Finance

Maximize Your Refund

Developing Countries Retirement Savings Insights from Realtors How To Spot a Phishing Scam Veterans Financial Issues Your Retirement Plan Federal Grants and Loans

Tax Law Changes You Need To Know To Maximize Your Refund

(NAPSI)—Although the U.S. federal tax code has undergone over 4,600 changes since 2001, most changes are unlikely to affect the average taxpayer.

Unless you’re an accountant or tax lawyer, you don’t need to know the vast majority of tax law changes. However, you can maximize the benefits and minimize any negative effect of changes when you file your income tax return.

“To avoid any surprises at tax time, do a dry run of your tax return each fall,” recommends TaxACT spokesperson Jessi Dolmage. “DIY tax programs are updated with the latest tax laws every fall. Just answer simple questions and the program will calculate your refund or liability as it currently stands so you can see what’s changed. The interview will also review credits and deductions you may still qualify for through Dec. 31.”

You can use the tax preparation filing products to get early calculations of your taxes or use a tax calculator such as TaxACT’s at www.taxact.com/tax-calculator.

Whether you do any year-end tax planning or wait until the filing deadline, here’s a list of key changes that could impact your federal tax return due April 15, 2015:

• Personal and dependent exemptions increase to $3,950 per person.

• The 2014 standard deduction is $6,200 for a single taxpayer and $9,100 for a head of household. The standard deduction for married couples filing jointly also increases to $12,400.

• Several benefits have expired, including the tuition and fees deduction, educator expense deduction, deduction for mortgage insurance premiums, cancellation of some mortgage debt, nonbusiness energy property credit and state and local sales tax deduction. Congress is expected to vote on extending the tax breaks after the November 2014 elections.

• If you purchased 2014 health insurance from the federal or a state-sponsored marketplace, you’ll receive Form 1095-A around January 31. The form will have the information you need to report on your tax return, including the premium tax credit. Simply enter the form information when your tax program asks.

If you got the premium credit in advance, your amount was based on your estimated household income and family size. Your credit amount will be reconciled with your actual income and family size on your tax return. If your situation changed since applying for insurance, you may receive a larger refund or have to pay part of the credit back.

• If you didn’t have minimum essential health insurance for three or more months in 2014 and don’t qualify for an exemption, you may pay a penalty. The shared responsibility payment is the higher of 1 percent of your 2014 income or $95 per adult and $47.50 per uninsured dependent under 18, up to $285 per family. Your tax program will ask simple questions to calculate your payment.

If you qualify for an exemption, remember some require you to have a certificate number (ECN) for your tax return in order to avoid the shared responsibility payment. To get an ECN, you must send an application and supporting documentation to your marketplace. Application processing can take several weeks, so apply now to avoid delay of your tax refund.

Learn about more tax law changes at www.irs.gov and www.taxact.com/taxinfo. Visit www.healthcare.gov and www.healthcareact.com for premium credit and exemption information.

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Morocco Urges New Approach To Development As Key To Security Strategy

(NAPSI)—At the United Nations General Assembly, one of America’s staunchest allies recently called for a new approach to helping developing countries achieve secure, sustainable economic and political stability.

Morocco’s King Mohammed VI, in a speech delivered to the General Assembly by the country’s Prime Minister Abdelilah Benkirane, urged that development assistance be based on respect for developing countries’ abilities and understanding of their unique environments.

“Each country follows a path of its own, having taken into consideration its historical development, cultural heritage, human and natural resources, specific political circumstances, as well as its economic choices and the obstacles and challenges facing it,” he said.

He concluded with an assessment of the urgency of the situation: “The world stands at a crossroads today. Either the inter- national community supports developing countries to help them achieve progress and ensure security and stability, or we shall all face the consequences of more conflicts and greater fanaticism, violence and terrorism—all of which feed on feelings of injustice and exclusion-and no part of the world shall be safe.”

