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Jason Parker
Budgeting for Retirement

You won’t be able to withdraw an unlimited amount of money in retirement. So a retirement budget is a necessity. Some retirees forego one, only to regret it later.

Run the numbers before you retire. Often people need about 70-80 percent of their end salaries in retirement, but this can vary. So years before you leave work, sit down for an hour or so (perhaps with the financial professional you know and trust) and take a look at your probable monthly expenses. Online calculators can help. read more »

Donor-advised Fund

So, you’d like to make some major charitable contributions, but you don’t want to create a family foundation — with its paperwork and management commitment and the possibility of squabbles. Is there an alternative?

Yes, there is. You could consider a donor-advised fund (DAF).

How does a DAF work? A donor-advised fund is a private fund established to manage charitable donations of individuals, couples, families and institutions. It is sponsored by a 501(c)(3) non-profit organization. The process of gifting through a donor-advised fund works like this. read more »

Wealth And Estate Planning
How much attention do you pay to this factor?

Could you end up paying higher taxes in retirement? Do you have a lot of money saved in a 401(k) or a traditional IRA? If so, you may be poised to receive significant retirement income.

Those income distributions will be taxed. As federal and state governments are hungry for revenue, you may see higher marginal tax rates in the near future.

Poor retirees with meager savings may rely on Social Security as their prime income source. They may end up paying less income tax in retirement, as up to half of their Social Security benefits won’t be counted as taxable income. read more »

Amid all the hype and euphoria, some history is worth remembering

America’s got gold fever. Internet headlines inform you that gold settled at another record close today. Nightly news segments show you footage of excited sellers and beaming commodities traders. Radio commercials remind you that gold has outperformed stocks in the last decade. How should you respond to all this?

There’s no doubt that in recent history, the performance of gold is startling. Across the 2000s, gold gained 278.52 percent on the COMEX while the S&P 500 lost 24.10 percent. In 2010, the S&P 500 advanced 12.78 percent and gold notched a 29.76 percent gain. read more »

Should you exploit the new $5 million lifetime gift exemption?

In late 2010, Congress reunified the estate tax, gift tax and generation-skipping tax (GST), giving them all top rates of 35 percent with $5 million lifetime individual exemptions.

In addition, the estate and gift tax exemptions are now portable between married couples. Upon the death of one spouse, the executor of the estate can elect to transfer any unused portion of the $5 million individual exemption to the surviving spouse.

At the moment, these tax rates and generous exemptions apply through 2012. In 2013, things may change. read more »

The 2 Percent Opportunity

What would you do with an extra $1,000 or $2,000? The Tax Relief Act of 2010 will give many of us the equivalent of a two percent raise in 2011. Employee payroll taxes have been cut from 6.2 percent to 4.2 percent this year. So if you pay into Social Security, you are looking at a rise in your take-home pay.

What are your plans for that extra money?

How about directing it into your 401(k) or IRA? That two percent “raise” will show up in your paychecks throughout the course of the year — it will come to you incrementally rather than as a lump sum. Still, 2 percent is nothing to scoff at — if you make $50,000 in 2011, you’re looking at $1,000 of found money. read more »

With the President's signature, most of them will remain in place through 2012

A holiday gift for taxpayers? After a 277-148 passage in the House and an 81-19 approval in the Senate, President Obama signed the 2010 Tax Relief Act into law on Dec. 17, extending the Bush-era tax cuts. Here is the impact of the new legislation:

Current federal income tax rates are preserved for everyone. The federal income tax brackets will remain at 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent for 2011 and 2012. read more »

They affect anyone with a brokerage account

Are you going to purchase stocks in 2011? If your answer to that question is “yes,” there’s an important IRS rule change you should know about.

If you buy a stock in 2011, your broker must report the gain or loss when you sell it. In fact, this will be true for the following investment classes as of the following dates:

  • Individual stocks you buy after Jan.1
  • Mutual fund shares you buy after Jan.1, 2012
  • Bonds, options and other securities you buy after Jan. 1, 2013

Prior to 2011, reporting the gain or loss triggered by the sale of an investment was your responsibility — but the IRS wasn’t satisfied with that. read more »

End-of-the-year money moves

What has changed for you in 2010? Did you start a new job — or leave a job behind? Did you retire? Did you start a family? If some notable changes occurred in your personal or professional life, then you will want to review your finances before this year ends and the next one begins.

Even if your 2010 has been comparatively uneventful, the end of the year is still a good time to get cracking and see where you can plan to save some taxes and/or build a little more wealth.

Do you practice tax loss harvesting? That is the art of taking capital losses (selling securities worth less than what you first paid for them) to offset your short-term capital gains. You might want to consider this move, which should be made with the guidance of a financial professional you trust. read more »

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