Good Bye 2009

Happy New Year! I am very happy to see the end of 2009 and all of the turmoil the year held.  In January, we saw a new president sworn in with a platform of change. I do not believe anyone was prepared for the global financial melt-down that was underway. The stock market finally recorded a bottom on March 9th, 2009 amidst fear, greed, short selling, liquidations, bankruptcies and panic selling.

This past year was the most difficult time to endure in my twenty six year career of managing investments. It was extremely challenging to have the conviction that the market had reached a bottom and begin buying good stocks and investments again. Headlines in all media continued to proclaim the market could and would continue to fall.  Headlines screamed about gold, housing price declines, Bernie Madoff and other swindlers in Ponzi schemes, oil, mortgage rates, interest rates, clunker programs, bail outs, the falling dollar, foreclosures, real estate short sales and more.  So, goodbye to 2009, and I never want to see a repeat of the frenzy this year brought. Good riddance!

Ordinary riches can be stolen, real riches cannot. In your soul are infinitely precious things that cannot be taken from you.     Oscar Wilde

Hello 2010!

A new decade is here to greet us. I still see a complicated year and road ahead. Our government deficit must be addressed, we will have rising interest rates, along with inflation at some point, our dollar must be supported, gold and oil depend on many geopolitical factors and our unemployment should start to decrease. We can have a jobless recovery and I do expect solid economic growth in 2010. 

Success is getting what you want.  Happiness is wanting what you get.  It's not how much you have; it’s how much you enjoy what you have rather than what you lack.

Los Angeles Times Money Makeover

I had the privilege of doing another makeover for the LA Times in November. This was a very long makeover involving a movie producer/director that was living on credit cards beyond her monthly income. This was one of my most frustrating makeovers once I discovered the amount of insurance and annuities she had been sold, almost all inappropriate for her.

 

API News

I will close my comments with a happy note. Carol Somoano is now an equity partner and part owner in Asset Planning. Carol has been with us for five years and I am very happy she is a partner. Nothing else will change in terms of clients; this is a corporate change as Carol is now Vice President. I remain President and CEO. Carol P. and Diane remain owners and directors.

Sandy

Notes from Carol:

Congress ended 2009 with a big tax mess.  The current law has no estate tax in 2010.  Also, the step in cost basis for heirs is reduced in 2010 and this impacts many families.  Under old law (2009), the value of the inherited property on the date of death was considered the “cost” basis for the heir.  So for example, if a parent paid $500,000 for a home, and the value of the home on the date of the parent’s death is $2,000,000, the child’s cost basis was $2,000,000. For 2010, there is a limit of $1.3 million total to the step-up in basis for all the assets combined.  Congress is expected to make retroactive fixes for these problems, but something always seems to come up that takes their attention elsewhere.

 

Required Minimum Distributions from IRAs and Retirement Accounts are back

This means if you are over 70 ½ you will have to take a mandatory distribution from your accounts in 2010.  We will be calculating the amounts and contacting you in the next 3 months to let you know the amount that must be distributed.  If you want your distribution before then, please contact us.

 

IRA and 401K:

The maximum 401K, 403B and 457 contribution stays at $16,500 and anyone born in 1960 or earlier can contribute another $5,500, for a total of $22,000.  There is no change for IRA and Roth IRAs.  The limits remain at $5,000 plus $1,000 if you are born in 1960 or earlier.

 

Roth IRA:

The Roth contribution limit phase out for couples is when AGI (adjusted gross income) is $166,000 to $176,000 and for singles it is $105,000 to $120,000.

 

Roth IRA Conversion:

You are not allowed to convert from a Traditional IRA to a Roth IRA if your income is over $100,000 but in 2010 (and only 2010) there will be no income limits.  If you convert, you will owe taxes on the entire conversion amount.  The new rule allows you to pay the entire tax due in 2010 or you can elect to pay ½ of it in 2011 and ½ of it in 2012.  Please consult us or your CPA if you are considering this.

 

Realized Losses and Gains for 2009

I will be mailing out the 2009 realized Capital Gains and Loss reports the last week of January.  This will have the cost basis and net proceeds for any sales.  It will also have the capital gains and dividends paid for the year.  You will need this in addition to the 1099s that you will receive from Schwab or TD Ameritrade to give to your tax preparer.

 

Wishing you a Happy, Healthy and Prosperous New Year!  Carol Somoano