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Saturday, 04 September 2010

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How 2009 Ended: By the Numbers
The S & P 500 gained 26.5%, the second best performance of the decade, the 11th best in the last 50 years of this particular index.  Since dropping to a bear market low on 3/9/09 the S & P 500 has gained a remarkable +67.8% total return through the close of trading in 2009.

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Congress and Estate Tax: Now What? 

Nothing has happened, that’s the problem. The House passed a bill in early December ’09 that would have provided a patch for the 2010 estate tax dropping to zero, preserving the $3.5 million exemption, the 45% rate and the stepped-up basis.  This patch would have given congress another year to work out a permanent solution.  But, they couldn’t agree on a bill, so nothing has happened.  Barring unexpected moves, the estate tax and generation skipping taxes (but not the gift tax) will be gone in 2010, with a scheduled reappearance January 1, 2011.

Now is the time to check your estate planning documents (Trusts, Wills, Agreements) as the winds are changing and additional strategizing might be beneficial to your business and or family. 

Risk Tolerance   

With market changes and downturns in 2008 brought some people to the realization that they might not be in the proper risk category.  Has your level of risk to reward changed in the last year?  When was the last time you took a quick survey indicating your risk tolerance? 

Employers:  401-k “Pay Outs"

According to the Department of Labor between 2001 and 2007 over 80% of employees filing claims against their company 401-k plan for perceived mismanagement were settled with 'monetary action' against the employer.  Fiduciary responsibilities are becoming more crucial, annual reviews of the fiduciary system has become vital.

 

 

The information provided is not intended as tax or legal advice and should not be relied upon as tax or legal advice.  Neither Woodbury Financial Services, Inc. nor its registered representatives or employees provide tax or legal advice. As with all matters of a tax and legal nature, please consult your tax or legal counsel for advice.

For more information about this subject or related insurance or investment thoughts contact Joseph J. Simon, Registered Representative, Simon Insurance & Investment Services, Inc. 3008 Walker DR. Green Bay, WI. 54311 This e-mail address is being protected from spam bots, you need JavaScript enabled to view it 920-465-3843. Securities through Woodbury Financial Services, Inc. St. Paul , MN. Member FINRA/SIPC Simon Insurance & Investment Services, Inc. is not an affiliate of Woodbury Financial Services, Inc.

 

 

 

 
 
Year 2010 Rare ROTH IRA Conversion

By Joe Simon

We here in the U.S. are on the precipice of what could possibly rank up there as the largest amount of untaxed money ever moving in one given year. 

The down market woes we have experienced might be a ‘blessing’ in disguise if you plan on moving some of your traditional IRA or 401-k money to ROTH IRA’s or ROTH 401-k’s.  Here is what I mean.  Once the year 2010 begins we will have the opportunity to consider moving tax deferred dollars, walking over a bridge (figuratively) paying the tax due on the transferring untaxed money, and setting it in a ROTH account.  By the way, there is no earnings limit determining who can use this strategy.  Whatsmore, the tax due can be extended over a two year period to pay it (2011 and 2012).  This is available in 2010 only.

For those who believe taxes are going up, especially for your particular bracket based on income, this is something you must stop and figure out.  The ‘water marks’ our past tax brackets have left; the 5-year period of time from 1988-1992 was the only time in the past 50 years when the top marginal tax rate was less than today’s 35%. The highest federal tax bracket we have ever seen is 90%.    Considering recent past Federal stimulus package payouts some are saying take advantage of this low tax bracket season we are in.

Here is a dollar example of how this would work:  Assume you have an IRA and you are in the 35% tax bracket.  That $100,000 would be worth $65,000 to you once you paid Federal taxes, presuming you converted this to a ROTH IRA.  The money to pay the tax due comes from your ‘pocket’ NOT the account which in-turn grosses up the account value within your ROTH back to $100,000.  ‘Why not pay the $35,000 in taxes due out of the IRA account’?  If you are under age 59 ½ you will be socked with a 10% penalty for tapping that money for that purpose. 

Lastly, there are effective reasons for you to consider using the ROTH conversion.  Account principal will remain tax-free, to include the growth.  A nice option to have once you start to sell your business, property, or tap into your other 401-K, Profit-Sharing, IRA accounts which are all waiting to pay taxes.

See your tax advisor for specific details, and then call me to talk about your investment options and strategies.

 

The information provided is not intended as tax or legal advice and should not be relied upon as tax or legal advice.  Neither Woodbury Financial Services, Inc. nor its registered representatives or employees provide tax or legal advice. As with all matters of a tax and legal nature, please consult your tax or legal counsel for advice.

For more information about this subject or related insurance or investment thoughts contact Joseph J. Simon, Registered Representative, Simon Insurance & Investment Services, Inc. 3008 Walker DR. Green Bay, WI. 54311 This e-mail address is being protected from spam bots, you need JavaScript enabled to view it 920-465-3843. Securities through Woodbury Financial Services, Inc. St. Paul, MN. Member FINRA/SIPC Simon Insurance & Investment Services, Inc. is not an affiliate of Woodbury Financial Services, Inc.