November 7, 2008
Vol 1, Issue 2
Jean Keener
Jean Keener
Welcome to the November issue of the KFP Newsletter.  There's a lot going on in the financial world right now, so please review the table of contents on the right to see topics relevant to your situation or interesting to you.

I also hope you will check out my new website which launched yesterday.   There are financial calculators, links to lots of useful websites, and articles on various financial topics.  If you like the website, Aaron Dolton is the one who built it for me and I would definitely recommend him.

As always, feel free to e-mail me at with requests for topics you'd like to see covered.  Thank you, and enjoy the newsletter.
Retirement Plan Contribution Limits Announced
couple at computerSo often we focus on just contributing enough to company retirement plans to get the full employer match.  However, there are lots of benefits to contributing more -- it can reduce your current taxable income, grow your retirement nest egg more rapidly, and defer taxes on the dividends and gains.    It's not the best move in every situation, but it's definitely something you should strongly consider because it's often a very smart strategy.  The new 2009 limits have been announced:
  • The annual elective deferral limit for 401(k) plans, 403(b) plans, 457(b) plans, SAR-SEPs, and the federal government's Thrift Savings Plan increases from $15,500 to $16,500
  • The annual elective deferral limit for SIMPLE plans is increased from $10,500 to $11,500
  •  The annual limit on additional catch-up contributions for employees age 50 and older to 401(k), 403(b), and Section 457(b) plans is increased from $5,000 to $5,500
See other limits at
In This Issue
Retirement Contribution Limits
Silver Lining in Market Downturn
Bail-Out Tax Changes
Ten Gifting Traps to Avoid
New Dummies Book
Free Retirement Seminar
Clients and Cocktails Event
Join Our E-Mail List!
Quick Links
Our Services
Silver Lining in the Market Downturn
Keener Financial PlanningWhen you look at your retirement plan statement and it's down 30% or more from a couple months ago, it's hard to believe there might be a silver lining there somewhere.  While the market downturn has created a tremendous amount of anxiety and it's caused a significant change in plans for some who planned to retire in the next couple of years or who had recently retired, there are still some potential opportunities created depending on your situation and stage in life.  This list isn't exhaustive, but hopefully it gets you thinking a bit more optimistically about these economically challenging times.

Buying Opportunity

First, we've all heard that the downturn is a "buying opportunity."  That's easy to say, much harder to do.  But I would encourage you to give it serious consideration if you have money sitting in cash that you're not going to need for the next 5-10 years.  Warren Buffet writes eloquently on this topic in his op-ed column "Buy American. I Am." in the NY Times on October 17.  Click on the article title to link to the NY Times website and read the article.

Roth Conversions On Sale

The second silver lining created by this situation is an opportunity to do Roth conversions "on sale."  This opportunity isn't available to everyone this year, only those with incomes under $100K.  But if you are eligible, this could be a great time to convert traditional IRAs to Roths.  You will need to pay the income taxes when you do the conversion, but you'll Keener Financial Planningbe
paying taxes on a much-reduced amount verses last year at this time or what your account may have recovered to in a couple of years.  For example, if you had a traditional IRA worth $100,000 last year and it's worth $65,000 now and you're in the 28% tax bracket, converting it now would only cost you $18,200 in federal income taxes vs. the $28,000 it would have cost you a year ago -- a savings of almost $10,000.  There are some nuances to this strategy and it's not right for everyone, so make sure you research the details or talk with a financial planner (preferably me) before moving forward.

Using Losses to Offset Capital Gains

The third opportunity is to "harvest losses" to offset capital gains.  If you have long-term property you've held that's appreciated in value and you plan to sell it in the future, you may want to consider acting now because of potential tax savings.  If you sell the capital-gain property along with investments that have significant losses, they could offset each other and you would avoid paying capital gains taxes on the property that increased in value. There's also a significant chance that capital gains tax rates may be higher in the future.  Again, there are nuances to this strategy as well ... so do your homework before jumping in.