Morocco’s understanding that “there can be no stability without development” is at the heart of the country’s multidimensional approach to combating extremism and terrorism—a unique approach recognized at a U.N. Counter-Terrorism Committee briefing that examined Morocco’s experience.

At the briefing, Yassine Mansouri, Director General of Morocco’s intelligence agency, highlighted Morocco’s growing intelligence network and partnerships with neighboring countries and told the Committee that Morocco’s efforts “to fight internal terrorist threats are a significant contribution to the international fight against terrorism and, through the sharing of intelligence, have saved many countries from malevolent acts threatening their security.”

Ahmed Toufik, Morocco’s Minister of Islamic Affairs, explained that the role of government is to identify the radicalizing elements within society and pacify them. He reported that Morocco has established an institute in the Kingdom where religious leaders undergo mandatory training in Morocco’s brand of moderate Islam before they start preaching in public.

The briefing came just days after the Global Counterterrorism Forum announced several new counterterrorism initiatives in which Morocco will play a key role.

This information is conveyed by Beckerman on behalf of the Government of Morocco. Further information is available at the U.S. Department of Justice.

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In-Depth Study Reveals How To Identify Actively Managed Funds That Can Add Significant Value To Retirement Savings

(NAPSI)—Looking at two key characteristics can help investors identify actively managed mutual funds that have outpaced index-focused investments over the past two decades, according to an in-depth study released by American Funds, whose parent company, Capital Group, manages nearly $1.4 trillion for individuals and institutions.

The study found that actively managed stock funds with relatively low expenses and whose portfolio managers invest alongside shareholders generated more value than “passive” investments over a 20-year period ending in January 2014. The study challenges the belief that investors should settle for average returns provided by index funds that seek only to mirror the movement of the broader markets. Choosing an active manager that can outpace the broader markets can make a significant difference in how much money investors are able to accumulate for retirement—and how long their money will last in retirement, according to American Funds.

“Low expenses and high manager ownership are critically important factors for investors to consider when they are searching for mutual funds that can help them achieve their investment objectives,” said Tim Armour, a portfolio manager and Chairman of the Management Committee at Capital Group. “Low expenses mean investors have more of their money working for them. High manager ownership means that fund managers are investing significant amounts of their own money in the portfolios they manage. They have ‘skin in the game’ and, not surprisingly, the funds have tended to provide better results.”

The American Funds’ study provided two hypothetical scenarios that demonstrated the importance of identifying actively managed funds that can add value over the long term:

• The first scenario looked at what would have happened had a 45-year-old invested $100,000 in January 1994 in two portfolios, with half of each devoted to large U.S. companies and half to large international firms. One portfolio consisted entirely of “passive” exchange-traded funds (ETFs), which are securities that track an index such as the Standard & Poor’s 500 or Dow Jones Industrial Average, but trade like stocks on an exchange. The other portfolio drew from the universe of 3,037 active equity mutual funds tracked by Morningstar, including only those funds whose expenses were in the lowest 25 percent and whose investment firms ranked among the highest 25 percent in manager ownership. After a 20-year period, the portfolio of actively managed funds would have grown to $551,409, or 31 percent more wealth than the ETF portfolio.

• The second scenario looked at what would have happened over the same period to a 65-year-old retiree who started with a $500,000 nest egg and invested in the same two portfolios. Assuming that retiree made an initial withdrawal of 5 percent of the principal from each portfolio and then increased that amount by 3 percent each year to account for inflation, the actively managed portfolio would have generated 5-7 percent more wealth in retirement.

American Funds emphasizes that the past results of mutual funds do not guarantee they will be similar in the future.

Information on expense ratios and manager ownership is typically available on fund company websites (see www.americanfunds.com), as well as from independent research firms such as Morningstar or financial advisors.

Investors who are relying on 401(k) plans for their retirement may want to review which mutual fund families are being offered through those plans, Armour said, suggesting that they specifically look at the funds’ expense ratios and manager ownership information.

