Asset Planning, Inc Blog

The latest from the team.

New Credit Card Rules

New credit card rules went into effect today. The legislation hopes to mitigate confusing credit card practices and help consumers manage their debt. Below you will find a summary of the new credit card rules moving forward:

  • Bills will be due at the same time each month
  • Notification of your payment due date must be mailed 21 days prior
  • Information regarding your account must be in "plain language & in plain sight"
  • Bills must include how much interest is charged for paying the minimum due
  • Calculations must be sent showing the pay off date if you only make the minimum payment & how much cardholders must pay to clear the balance in 3 years
  • Nearly all interest rate hikes are prohibited on outstanding balances
  • Consumers will be notified 45 days before any interest rate increases
  • No interest rate increases are allowed in the year following the account's origination
  • Automatic enrollment in over limit/draft programs are prohibited
  • Most under age 21 must prove assets and or income equal or greater than the credit limit to be approved for credit or have a co-signer.


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1099 IRS Revised Deadlines

Just a quick blog to let you know that the IRS has revised the upcoming delivery deadline for 1099 tax statements for the 2009 tax year from January 31 to February 16, 2010. The IRS increased the deadline in an effort to reduce the number of 1099 revisions that many mutual fund clients receive. Last year it was not unusual for clients to receive 2 or 3 revisions. The revisions are mainly due to the reclassification of dividends from qualified to non-qualified and vice-versa. The custodians we use, TD Ameritrade and Charles Schwab, are making the 1099's available on-line and mailing them out by 2/16/2010. If you do not receive your 1099, go on-line to the document section and click on tax forms to see if it is available. Or you can call or email us and we can send it to you via email or fax.

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Roth Conversion Raises Medicare Costs

With all the talk of Roth conversions in 2010, I’d like to bring attention to a little known consequence of doing a Roth conversion- it increases your income and therefore could trigger a higher Medicare premium.  Currently, most retirees pay $96.40 for part B coverage. However, if you claim the conversion income over one and/or two years you will likely be push into a very high income bracket and therefore have higher Medicare premiums for those corresponding years. To help with your planning, see Medicare’s income thresholds and subsequent premiums below:


Monthly Medicare Premium


Married Couples

$85,001   to $107,000

$170,001 to $214,000


$107,001 to $160,000

$214,001 to $320,000


$160,001 to $214,000

$320,001 to $428,000


$214,001 or more

$428,001 or more



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TD Ameritrade Doubles FDIC Insurance

We are very pleased to announce that TD Ameritrade has arranged so our clients will receive double the amount of FDIC insurance for their cash. TD Ameritrade joint accounts will now have up to 1 million dollars in FDIC coverage and up to $500,000 in protection for individual accounts. TD Ameritrade is able to do this by adding a second bank under their umbrella. No action is needed on your part to get the extra insurance.


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Year End Tax Deadlines

The end of the year is coming upon us very quickly. Here are some important dates/deadlines to beware of:

December 10 - 1st installment of property taxes are due.

Charitable Contributions - The last date to make a charitable donation that can be deducted from your return is December 31, 2009.

If you contribute to a 401K/403b/457 retirement account, check to see if you have put in enough:
The limits for 2009 are $16,500 if you are under age 50;
and if you are over 50 you may contribute another $5,500 for a total of $22,000.

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Roth IRA Conversion

There's been a lot of conversation and buzz about the new rules for converting Traditional IRA accounts to Roth IRA's in the year 2010. Basically, there will be no income limits and everyone is eligible to convert their Traditional IRA to a Roth IRA.

What does this mean and is it something you should consider?

There are 2 types of IRAs – traditional and Roth. The tax deductible traditional IRA (including IRA rollovers & SEP IRAs) is funded with pre-tax income and lowers your income for tax purposes. The money grows tax free until you withdraw it and at that time you pay ordinary income tax rates on the entire amount withdrawn. There is an additional 10% penalty if you withdraw funds before age 59 ½. The IRS requires you to take minimum distributions at age 70.5.

