital gain). If you gift the shares to a qualified nonprofit, the nonprofit may sell the asset and not pay the capital gains tax on it. This makes your gift that much more impactful. Capital gains rates are approximately 15 percent to 20 percent under the new 2018 tax laws.

Take advantage of North Dakota Charitable Tax Credit

North Dakota is one of a few states that offers charitable tax credits to donors who give $5,000 or more to a qualified North Dakota charitable endowment in a single year. This is a 40 percent tax credit (not a deduction) and can be used in combination with the higher standard deductions in place under the new 2018 tax laws. Under this option, North Dakota state tax liability is reduced dollar for dollar and the maximum credit available is $10,000 for individuals and $20,000 for married filing jointly. The credits can also be carried forward for up to three years.

Pool assets for several years

With the new higher standard deductions, major donors may want to pool assets for a number of years to grow their charitable donation in excess of the $24,000 threshold to be made in any given year. This would allow you to take advantage of a greater itemized tax deduction.

Gift commodities like grain, beans, corn

The tax law still allows for farmers to deduct gifts of commodities to qualified charitable organizations. It needs to be a standalone transaction, meaning the gift must be made before the crops are taken to the elevator. This gifting option allows the farmer to not report the value of the gifted crop as income, thus avoiding income and self-employment taxes. In addition, the expenses incurred by producing the gift crop can be reallocated to the overall farm crop production on Schedule F in the year paid.

Charitable donations, tithing, and gifts are the lifeline of dedicated nonprofit organizations that mean so much to so many in our great community. These are just some examples of how donors may want to look at more effective gifting to qualified 501(c)(3) charitable organizations under the new 2018 tax laws.

At Heartland Trust Company we always recommend you consult with your personal tax advisor professional to determine how your gifting will impact your personal tax situation.

If you have any questions about these or any other gifting ideas or options available, please contact Heartland Trust Company. We are here to be a trusted resource for our clients and communities and welcome any opportunity to help you fulfill your philanthropic wishes.

Jon BensonGiving to Charities in 2018
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IRA and Retirement Plan Limits for 2018

IRA contribution limits
The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2018 is $5,500 (or 100 percent of your earned income, if less), unchanged from 2017. The maximum catch-up contribution for those age 50 or older remains at $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2018, but your total contributions can’t exceed these annual limits.

Traditional IRA income limits
The income limits for determining the deductibility of traditional IRA contributions in 2018 have increased. If your filing status is single or head of household, you can fully deduct your IRA contribution up to $5,500 in 2018 if your modified adjusted gross income (MAGI) is $63,000 or less (up from $62,000 in 2017). If you’re married and filing a joint return, you can fully deduct up to $5,500 in 2018 if your MAGI is $101,000 or less (up from $99,000 in 2017). Note that these figures assume you are covered by a retirement plan at work.

    If your 2018 federal income tax filing status is single or head of household:

    Your IRA deduction is limited if your MAGI is between $63,000 and $73,000.
    Your deduction is eliminated if your MAGI is $73,000 or more.

    If your 2018 federal income tax filing status is married filing jointly or qualifying widow(er):

    Your IRA deduction is limited if your MAGI is between $101,000 and $121,000 (combined).
    Your deduction is eliminated if your MAGI is $121,000 or more (combined).

    If your 2018 federal income tax filing status is married filing separately:

    Your IRA deduction is limited if your MAGI is between $0 and $10,000.
    Your deduction is eliminated if your MAGI is $10,000 or more.

If you’re not covered by an employer plan but your spouse is, and you file a joint return, your deduction is limited if your MAGI is $189,000 to $199,000 (up from $186,000 to $196,000 in 2017), and eliminated if your MAGI exceeds $199,000. Single filers, head-of-household filers, and married joint filers who are not covered by an employer plan can deduct the full amount of their contributions.

Roth IRA income limits
The income limits for determining how much you can contribute to a Roth IRA have also increased for 2018. If your filing status is single or head of household, you can contribute the full $5,500 to a Roth IRA if your MAGI is $120,000 or less (up from $118,000 in 2017). And if you’re married and filing a joint return, you can make a full contribution if your MAGI is $189,000 or less (up from $186,000 in 2017). (Again, contributions can’t exceed 100 percent of your earned income.)

    If your 2018 federal income tax filing status is single or head of household:

    Your Roth IRA contribution is limited if your MAGI is more than $120,000 but under $135,000.
    You cannot contribute to a Roth IRA if your MAGI is $135,000 or more.

    If your 2018 federal income tax filing status is married filing jointly or qualifying widow(er):

    Your Roth IRA contribution is limited if your MAGI is more than $189,000 but under $199,000 (combined).
    You cannot contribute to a Roth IRA if your MAGI is $199,000 or more (combined).