“There are a number of fund families—American Funds among them—that keep their costs relatively low and have portfolio managers who invest alongside their shareholders,” Armour said. “Rather than simply going along with the idea that passive investments are the only answer, investors would benefit from using these two screens. Active managers that have the potential to provide superior results are available, and the value they may add can make a significant difference to investors in pursuing their retirement objectives.”

For more information, visit www.americanfunds.com.

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Editor’s note: The ETF portfolio represents an equally divided allocation between a widely used S&P 500 ETF and MSCI ACWI ex USA ETF. For years in which the MSCI ACWI ex USA ETF was not in existence, index returns were used, net of the ETF’s fees, as of 2013. The ETFs selected were the largest in their respective categories (among Morningstar’s universe of large-cap investments) tracking the S&P 500 and MSCI ACWI ex USA indexes as of December 31, 2013. The actively managed portfolio represents a cross-section of the least expensive and highest manager ownership quartiles (50 percent U.S., 50 percent international). The U.S. allocation is equally weighted among 85 active U.S. equity managers; the international is equally weighted among 20 active international equity managers.

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Real Insights From Realtors

(NAPSI)—For many people, buying a home is a goal they aspire to achieve and often the most significant financial decision they'll make in their life. If you're among them, consider this advice: Given the mass amounts of information, data and tools available, it's critical to work with a professional who can help you make sense of it all. During the home buying or selling process, it's wise to follow these tips:

• Work with a local expert. Realtors are the most trusted resources for up-to-date, comprehensive and accurate real estate information when it comes to navigating each step of the complex home buyers process. More than four out of five recent home buyers and sellers used a real estate professional, according to the National Association of Realtors.

• Learn about the area. Looking to move to a new neighborhood? Chances are you're unfamiliar with some characteristics of the area, such as traffic patterns on busy streets and the best schools within the district. Realtors have a finger on the pulse of each market where they do business. They're responsible for knowing the nuances to consider before buying a home and can leverage that expertise to help you.

• Seek accurate information. Many websites offer to help potential home owners find the perfect house. Some people have even suggested the Internet will eventually make buying a home as easy as buying an airline ticket or a stock certificate. However, consumers often complain that some of the information provided on these sites is either out of date or inaccurate, creating confusion and frustration.

A Realtor, on the other hand, can provide valuable counsel, discuss listings, show you homes in person, negotiate on your behalf and help you stay focused on the emotional and financial issues that are most important. That may be one reason 88 percent of buyers in 2013 used a real estate agent, up from 69 percent in 2001.

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How To Spot A Phishing Scam And Avoid Getting Hooked

(NAPSI)—It could happen to you: You open your e-mail and see a message that seems to come from your bank asking you to reconfirm your online banking profile because of “some unusual activity on your account.” Reading it, you notice a couple of things, however. The e-mail begins with a simple “Hello,” not a personal greeting. A couple of words are misspelled and the grammar is a little off. Next, you roll your mouse over the link you’re asked to connect to and you notice it’s clearly not from your bank, because the link misspells the bank’s name.

Nice work. You’ve just avoided being hooked by a phishing scam, where online thieves use false website links and other schemes to gain access to people’s private information or install harmful software on their computers.

“This is what comes to mind when you hear ‘phishing’ and these low-skill attacks definitely still exist,” says Peleus Uhley, lead security strategist at Adobe. “However, phishing attacks have improved and have become more sophisticated over the years. In order to be less obvious, they will often illegally include corporate logos and messaging. They will even use recent events to make the e-mail seem more legitimate,” he adds.

For example, at least 2 million people received an e-mail notifying them that an order they had placed on a large U.S. retailer’s website was being processed, though none of them had actually done so. Still, thousands of people clicked on the link in the e-mail, and they downloaded malware that infected their computers, putting them in the control of the hackers.

