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Issue: # 26 |
November 2010 |
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Welcome to the November Issue of the Brighton Bulletin!
Another month has come and gone and investing remains as challenging as ever! One market pundit believes bonds are over-valued and poised for collapse while another believes bonds are still under-valued. Another pundit believes equity markets are poised for a breakout while still another believes markets will retest the February 2009 lows! Of course, this uncertainty exists at all times and is why investing bears risk. Our objective is always to manage risk while generating return. Our task seems simplistic, and obvious, but is not. Most investors focus on maximizing return and often ignore or under-appreciate the risk they bear striving for that return. The result, when markets turn downward, can be disastrous. My point is to emphasize the value in approaching investing skeptically. This inherent defensive mechanism can help you as an investor at least manage downside risk during difficult markets and possibly help you avoid over-indulging in good markets. This year we've seen a bit of both with a roller coaster ride so far. We anticipate 2011 will offer more of the same for several reasons: 1) GDP growth appears to be weakening - initial 3Q GDP was 2.0% (1), which is very low for this stage of a supposed recovery and was lower than expectations. It shouldn't be surprising if the first revision of this number is below 2%. 2) Real estate remains in a deep, deep funk. I was recently looking at a listing for a property for $650,000. 4 years ago (2006), this property sold for $1.250 million! The foreclosure mess is only adding to the uncertainty. 3) The Fed is discussing another round of quantitative easing which is disconcerting to many economists and investment strategists. Inflation appears subdued currently, with many concerned about deflation (including me), yet another round of easing could stoke inflationary concerns. (1) Yahoo finance We'd welcome an economic recovery in 2011 that follows historic precedent but we're not sure it's going to happen. We remain skeptical and are managing our portfolios accordingly. If you'd like to discuss your portfolio in greater detail, please contact us to schedule a meeting.
As always, if there is anything we can do for you, please contact us. Follow us on Facebook, and on our blog, the Brighton Perspective!
Sincerely,
John P. Middleton, CFA, CAIA Brighton Financial Planning |
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IRS Announces 2011 Benefit Limits
October 28, 2010 - The Internal Revenue Service (IRS) on Thursday announced that the 2011 deferral limit for 401(k), 403(b) or 457(b) plans and the federal government's Thrift Savings Plan is unchanged at $16,500.
According to the tax agency's annual announcement on pension-related limits, the limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged for 2011 at $49,000.
The limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) also remains unchanged at $195,000. For a participant who separated from service before January 1, 2010, the participant's limitation under a defined benefit plan under section 415(b)(1)(B) is unchanged.
The catch-up contribution limit for those aged 50 and over remains at $5,500 for 2011.
Generally, the IRS said, the 2011 figures reflect either no changes or small inflation adjustments. The limitations that are adjusted by reference to Section 415(d) generally will remain unchanged for 2011. The agency said this is because the cost-of-living index for the quarter ended September 30, 2010, while greater than the cost-of index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation.
Other limits announced in the IRS notice include:
- The AGI limit for the saver's credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750.
- The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000.
plansponsor.com
| More information on the 2011 limits is at http://www.irs.gov/newsroom/article/0,,id=229975,00.html.
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Client Alerts
Check out the Client Alerts we have posted under our Client Resources tab on our website.
These are short informational videos that include current interesting financial and tax information from Forefield Inc.
Some of the posted Client Alert Videos include:
- Considerations in Claiming Social Security Retirement Benefits
- Financial Reform: What it is and why it matters to you
- Putting Market Volatility in Perspective
- Health-Care Reform
- Roth IRA Conversions 2010
Click on the link below to see what's new!
Check them out today!!
Client Alerts | |
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New Social Security Figures
Beneficiaries will not receive a cost-of-living adjustment (COLA) for 2011.
This is because there was no increase in the Consumer Price Index (CPI-W) from the third quarter of 2008 to the third quarter of 2010. This is the second year in a row that no COLA has been payable.
The maximum annual earnings subject to Social Security taxes will remain at $106,800 (by statute, this amount remains the same when there is no COLA).
Earnings required for a quarter of coverage will remain at $1,120 (by law, because there was a decrease in the national average wage index for 2009).
The retirement earnings test exempt amounts for beneficiaries will remain unchanged
(by statute, these amounts remain the same when there is no COLA). For beneficiaries under full retirement age, the annual limit remains at $14,160 ($1,180 per month). In the year an individual reaches full retirement age, the annual limit remains at $37,680 ($3,140 per month).
Forfield Inc.
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Disclosures
The views expressed herein represent the opinion(s) of Brighton Financial Professionals as of the date of this posting, and may change at any time without prior notification. |
The links to other websites provides a path to other entities' websites that are not affiliate with BFP. BFP is not responsible for the content or information practices by websites linked to Brighton. Often we provide links to other sites solely as pointers to information or topics that may be of interest to users of our website. Such links do not imply BFP's endorsement of any information or material on any other site and BFP disclaims all liability with regard to your access to and use of such linked websites.
Brighton Financial Planning utilizes information from third party sources. Brighton Financial Planning is not responsible for verifying the accuracy of any information sourced by such third-party information providers.
Any mention of products or securities does not constitute a recommendation, investment, legal or tax advice, as BFP is not holding itself out as providing such advice.
Any mention of securities does not represent an offer or a solicitation of an offer to buy or sell such securities, particularly in those jurisdictions where such solicitation or offer is prohibited by law.
As with all investments, there are inherent risks to investing that may not be able to be mitigate through responsible investing. You should consult with a qualified investment adviser prior to investing. |
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