2009 January Keep Punching Newsletter

Don’t Need IRA Funds in 2009? You Can Leave Them in Place.

Most of us have seen the value of our IRAs and employer-sponsored retirement plan accounts dwindle during the recent bear market declines. However, new legislation provides that if you’re already taking Required Minimum Distributions (RMDs) from your retirement accounts – or will soon have to because you are approaching 70½ – you can now choose to keep those assets working for you by not taking your 2009 RMD.

The temporary relief came about because of concerns that seniors were being forced to withdraw funds from their traditional IRAs, Inherited IRAs, SEP IRAs and SIMPLE IRAs, as well as most employer-sponsored retirement plans, including profit sharing and 401(k), 403(b), and 457(b) plans, when the market is at a low point. Such withdrawals remove a larger percentage of savings than when the market is flourishing. The Worker, Retiree and Employer Recovery Act of 2008 allows you to skip these withdrawals in 2009.

By leaving your savings in your retirement plan accounts, you not only eliminate the tax due on the distribution, you also give those assets time to recover value and grow in a tax-favored environment. Unless there is further legislation, the mandatory RMD will return in 2010. Some aspects of the law are a little less clear, but I’m actively monitoring developments.

If you would like to discuss skipping your RMD and how doing so might fit into your financial plan, please don’t hesitate to call me at (201-291-9000).

Preparing for your tax preparer
What do you really need to have?

It’s that time of year many may be dreading – tax season. Whether a tax advisor prepares your taxes or you handle them yourself, it’s always a good idea to organize the necessary documents beforehand. Use this checklist to determine what you’ll need to prepare your 2008 taxes. And, if you haven’t done so already, contact me about the many benefits of year-round tax planning so April 15 won’t seem as daunting in the future.

Employment and income records
  • 2008 W-2 forms for each employer
  • Pension and annuity statements
  • Alimony received
  • Partnership and trust income
  • Scholarship and fellowship awards
  • State and local income tax files
Self-Employment records
  • K-1 forms on all partnerships
  • Receipts and documentation for business-related expenses
Homeowner records
  • Form 1098 for mortgage interest
  • Form 1099-S if you’ve sold your home or other real estate
  • Second mortgage interest
  • Real estate taxes
  • Moving expenses
Financial assets
  • Interest income statements
  • Dividend income statements
  • Broker transaction proceeds
  • Tax refunds
  • Unemployment compensation
  • Retirement plan distribution
Financial liabilities and expenses
  • Student loan interest
  • Medical savings accounts
  • Charitable donations
  • Adoption expenses
  • Alimony paid
  • Childcare expenses
  • Education expenses
  • Investment expenses
Other documentation
  • IRA, Keogh, SEP and other retirement, plan contributions
  • Income from other sources, such as real estate, rentals, etc.
  • 2007 tax return
Did You Know That…
44…Percentage of Americans who still think it’s a good idea to invest in stocks, bonds, and mutual funds versus 31 percent who think it’s a bad idea.
66…Percentage of Americans who still believe buying a home is the best investment they can make
60…Percentage of American couples who argue over money at least once a month
90…Percentage of parents who give money to their adult children to pay for major expenses such as credit card balances and student loans.

Special Point of Interest

For 2009, salary deferrals in 401(k), 403(b), and 547(e) plans have increased to $16,500 ($22,000 for those age 50 and older) and SIMPLE plans have increased to $11,500 ($14,000 for those 50 and older).

Client Corner

Kudos to our client, Addie Caputi for her commitment to helping Bergen County’s homeless population make the transition to independent living. Addie is the vice-president of the DACKKS Group board of directors. The DACKKS Group Mission is to offer affordable housing to people who are homeless.

From The Desk of Randy Neumann

One of the more difficult duties of a financial planner is helping the family should you become incapacitated or die. All too often, the heirs are unaware of the strategies put in place. To ensure that your plans are carried out according to your wishes, I recommend that you discuss your strategies with your heirs.

The beginning of the New Year might be a good time to consider having a discussion regarding estate planning issues such as wills, trusts and long-term care with your heirs.

If you would like to include me in these discussions, I would be more than happy to do so. I believe it is very important that your heirs get to know me so that they will feel comfortable discussing such matters with me in the future.

Keep Punching is a quarterly newsletter for our clients. 

Click on the links below to read the news articles included in this issue.

January 2009
Rebalancing: What it is and why it’s important
How to ‘stretch an IRA’
Optimize your employee benefits plan

If you would like to receive our newsletter and weekly market commentary via email, please call our office at 201-291-9000 or email your email address tokaren@randyneumann.com