Some phishing scams purport to offer the latest updates to popular software such as Adobe Reader and Adobe Flash Player. “These scams can mislead some users to install malware that harms their computers and attempts to capture their sensitive personal information,” says Uhley. In truth, updates to Adobe products are available only on its website. The company never makes software updates available through third parties.

“If you think you have been a victim of a phishing e-mail claiming to be from Adobe, then send a copy of the offending e-mail to our customer support team so that we can investigate,” Uhley advises.

Recognizing Phishing E-mail

• A request for personal information. No legitimate company will ask for personal or account information via e-mail. For example, a recent phishing scam, this time supposedly from a major bank’s customer service group, warned recipients that someone tried to log into their accounts and they must now “confirm” their account info. The phishing spam took recipients to a very convincing copy of the bank’s log-in page, including a Web address that looked like it ended with the bank’s website link, but in fact went to a website in Russia.

• Urgency. Don’t ever feel pressured into divulging personal information. While there are legitimate reasons for a company to ask you to do something right away—there’s been a security breach, for example—phishers often use scare tactics to fool you into updating certain information. Contact the company directly to confirm the authenticity of the request.

• Incorrect spelling and bad grammar. Phishers often use misspelled words on purpose to get around spam filters that check for the legitimate spelling of a brand name, for example. Another reason is that many scams are run from overseas, where English isn’t the first language.

• Impersonal greetings. Legitimate companies will use customer names or user names in the e-mail and banks will often include part of an account number. Phishing e-mails typically offer generic greetings.

• Your e-mail is the “From” address. This is a sign of a fake e-mail message. Similarly, if the “To” field is a long list of recipients, you should also be cautious. Legitimate e-mails will most likely be sent directly to you and you only.

Be Smartphone Smart

You should be just as wary on your smartphone as you would be on your desktop. Never give away a password or any personal information. If you’re unsure, go to the site directly or e-mail customer support directly. Never use the links or contacts within the e-mail itself.

Learn More

For further facts and tips on phishing and how to protect yourself, visit www.adobe.com/security/prevent-phishing.html.

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Helping Veterans Cope With Financial Issues

by Blake Allison

(NAPSI)—If you are a servicemember or veteran facing financial struggles, you’re not alone—and help is available.

The Problem

A sampling of security clearance hearings from the Defense Office of Hearings and Appeals found that about 50 percent of clearance denials involved “financial considerations.” And in recent Blue Star Families’ Military Family Lifestyle Surveys, 41 percent of respondents listed pay/benefits as one of their top three military family life issues. Additionally, 84 percent of respondents who mentioned pay and benefits said that they were having trouble making ends meet or felt their servicemembers’ military pay was low, and 65 percent said they experience stress related to their current financial condition.

While there are a lot of resources available to the military community to overcome these challenges, many servicemembers or veterans may not know which are relevant or how to access the ones that are.

A New Solution

A financial education program for veterans, servicemembers and their families called VALOR, or Veterans Assistance for Learning, Opportunity & Readiness, can help. It features an online tool known as LifeCents that offers veterans a free financial health assessment focused on helping them understand the factors affecting their financial well-being. This preventative financial education program can help you understand and identify threats to your financial security before they become serious. Created by a team of experts in the field of consumer financial education at Financial Education & Literacy Advisers (FELA), it personalizes the learning experience to make it relevant and rewarding.

PRA Group, a financial services company that helps customers resolve their debt, provided financial support to launch VALOR as a resource for servicemembers, veterans and their families to overcome financial challenges and gain long-term financial security.

Veterans, servicemembers and their families can take the first step toward achieving financial independence by signing up for LifeCents to get their free personalized financial health assessment and guide to resources most relevant to them at http://valorusa.org/sign-up.

Learn More

For additional information about FELA and VALOR, please visit www.myfela.com and www.valorusa.org.

• Mr. Allison is president of Financial Education & Literacy Advisers.

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Your Retirement Plan, Post-Great Recession


(NAPSI)—Everyone from the baby boomer to the fresh-out-of-college millennial should think about retirement. More important, they should plan for retirement. Recent polls have shown that outliving retirement savings is one of the prime concerns for retirees.