    If your 2018 federal income tax filing status is married filing separately:

    Your Roth IRA contribution is limited if your MAGI is more than $0 but under $10,000.
    Your Roth IRA contribution is eliminated if your MAGI is $10,000 or more.

Employer retirement plans
Most of the significant employer retirement plan limits for 2018 have also increased. The maximum amount you can contribute (your “elective deferrals”) to a 401(k) plan is $18,500, up from $18,000 in 2017. This limit also applies to 403(b) and 457(b) plans, as well as the Federal Thrift Plan. If you’re age 50 or older, you can also make catch-up contributions of up to $6,000 to these plans in 2018. (Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.)

If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($18,500 in 2018 plus any applicable catch-up contributions). Deferrals to 401(k) plans, 403(b) plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can defer the full dollar limit to each plan—a total of $37,000 in 2018 (plus any catch-up contributions).

    The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) plan remains unchanged at $12,500, and the catch-up limit for those age 50 or older remains at $3,000.

    If your plan type is 401(k), 403(b), governmental 457(b), or Federal Thrift Plan:

    Your annual dollar limit is $18,500.
    Your catch-up limit is $6,000.

    If your plan type is SIMPLE plans:

    Your annual dollar limit is $12,500.
    Your catch-up limit is $3,000.

Note: Contributions can’t exceed 100 percent of your income.

The maximum amount that can be allocated to your account in a defined contribution plan (for example, a 401(k) plan or profit-sharing plan) in 2018 is $55,000, up from $54,000 in 2017, plus age 50 catch-up contributions. (This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan.)

Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2018 is $275,000 (up from $270,000 in 2017), and the dollar threshold for determining highly compensated employees (when 2018 is the look-back year) remains unchanged at $120,000.

—Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.

Broadridge Investor Communication SolutionsIRA and Retirement Plan Limits for 2018
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Will I have to pay tax on my investment income?

The taxation of your investment income depends on several factors, including the type of investment income you have (e.g., tax exempt, ordinary, capital gain, or tax deferred).

If you have municipal bonds, the interest they generate is typically exempt from federal taxation and state taxation in the state the bonds are issued. The interest may or may not be subject to state income tax in the state of your residence, if different from the state of issue. U.S. Treasury bills and certain types of government savings bonds generate interest that is typically subject to federal tax, but not state tax.

Of course, not all investments are tax exempt. Investment income is generated by either the income it produces during the ownership of the investment (e.g., interest, dividends, or rent) or the gain it produces when the investment is sold at an appreciated value. Investment income such as interest and rent is considered ordinary income and will generally be taxed according to your ordinary income tax rate. If you have investment income from the sale of a capital asset that is held for more than one year (e.g., stock or investment property), the income is generally considered capital gain and is taxed at long-term capital gains rates. Qualifying dividends are also taxed at long-term capital gains rates (dividends that don’t qualify for long-term capital gains rates are taxed at ordinary income tax rates).

Finally, you should know that tax-deferred investments (such as 401(k) plans) produce earnings and gains that are not taxed until later, when the money is distributed to you.

For more information, consult a tax professional.

Note: For tax years beginning after 2012, a 3.8 percent unearned income Medicare contribution tax may also be imposed on interest, dividends, capital gains and other investment income for individuals making more than $200,000 ($250,000, if married filing jointly).

—Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

Broadridge Investor Communication SolutionsWill I have to pay tax on my investment income?
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Meet Mary Carlson

Mary Carlson is a senior administrative associate who works primarily with personal trusts. She also is a huge sports fan and makes a fabulous Christmas Eve Lasagna.

Below she shares a few things about herself—and her recipe!

Tell us about yourself.
I was born in Thief River Falls, Minnesota, but moved to Fargo when I was 4 years old and have been a “north sider” ever since. I have two daughters: Jenna, who is 26, and Liz, who just turned 20. I am a member of First Lutheran Church, Fargo, where I most recently served as secretary/treasurer of its foundation.

What do you like to do in your spare time?
I enjoy sports of all kinds and love attending any local games played by the Fargo North Spartans, the Bison, and the Fargo Force. I also like to cheer on our closest professional teams, the Minnesota Wild, Vikings, and Timberwolves! Even though my average is not very good, I enjoy bowling and am on a league. I also enjoy scrapbooking, reading, being at the lake, and spending time with family and friends.

