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| Dear Clients and Friends,
Welcome to The Redwood View, the periodic newsletter of Redwood Wealth Management! We hope to use this forum to provide timely and useful information to our valued clients and associates. The topics will cover all areas of wealth management as well as current issues that might affect you or your family. |
 Bonds without Interest?By Shawn Meade, CFP®, CPA, MS
I was reading Kiplinger's recently and came across the article "Ring Out the E-Bonds, Ring in the I-Bonds" by Joan Goldwasser. That got me to thinking. I remember when I was growing up that I would get US Savings Bonds from my grandparents or aunts and uncles from time to time for Christmas or my birthday. I'm sure that many of our clients have the same memory. Twenty years later, you find them stuck in a box somewhere and wonder, "How much are these worth?"
US Savings Bonds are issued by the US Treasury and are backed by the full faith and credit of the US Government, they are guaranteed (I don't get to say that very often in the Investment Advisory world!).
So the bonds are worth whatever their "face value" is, likely written on the bond itself.
However, while the value is guaranteed, the bonds may no longer pay interest so cashing them in and buying bonds that do pay interest probably makes more sense than leaving them in the attic.
The site has a list of bonds no longer paying interest including:
- Series E Bonds issued from May 1941 through January 1980
- Series EE Bonds issued in January 1980
- Series H Bonds - All of them
- Series HH Bonds issued from January 1980 through January 1990
- A bunch of other ones are listed on the website as well
> Read the entire article. |
Where is Abraham Flexner? 100 years ago if you needed surgery, the doctor performing the procedure was likely educated at one of 155 small, for-profit trade schools. The person who was about to cut you open was taught by part-time doctors, not professors, and there was minimal regulation about the curriculum at these schools.
Encouraged by the American Medical Association, Abraham Flexner published a report in 1910 about the quality of education in medical schools. The Flexner Report, funded by the Carnegie Foundation, called on American medical schools to enact higher admission and graduation standards.
After the report, most of the schools shutdown and the number of medical graduates dropped by one half. Today a prospective doctor must have 6-8 years of postsecondary education at an AMA approved institution with full-time clinical professors. Once this is completed, the prospective doctor must pass a rigorous state board exam.
So at the beginning of the last century, Americans rightly demanded that those who provided their health care meet the highest educational standard.
But as the next century begins, they have so far not demanded the same from those who give them advice about their money.
> Read the entire article. |
 529 College Savings Update
by Brian Huey
If you work with an advisor at Redwood and have children, you have heard about the benefits of 529 plans. That may be due to the fact that the advisors at Redwood have a collective 10 children under the age of 8 so planning for the needs of children is a constant topic of conversation in our hallways.
Investors in 529 college savings plans received good news recently as several 529 plan sponsors have reduced management fees. In December, Fidelity Investments announced it was cutting program-management fees in half for its index portfolios in all seven of its state-sponsored plans. The applicable program management costs will now range from 0.25% to 0.35% annually, down from 0.50%.
Separately, Vanguard and Upromise investments lowered program management fees in 2009 on several 529 plans. Competition is driving fee reductions as more states put pressure on plan sponsors to cut costs. Additionally, more plan sponsors are adding lower-cost index funds to reduce expenses associated with 529 plans.
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The last 18 months have brought on more pages of complexity in the IRS tax code. There are not too many major changes between the 2009 laws and the 2010 laws. However, with some good planning and use of the Stimulus tax cuts, there are some opportunities for you:
- Retirement Plan Contributions - these are essentially the same as 2009. The employee contribution to 401-K plans stays the same at $16,500. IRA/ROTH IRA contributions stay the same at $5,000. Catch-up contributions for those over age 50 also stay the same at $1,000.
- Tax Witholdings - As you get ready to file your taxes, it's a good idea to check your tax withholdings. If you are getting large refunds, consider increasing your withholdings to get the money during the year rather than at year end. If you owe each year, then chances are you are being penalized.
- Haiti Earthquake relief - if you make a donation to a qualified organization (not directly to a family) between January 12, 2010 and March 1, 2010, the donation can be deducted in 2009 or 2010. Even "text donations" are deductible in either year.
- Itemized deductions - in past years, a part of your itemized deductions were limited and phased out based on your income. This year there is no phase out, so it maybe a good idea to accelerate state tax payments, charitable donations, etc.
- ROTH conversion - in 2010 you can convert your regular IRAs to ROTH IRAs with no penalty. Taxes are due on the conversion but split between tax years 2011 and 2012. So if you convert $50,000 in 2010, you pay taxes on $25,000 in 2011 and $25,000 in 2012. There is no income cap on who can convert to a ROTH anymore so anyone with a traditional IRA can convert.
- College 529 Plans - in 2009 and 2010, you can use 529 plan accounts to buy computer equipment. Previously the accounts were limited to tuition, books, fees, etc.
- HOPE Credit - For college students (parents), there is a $2,500 tuition credit for the first 4 years of college. This used to be for 2 years but now expanded to 4 years.
- Energy Credit - You can get a credit up to 30% of the cost of certain energy efficiency projects for your home. You can get details about this at www.energystar.gov.
As always, consulting your CPA or tax consultant about how these items effect your particular situation.
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Importance of a Will
By Peggy J. Bailey, Esq.
Morris, Manning & Martin, LLP
In order to save money, potential chaos and hurt feelings among your family members, it is important to plan for the disposition of your estate upon your death.
If you die in Georgia without having a valid Will (known as dying "intestate"), Georgia law dictates who will receive your assets. If you are married and have no children, your spouse will receive all of your assets. If you are married and have children, your spouse will share equally with your children, but will receive no less than one-third of your estate. If you are unmarried but have children, your children will divide your estate in equal shares. If you are not married and have no children, your estate will be distributed to your parents. 1
If you die intestate, a friend or member of your family will have to petition the Probate Court to become the Administrator of your estate. The Administrator may have to post a bond with the Probate Court, file an inventory of your assets, and file returns annually with the Probate Court documenting the disposition of your assets.
> Read the entire article. |
Redwood Grows Again
By Larren Odom, CFP®, MBA
 It seems like every recent Redwood newsletter features a story about a new addition to our firm and this quarter's edition is no different. Ross Hughes joined Redwood as a Portfolio Analyst in November 2009. Ross is a University of Georgia graduate with a degree in Personal Financial Planning.
At UGA Ross completed coursework in Retirement Planning, Estate Planning, Investment Planning, and Portfolio Analysis so he is well equipped to help the advisors at Redwood serve our clients.
"I am a person who loves to help other people. I always knew I wanted to do something where I could be in touch with people and help them achieve their goals," Ross said.
As a Portfolio Analyst, Ross works directly with Lane Steinberger and the other members of the Investment Policy Committee.
"In my first three months at Redwood, I have learned that I work for a great group of advisors, and I believe it is due to the fact that they are good individuals. They truly care about their clients and about the other individuals in the firm."
Ross loves hunting, fishing, golfing, and "pretty much just loves being outdoors." He also loves art, art history, and likes to draw in his free time.
"My goal is to become an advisor. I am hoping after a few years in my position I will be comfortable enough to move into an advisor role. Ideally, I would love to continue working at Redwood when I make that transition. I enjoy investments and think it is an area in which I will continue to focus in the future."
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We hope you have found something useful in the newsletter. If you feel anything in The Redwood View might be helpful to a friend or family member, please feel free to forward it to them. The professionals at Redwood Wealth Management wish you and your family a prosperous 2010.
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