The concern is a justifiable one. Thirty-six percent of Americans have no retirement savings and many have not saved enough to make them feel comfortable as they approach and begin retirement. As people continue to live longer, there is worry that they will outlive their savings—if they have sufficient savings to begin with.

In the post-Great Recession climate, an emphasis on savings, retirement security and financial preparedness has never been as salient to the public—and so urgent. However, many people do not know how to begin to prepare a solid financial plan or what tools they should use to build an effective and reliable financial portfolio.

With pensions and other employer-provided retirement plans disappearing from the retirement landscape, it is placing more responsibility than ever on the average American to provide a steady income stream for themselves during their golden years. The thought of restful days in a sunny climate could be usurped by the thought of keeping up with bills and affording the upkeep of a home.

The landscape may sound bleak, but people who take a proactive approach can find that planning ahead helps alleviate concerns about their retirement years. In fact, several financial tools exist to help people maintain a comfortable lifestyle in retirement.

One of those tools is a fixed indexed annuity.

A fixed indexed annuity, or FIA, is a key part of a balanced financial plan that offers the opportunity for growth through a steady, guaranteed lifetime in come stream, all while protecting the principal from the un certainty of market volatility, according to the Indexed Annuity Leader ship Council.

After the lows the stock market experienced in recent years, Americans have been weary of losing their money in investments. With an FIA, a retiree cannot lose his or her principal balance and is guaranteed a minimum return, ensuring the buyer never loses his or her investment.

Laura Adams, an insurance analyst, personal finance expert and author of "Smart Moves to Grow Rich," says, "Fixed indexed annuities are one of the most overlooked ways to make sure you never run out of money in retirement. They give you a set rate of return and income that's guaranteed for your entire life, no matter what happens in the financial markets. This security can make the difference between a retirement filled with constant financial worries or one with happiness and peace of mind."

FIAs are unique in that they offer the possibility of competitive interest crediting, if the markets are doing well. "Having an FIA is a smart way to balance your financial portfolio. It allows you to lock in your principal so it never declines in value due to market downturns, while also enjoying potential upside through market-linked growth. That allows you to enjoy moderate rewards without taking on too much financial risk," Adams says.

FIAs also provide further benefits through optional riders. Riders provide additional income in certain situations, such as nursing home stays or terminal illnesses. Health care riders are good options for individuals who are concerned with paying for possible health costs as they age. Other riders include income, which provides guaranteed income for life, and death benefit, which ensures that if the annuity purchaser dies, his or her beneficiary can receive an enhanced death benefit.

Another benefit to fixed indexed annuities is tax-deferred growth, allowing money to compound year after year. Taxes are not due until money is withdrawn from the annuity. Also, if individuals choose to receive an annuitized income stream on a non-qualified annuity, the payment is a combination of earnings and principal. Since the principal was put in on an after-tax basis, that portion is never taxable. Individuals will only owe tax on the earnings portion of their annuitization payments.

The benefits to an FIA are appealing in light of the instability of the market in recent years. When purchasing an FIA, make sure to do research and ask questions. Like any other major purchase, it's important to make sure you are comfortable with the contract and that the product is right for your situation.

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Students And The Selective Service

(NAPSI)—There’s good news for young men in high school who will turn 18 this school year. They can register with the Selective Service without ever leaving the school grounds.

That’s because at many schools there are volunteers who can provide young men with a convenient alternative to going to the post office to register.

These high school registrars help ensure that students are in compliance with the Military Selective Service Act, which requires young men to register within 30 days of their 18th birthday. These volunteers can also assist men in registering online, using school computers to connect to www.sss.gov.

Registration is critical for young men as they move on from high school since it is required when applying for federal college loans and grants and for federal jobs.

It is also necessary for those who wish to become citizens, and for employment with many state and municipal governments.

To learn more or register online, visit www.sss.gov.

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