GOOD MONEY: RETIREMENT PLANNING OPPORTUNITIES & CHANGES FOR 2009-2010
Printer-friendly versionGood Money: Your guide to financial planning & socially responsible investing RETIREMENT PLANNING OPPORTUNITIES & CHANGES for 2009-2010 By: Judith L. Seid, CFP ® President, Blue Summit Financial Group December 2009 (La Mesa) — Below is a brief discussion of some of the major opportunities available for you now and in 2010. A check-up with your tax professional, and/or financial advisor is wise to ensure that you are taking advantage of all great tax and retirement planning strategies given your individual situation. ROTH – IRA CONVERSIONS for 2009 If your income is low this year, due to layoff or lower business income, for example, you still have time to convert IRA accounts to Roth IRA. This can save you thousands of tax dollars later as the Roth-IRA monies will grow tax free vs the IRA which is tax deferred. It is also worth noting that with all of the reckless government spending, there is a great chance that tax rates could increase in the years ahead. This is another reason why now may be as good time as ever to convert. If converting may send you into a higher tax bracket, you could consider doing a partial conversion (only converting a portion of your Traditional IRA to avoid going into the next bracket). Your AGI must be below $100,000 in order to qualify for a conversion. Before converting from a traditional IRA to a Roth, be sure to consult your tax advisor and/or financial advisor. You should fully understand the potential tax impact of a Roth conversion on your finances and your estate. First determine your 2009 estimated income, and then convert an amount that allows you to at least “use up” the lower (15%) tax brackets for this year. For example, a client who files married-joint for 2009 can have up to $67,900 in taxable income and still be in the 15% tax bracket, so it pays not to waste any part of this low tax bracket. “Fill up” the bracket by converting only enough 401k plan or IRA funds to a Roth IRA in 2009 to bring the your income up to $67,900. If you are unsure about how much income you will have, convert anyway and adjust the amount later (when your 2009 taxable income is known) by re-characterizing a portion of the Roth conversion. The funds must be converted/distributed to the Roth account by 12/31/09…so no time to waste! And you have until your tax filing 2010, which can be extended until Oct. 15 to undo a 2009 conversion. Here are the 2009 federal tax rate schedules: Single Filing Status 10% on income between $0 and $8,350 15% on the income between $8,350 and $33,950; plus $835 25% on the income between $33,950 and $82,250; plus $4,675 28% on the income between $82,250 and $171,550; plus $16,750 33% on the income between $171,550 and $372,950; plus $41,754 35% on the income over $372,950; plus $108,216 Married Filing Jointly or Qualifying Widow(er) Filing Status 10% on the income between $0 and $16,700 15% on the income between $16,700 and $67,900; plus $1,670 25% on the income between $67,900 and $137,050; plus $9,350 28% on the income between $137,050 and $208,850; plus $26,637.50 33% on the income between $208,850 and $372,950; plus $46,741.50 35% on the income over $372,950; plus $100,894.50 on the income over $186,475; plus $50,447.25 Head of Household 10% on the income between $0 and $11,950 15% on the income between $11,950 and $45,500; plus $1,195 25% on the income between $45,500 and $117,450; plus $6,227.50 28% on the income between $117,450 and $190,200; plus $24,215 33% on the income between $190,200 and $372,950; plus $44,585 35% on the income over $372,950; plus $104,892.50 ROTH – IRA CONVERSIONS in 2010 – Why wait until 2010? In order to generate additional tax revenues, new rules encourage you to convert from IRA to Roth IRA. In 2010: The $100,000 AGI limit for conversions will go away for 2010 and after, as will the exclusion for married filing jointly This means that anyone can convert no matter what your income level or filing status If you do a Roth conversion during 2010, you can choose to divide the taxes on the conversion between your 2011 and 2012 federal returns with no income included on your 2010 tax return. This does not apply if you convert in 2009. Also, remember that while the income limit on Roth IRA conversions will go away in 2010, the income limits on Roth IRA contributions still apply next year and for the foreseeable future. AGI Phaseout Individuals: $105,000 – $120,000 Joint Filers: $166,000 – $176,000 NET UNREALIZED APPRECIATION (NUA) Tax Break With all the layoffs this year, some people qualify for the net-unrealized-appreciation tax break if they have appreciated company stock in their 401(k) plan. They get to withdraw the stock as part of a qualifying lump-sum distribution of the plan assets and pay tax only on the cost of the company stock to the plan. Any appreciation in the stock (the NUA) is not taxed until the stock is sold, and even then, it is taxed at favorable long-term capital gain rates (currently 15%) regardless of how long the stock is held (even if less than one year). To qualify for the NUA tax break, you must first have one of four triggering events: separation from service reaching age 591/2 death or disability. Once a plan participant qualifies, he or she can take a lump-sum distribution, which is a complete distribution of the account within one calendar year. The company stock must be transferred to a taxable brokerage account “in kind,” that is, as stock. The stock cannot be sold in the plan. You must make sure that all of the plan assets are distributed by year-end or the NUA deal will be lost. Non-company stock assets can be rolled over to an IRA since the NUA tax break does not apply to those assets. Charity transfers Qualified charitable