A Roth IRA is funded with after tax income but you can only contribute if your Adjusted Gross Income is under $105,000 if you are single and $166,000if you file jointly. You can withdraw money tax free as long as you have the Roth for 5 years and you are older than 59 ½. You are not required to take mandatory distributions.

Currently, 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 paythe entire tax due in 2010 or you can elect to pay ½ of it in 2011 and ½ of itin 2012.

Should you convert? There is not a one size fits all answer. Every situation is unique. While the calculation is fairly easy, there are many assumptions that the decision should be based on:
What is your tax rate now vs. what will it be a tretirement?
What will your tax rates be in 2011 and 2012 when the tax is due?
Will tax rates rise? We don't know, but they may.
Can Congress change the rules on tax-free withdrawals of the Roth in the future? It is always possible.
Will your income drop or be the same or more in retirement?
The funds to pay the tax need to come from funds outside the IRA. Would those funds be better invested elsewhere? Be cautious on the assumptions you use for inflation, future income tax rates and the rate of return of the IRA.

Everyone's situation and goals are different, so before you decide, consult your Certified Financial Planner or your CPA.

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Free Seminar on Alzheimer's Detection & Treatment

Mariners Church, Irvine
January 16, 2010
1p.m. - 3 p.m.

Patty Barnett Mouton, Director of Education & Public Policy, Alzheimer's Association, Orange County Chapter will discuss how to detect and treat the early signs of Alzheimer's and related disorders.

The event is offered online to those that can not attend in-person.

For event registration and details click here

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Homebuyer Tax Credit Extended

President Obama signed into law today the extension and expansion of the homebuyer tax credit. The tax credit will be extended through April 30, 2010, with a 60 day extension if a binding contract is in place prior to the deadline. First time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500. Existing homeowners will be eligilbe for the $6,500 if they lived in their current residence for at least 5 years.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit will be phased out for individuals with annual incomes over $125,000 and for joint filers with incomes above $225,000. Also added was that taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The credit does not have to be repaid, provided the home remains their primary residence for at least 36 months.

Also added to this bill was to extend unemployment benefits to those who have exhausted their benefits by the end of the year. They will receive 14 additional weeks if their states unemployment rate is under 8.5% and 20 weeks if the rate is higher (e.g., California). This is estimated to help 2 million people.

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Dow Hits 10,000

The Dow Jones Industrial Average reached 10,000 today for the first time since October 7, 2008. The Milestone was led by strong earnings reports from Intel and JP Morgan. Oil also reached a one year high today at $75/barrel. And the VIX (Volatility Index Indicator) hit a 52 week low, meaning that investors are more positive.

The first time the Dow hit 10,000 was March 29, 1999. Here are some interesting facts of then vs. now:
Gas was $1.20/ gallon
Gold was $280/ounce vs. $1,060/ounce today
The Dollar index, as compared to other currencies, was 100.36 and today it is 75.60 - 25% weaker!
US debt was $24.6 billion and today it is $50.8 billion and growing.

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Reverse Mortgage Guidelines

You have to be careful with what you're getting yourself into when it comes to reverse mortgages. Many retirees take out reverse mortgages to generate cash to live on without having to sell their home. While this type of product makes sense for some individuals, many find themselves paying excessive fees for an unnecessary product. To help consumers navigate the world of reverse mortgages the U.S. Department of the Treasury has issued the following guidelines:

1. Explore other loan products such as home equity lines of credit & cash out refinances first

2. Reverse mortgages are generally too costly if you plan to stay in your home for less than 10 years

3. Be cautious of agents that try to sell you other products, such as annuities, in addition to the reverse mortgage

4. Consult with a counselor from the U.S. Department of Housing and Urban Development before you commit to anything

5. If you do get a reverse mortgage, make sure the loan is insured under the Federal Housing Administration (FHA) so that if the lender can't or won't continue payments, the government will.

The complete guidelines on reverse mortgages can be viewed here


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