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by Naomi ganoe, Cpa, mt, CFp E ta x limits have been released for 2014 reminding us to take a closer look at retirement and wealth transfer opportunities. The unified estate and gift tax exclusion increased from $5,250,000 for individuals to $5,340,000. That means each taxpayer can gift $5,340,000 during his or her lifetime or at death without paying gift or estate tax. The generation-skipping transfer (GST) tax exemption also increased to $5,340,000. The GST exemption is used for gifts or transfers to grandchildren (individuals who are more than one generation below you) or trusts that will benefit a generation that skips an individual's children. The maximum gift and estate tax rate for 2014 is 40 percent. The annual gift exclusion amount one can give to any individual without paying gift tax or without using one's lifetime exemption remains at $14,000 for 2014. Since this figure is for each taxpayer, a married couple can give $28,000 to an individual without any gift taxation. STATE AN d G IF T Beneficiary designations on estate plan trust accounts, insurance contracts and retirement accounts should be reviewed periodically. Requesting w r it ten con f i r m at ion f rom t he account carrier or agent will ensure the beneficiaries listed are correct. It is a good idea to review those listed as beneficiaries to confirm they are still relevant (considering births, deaths, divorce, charities, wealth of beneficiaries, etc.). Tr usts a re subject to the new Medicare Surtax (additional 3.8 percent tax) on their passive income. Trusts also pay tax at the top individual rate of 39.6 percent on income in excess of only $12,000. Trust account owners and trustees should look at transfer opportunities to reduce income taxes. Making distributions to beneficiaries in lower tax brackets may help reduce tax. Be sure to consider the impact on the income of the beneficiary, the additional Medicare Surtax and potential kiddie tax consequences. Another planning consideration involving the Medicare Surtax is the participation in activities where one could change the passive versus active label. Passive activities are subject to the additional 3.8 percent tax but nonpassive activities are not. Be careful to consider all investment activities together. Changing the active versus passive status will affect the ability to offset income investments with loss investments in calculating the total income tax to be paid. High earning individuals owning profitable closely held companies can significantly increase individual retirement savings by having their corporation sponsor both a Defined Contribution and Defined Benefit Plan. These types of plans can be layered so that together they maximize retirement funding to owners, and offer larger corporate income tax deductions and larger individual income tax deferrals than by having only one plan. As the end of the year is approaching, it is a good time to take a look at these key planning opportunities. Naomi Ganoe is a Senior Manager at CBIZ MHM, LLC, in Cleveland. ■ NovEmBEr /dECEmBEr ■ mdNEWS.Com ■ MD News Cleveland/Akron/Canton | 43