ASSEMBLYMAN ANDERSON HOSTS HOLIDAY OPEN HOUSE TONIGHT IN EL CAJON
Printer-friendly version Protest planned outside over donation controversy December 8, 2009 – Assemblyman Joel Anderson (R-El Cajon) invites constituents to his annual open house from 6 to 8 p.m. tonight at his offices at 500 Fesler Street, Suite 201, in El Cajon. Guests will be offered hors d’hoeuvres and refreshments as well as an opportunity to meet their legislator and have a photo taken with him. In the past, the event has drawn hundreds of visitors. Citizens Oversight, a local watchdog group, plans a “Stop Dirty Money/Fund Our Schools” protest outside the Assemblyman’s holiday party. Raymond Lutz, founder of Citizens’ Oversight, ran against Anderson in the last election. Earlier this month, Anderson agreed to a settlement with the state Fair Political Practices Commission and was fined $20,000 for accepting donations through his campaign that were in excess of amounts allowed by law. His campaign also returned more than $100,000 in donations. Fines were for donations from the Barona Band of Mission Indians, Sycuan Band of the Kumeyaay Nation, and members of the Hamann Construction family. All gave large sums to several Republican Central Committees, which in turn funneled money into Anderson’s campaign. (SDG&E/Sempra Energy also gave large sums to Republican Central Committees which in turn sent money on to Anderson, the Fresno Bee has reported, however the utility donations were not included in the settlement stipulation or attached exhibits.) Anderson has not yet announced whether he will pursue plans to run for the State Senate seat currently held by Dennis Hollingsworth, as was widely speculated before the campaign finance controversy arose. Nor has he confirmed whether he will seek reelection to the Assembly. Assemblyman Anderson’s party is free and open to all residents of the 77th Assembly District. An RSVP is requested. Please call the Assemblyman’s office at (619)441-2322 if you plan to attend. Printer-friendly version
SNOW IN MOUNTAINS: CHAINS REQUIRED
Printer-friendly version December 7, 2009 (San Diego’s East County) – Snow plows are working to clear roads in East County’s mountain areas. Chains are required on Sunrise Highway to Mount Laguna. Stormy weather has caused numerous accidents around the County. High winds have also led to man fallen trees, downed power lines and other hazards. For the latest on road conditions, check the California Highway Patrol website at http://cad.chp.ca.gov/. Printer-friendly version
STORM KILLS POWER FOR 36,000; SDG&E OFFERS TIPS FOR AVOIDING DAMAGE FROM POWER SURGES
Printer-friendly version December 7, 2009 (San Diego) – Today’s storm caused dozens of power outages throughout the County, leaving over 36,000 people without power temporarily according to SDG&E. The utility’s “emergency” line for reporting outages was so overloaded that a recording advised people to call back later. An SDG&E representative advises consumers to unplug TVs, computers and microwaves—not merely shutting them off—to prevent damage should a power surge occur when electricity comes back on. Leave refrigerator doors closed to prevent food spoilage.It’s also wise to keep flashlights or electric lanterns on hand, along with a battery powered radio to receive emergency information. East County Magazine’s editor was among those left without power for several hours in La Mesa late this afternoon, where more than 1,000 homes were affected. To report a power outage, call 1-800-611-7343 (SDGE). You can also visit http://www.sdge.com/outages/ for information on current outages. If you have details on a specific outage in your area, please post in the comments section at the end of this article. Printer-friendly version
CALIFORNIA WELCOME CENTER OPENS IN ALPINE
Printer-friendly version December 7, 2009 (Alpine) – San Diego East Visitors Bureau celebrated the grand opening last week of its new office in the Viejas Outlet Center in Alpine. The site is an official California Welcome Center, providing information for tourists on attractions in East County and the San Diego region. “This is the first California Welcome Center ever opened on tribal lands,” said Charlie Brown, director of Viejas Community Relations. The Center will be included in more than a million dollars worth of advertising by the State of California to boost visibility and inform visitors about the new facility. Soon, a new freeway billboard will inform motorists on I-8 about the welcome center, inviting them to stop by. The center offers a wealth of information including tourism brochures and coupons for local attractions. At the opening event, names were drawn for guests to vie for prizes –including taking a turn to snatch up flying cash in a money booth. (photo: Brian Gray of AT&T tries his hand at catching some holiday cash, which could be redeemed for prizes.) In addition, Supervisor Dianne Jacob was on hand to present a proclamation honoring East County’s new welcome center for visitors to our community. Printer-friendly version
NEED SANDBAGS? STOCK UP HERE:
Printer-friendly version CAL FIRE Crews throughout San Diego County are combatting flooding caused by today’s winter storm. Sandbags are available at the following locations: Valley Center Station 73 28205 North Lake Wohlford Road, Valley Center CAL FIRE Station 70 16971 Highway 76, Pauma Valley CAL FIRE Station 50 1587 Highway 78, Julian CAL FIRE Station 86, 16310 Highway 67, Ramona North County Fire Protection, Station Four 4375 Pala Mesa Drive, Fallbrook Dulzura Station 30 17304 Highway 94, Dulzura Alpine Fire Department 1364 Tavern Road, Alpine Printer-friendly version