Happy New Year 2009!     

     USC beats Penn State 38- 24

The Good, the Bad and the Ugly.

The Good: Once again, my Trojans were the highlight of my year. USC has played in the Rose Bowl the past four years.  Fourteen of my cousins are coming from Minnesota next year to see the Rose Parade since they sit at home in mounds of snow and see our beautiful sunny weather. The Trojans have won seven consecutive Pac 10 conference titles and played in seven consecutive BCS bowl game, winning six.

The Bad: The market closed out 2008 with the worst year since 1931, with a loss of 38.5% for the S&P.  The Dow dropped 33.8% and NASDAQ turned negative 40.5% for the year.  It is safe to say that many unprecedented events took place this calendar year that will never happen again.  There were so many panic areas: banks failing, brokerages falling to liquidation points, insurance companies at risk, airlines in bankruptcy, auto makers on the brink of disaster, commodity prices soaring and then crashing. 

The Ugly: New York finds Bernie Madoff living in his penthouse apartment, instead of jail, after he confessed to a 50 billion dollar fraud of investments from charities, foundations, pensions and investors.  It was announced this morning that he mailed over one million dollars worth of jewelry to friends and relatives over the past few days. I do not understand why he is under house arrest instead of jail.

"Our lives are not determined by what happens to us, but by how we react to what happens; not by what life brings us, but by the attitude we bring to life.  A positive attitude causes a change reaction of positive thoughts, events and outcomes.  It is a catalyst, a spark that creates extraordinary results."  Anonymous

We have been a nation of spenders and we need to become savers instead. I think the economy in recession, rising unemployment and foreclosures is scaring many people to their core. More lay- offs are coming from all sectors.  The housing debacle has shaken the employment in banks, financial and mortgage, home builders, construction, home improvement, and more. It is not over yet. The next wave of the Alt A adjustable rate mortgages are due to reset their interest rates in 2009 to 2011. The move to cut interest rates to almost nothing will put pressure on mortgage rates to stay low in hope that these Alt A mortgages are refinanced, instead of foreclosed on.

Are retirement dreams deferred? Even conservative asset allocation portfolios saw losses of 20 to 30% in a matter of weeks. Panicked selling by hedge funds that were overleveraged brought the market to volatility never seen before. The market moving by over 400 points in the final trading hour of the day became the norm in October and November.

I wish president elect Barack Obama success with his new cabinet appointments and his crisis team. President Obama will take office in less than two weeks in the midst of the worst financial crisis this nation has ever faced.  My daughter will be at the inauguration to witness history in the making.

We look forward to seeing you in our new offices! Sandy

"Keep your dreams alive. Understand to achieve anything requires faith and belief in yourself, vision, hard work, determination, and dedication. Remember all things are possible for those who believe.” Gail Devers

Notes from Carol:

Please check out our blog on this site and sign up for email notices of each new post.  This is our way to keep in communication with you in these hectic economic times.


2009 Tax Changes - Here are some highlights of the changes:


Required Minimum Distributions from IRAs and Retirement Accounts are WAIVED for 2009

This means if you are over 70 ½ you will not have to take a mandatory distribution from your accounts.  You will not have to make this up, the Treasury is letting you skip the distribution.  This waiver also applies to Inherited IRAs.  We will be sending a letter if this applies to you.


IRA and 401K:

Working taxpayers can put more money away for retirement.  The maximum 401K, 403B and 457 contribution increases to $16,500 and anyone born in 1959 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 1959 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.


Estate Tax:

The estate tax exemption is increased to $3,500,000 with the top tax rate at 45%.  The lifetime gift tax exemption is still at $1,000,000 and the annual gift tax exclusion rises to $13,000 per donee.


Realized Losses and Gains for 2008

I will be mailing out the 2008 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