How long have you been at Heartland Trust Company?
I began working at Heartland Trust Company in April of 2012. Prior to joining HTC, I was employed with Wells Fargo Bank for 30 years, where I held positions in the trust department, ag/business banking, and administration. In my position at HTC, I work primarily with the administration of personal trust, agency and IRA accounts, along with foundation accounts, some conservatorships, and estates.

What is your favorite part about working for Heartland Trust Company?

I am thankful to be part of a company that truly cares about doing the right thing for its clients and helps them reach their goals. We have a great team of employees who work hard but still have fun, which makes it a great place to work.

Brown 1 pound ground beef and one finely chopped onion (or minced onion equivalent).
14-½ ounce can stewed tomatoes
6 ounce can tomato paste
1 cup water
2 tablespoons parsley flakes
1 teaspoon basil

Seasoned Cottage Cheese Filling:
2-2/3 cup cottage cheese
4 ounces parmesan cheese
1 tablespoon parsley flakes
1 teaspoon oregano

8 ounces lasagna noodles (uncooked)
8 ounces mozzarella cheese

Grease or add nonstick spray to a 9×13 pan. Layer ingredients as follows: ½ sauce and meat mixture, ½ of the noodles, all of the cottage cheese filling, remaining noodles, remaining sauce and meat mixture. Top with mozzarella cheese.
Bake covered at 350 degrees for one hour. Remove covering and bake for 15 minutes longer.

Heartland TrustMeet Mary Carlson
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Tax Moves to Review Before Ringing in the New Year

Here are 10 things to consider as you weigh potential tax moves between now and the end of the year.

1. Reserve time to plan.
Effective planning requires that you have a good understanding of your current tax situation, as well as a reasonable estimate of how your circumstances might change next year. There’s a real opportunity for tax savings if you’ll be paying taxes at a lower rate in one year than in the other. However, the window for most tax-saving moves closes on December 31, so don’t procrastinate.

2. Defer income to next year.
Consider opportunities to defer income to 2018, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services. Doing so may enable you to postpone payment of tax on the income until next year.

3. Accelerate deductions.
You might also look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as medical expenses, qualifying interest, and state taxes before the end of the year, instead of paying them in early 2018, could make a difference on your 2017 return.

4. Factor in the AMT.
If you’re subject to the alternative minimum tax (AMT), traditional year-end maneuvers such as deferring income and accelerating deductions can have a negative effect. Essentially a separate federal income tax system with its own rates and rules, the AMT effectively disallows a number of itemized deductions. For example, if you’re subject to the AMT in 2017, prepaying 2018 state and local taxes probably won’t help your 2017 tax situation, but could hurt your 2018 bottom line. Taking the time to determine whether you may be subject to the AMT before you make any year-end moves could help save you from making a costly mistake.

5. Bump up withholding to cover a tax shortfall.
If it looks as though you’re going to owe federal income tax for the year, especially if you think you may be subject to an estimated tax penalty, consider asking your employer (via Form W-4) to increase your withholding for the remainder of the year to cover the shortfall. The biggest advantage in doing so is that withholding is considered as having been paid evenly through the year instead of when the dollars are actually taken from your paycheck. This strategy can also be used to make up for low or missing quarterly estimated tax payments.

6. Maximize retirement savings.
Deductible contributions to a traditional IRA and pre-tax contributions to an employer-sponsored retirement plan such as a 401(k) can reduce your 2017 taxable income. If you haven’t already contributed up to the maximum amount allowed, consider doing so by year-end.

7. Take any required distributions
Once you reach age 70½, you generally must start taking required minimum distributions (RMDs) from traditional IRAs and employer-sponsored retirement plans (an exception may apply if you’re still working for the employer sponsoring the plan). Take any distributions by the date required—the end of the year for most individuals. The penalty for failing to do so is substantial: 50 percent of any amount that you failed to distribute as required.

8. Weigh year-end investment moves.
You shouldn’t let tax considerations drive your investment decisions. However, it’s worth considering the tax implications of any year-end investment moves that you make. For example, if you have realized net capital gains from selling securities at a profit, you might avoid being taxed on some or all of those gains by selling losing positions. Any losses over and above the amount of your gains can be used to offset up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your taxes in future years.

9. Beware the net investment income tax.
Don’t forget to account for the 3.8 percent net investment income tax. This additional tax may apply to some or all of your net investment income if your modified AGI exceeds $200,000 ($250,000 if married filing jointly, $125,000 if married filing separately, $200,000 if head of household).

10. Get help if you need it.
There’s a lot to think about when it comes to tax planning. That’s why it often makes sense to talk to a tax professional who is able to evaluate your situation and help you determine if any year-end moves make sense for you.

—Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.

Broadridge Investor Communication SolutionsTax Moves to Review Before Ringing in the New Year
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