Opportunity to Re-Examine

The last opportunity really applies to everyone.  We go through life every day and it's very easy to get into routines and habits where we basically stop thinking.  But then something major happens that makes us feel less secure and makes us more willing to re-examine our lives and consider making changes.  I believe this economic downturn is one of those things.  The positive that can come out of this loss of a sense of security is that we may be willing to make that hard choice that we weren't willing to make before. 

It could be something small like committing to only 1 Starbucks a week instead of 5 and saving the other $14 -- over a year that would mean $728 in the bank.  Earning a 4% interest rate on your Starbucks savings, you would have saved $8,740 in 10 years.  Not chump change.

Or it could be something big like really wanting to simplify your life.  Downsizing a house.  Making a decision to get out of credit card debt once and for all.  Driving a car you can pay cash for.  Big actions with big pay-offs.

So if you're so inclined, I encourage you to take a moment and use this economic insecurity to do something positive for yourself.  If you've already done this, I'd love to hear about it.  You can post a comment to my website if you want it to be public, or just send me an e-mail.
Bail-Out Tax Changes Affecting Individuals
We've all heard about the bank bail-out portion of the emergency economic stabilization act.  But there were also some important benefits for individual tax payers.  They include:
  • Extension of mortgage debt forgiveness
  • One-year "patch" for the alternative minimum tax (AMT)
  • New tax credit for electric vehicles
  • New tax-free fringe benefit for bicyclists
  • Extension and modification of energy tax credits
  • Other tax changes including the child tax credit, above-the-line deductions for non-itemizers, and allowances for charitable contributions direct from an IRA.
Get the details at
Ten Gifting Traps to Avoid
Business Woman This is the time of year when we all start thinking about giving gifts.  From a financial perspective, lifetime gifting can be a powerful estate planning tool. Transferring property during your life, instead of at your death, has many advantages. Making lifetime gifts can be desirable for personal reasons (e.g., to help your children or other family members) or for financial reasons (e.g., saving taxes). No matter what your reasons for starting a gifting program, there are a few gifting traps you should be aware of.  Here are the highlights.  You can view the details here.

1. The kiddie tax rules
2. Gifts of retained interests or powers
3. Income taxation of gifts made to a trust
4. Delays in making a gift of life insurance
5. Delays in planning your estate to meet percentage tests
6. Payments for tuition or medical care made to the donee
7. Overlooking gift splitting
8. "Reverse" gifting if death is imminent
9. Overlooking the benefit of taxable lifetime gifts
10. Selecting property that does not attain your tax-savings objectives

  Jean contributes to Investing in an Uncertain Economy for Dummies
Dummies coverThe new Dummies book is out: Investing in an Uncertain Economy for Dummies.  The book is by Sheryl Garrett and the Garrett Planning Network, and Jean contributed Chapter 37: Sort through an Investment's Return.

The book was written back in June when the economy was already looking
pretty shaky.  And now given the events of past 60 days, the topic couldn't be more relevant.  The book is available in bookstores, on, and Jean has several copies to give away at upcoming events.
Free Seminar: Are You Saving Enough for Retirement?
hand writingThis free seminar will provide the tools to make a realistic assessment of your current retirement savings and come up with a plan to get on track or stay on track.  A free copy of Investing in an Uncertain Economy for Dummies will also be given away to one of the attendees.

Keller Public Library
640 Johnson Drive, Keller, TX
December 1, 2008, 6:30 pm - 8:00 pm
Advance registration recommended: (817) 743-4840
Clients and Cocktails
GKWC logo
The Greater Keller Women's Club is holding a fun event next Thursday.  It's called Clients and Cocktails and will be held at Dominion Apartments (1300 Keller Parkway, Keller, TX 76248) from 5 pm to 8 pm.  About 25 businesses will have tables set up (including me), and there will be mingling, food, drink, and door prizes.  It should be a fun evening, and you're invited.
I hope you found this newsletter informative.  KFP offers a free, no-obligation get-acquainted meeting to start the financial planning process.  To learn more or schedule a time, call 817-993-0401 or e-mail
Jean Keener
Keener Financial Planning

Keener Financial Planning provides hourly, as-needed financial planning and advice on a commission-free basis to people at all financial levels.