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February 11, 2011 |
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Greetings! 
Happy Valentine's Day!
Spring's around the corner. Why don't you make financial "organization" a part of your Spring Cleaning this year? If you haven't done so already, take some time to assemble all of your financial and life documents in one place. If you would like a personal organizer to complete, please let us know.
As always, we enjoy hearing from you.
Best,
John A. Frisch, CPA/PFS, CFP
President & Founder
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Easier Cost Basis Reporting Rules
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If you're contemplating selling stock in 2011 and beyond, you should be aware of new federal regulations that give you more flexibility in managing the tax impact of your investment decisions. The new regulations, which went into effect January 1, 2011, require brokers to track your cost basis. Even better, they allow you to determine how your brokerage firm reports the cost basis of a sale. That can be helpful if you want to minimize the amount of gain on which you'll owe federal income tax or maximize a capital loss.
Your cost basis represents the original purchase price of a security plus any commissions or other fees; your adjusted cost basis is that cost basis adjusted for a variety of factors such as stock splits, corporate acquisitions or spinoffs, and reinvested dividends. Until now, reporting the gain or loss from your investments has been your responsibility, and could be very challenging for the average investor. The new regulations should make it easier to record your capital losses or gains accurately on your federal income tax form.
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From Surviving to Thriving
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February 3, 2011
For the past year, I’ve been distributing a series of Bear Market Survival guides in each of a half-dozen president’s letters (plus this one). With 2010 numbers now in, despite some stomach-wrenching uncertainties throughout the year, the markets ultimately rewarded investors who remained steadfastly invested according to their personal goals. The overall U.S. stock market provided annualized returns of nearly 17 percent; overall world stock market annualized returns were also in the double digits at nearly 13 percent (as represented by the Russell 3000 and MSCI All Country indexes, respectively).
Does that mean we can bid the bear goodbye? I can state with near certainty that we cannot. Someday, somewhere, I fully expect that we WILL encounter more bear markets. The problem is, I have no more idea than you do regarding when, where or for how long they will again intrude upon our lives.
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Healthcare Insurance Reform in 2011
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The Patient Protection and Affordable Care Act (PPACA), signed into law in 2010, makes significant changes to our health care delivery system. Some of these reforms took effect in 2010 while many others take place in 2011.
• Individual and group health insurance plans are required to extend dependent coverage for adult children up to age 26. While this requirement was effective November 2010 for active employees, enrollment elections made during the 2011 open enrollment period will be effective on January 1, 2011.
• The cost of over-the-counter drugs not prescribed by a doctor can no longer be reimbursed through a Health Reimbursement Account or a health Flexible Spending account, nor can these costs be reimbursed on a tax-free basis through a Health Savings Account or Archer Medical Savings Account.
• Medicare Part D participants will receive a 50% discount on brand-name prescriptions filled in the coverage gap (i.e., the donut hole) from pharmaceutical manufacturers, and federal subsidies for generic prescriptions filled in the coverage gap will start to be phased in.
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Tax Free Contributions from IRAs Extended
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Tax-Free Charitable Contributions from IRAs Extended Once Again
Background
The Pension Protection Act of 2006 first allowed taxpayers age 70½ or older to exclude from gross income otherwise taxable distributions ("qualified charitable distributions," or QCDs) from their IRA that were paid directly to a qualified charity. Taxpayers were able to exclude up to $100,000 in both 2006 and 2007. The law was extended through 2009 by the Emergency Economic Stabilization Act of 2008, and has just been extended again, through 2011, by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Tax Relief Act).
You must be 70½ or older in order to make QCDs. You direct your IRA trustee to make a distribution directly from your IRA (other than SEP and SIMPLE IRAs) to a qualified charity. The distribution must be one that would otherwise be taxable to you. You can exclude up to $100,000 of QCDs from your gross income in 2011. If you file a joint return, your spouse can exclude an additional $100,000 of QCDs in 2011. Note: You don't get to deduct QCDs as a charitable contribution on your federal income tax return--that would be double dipping.
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About Us:
Located in Woodbridge, VA, Alliant Wealth Advisors (formerly Millennium
Capital Management Corp) was founded to help a select group of families
achieve all that is important to them financially. To achieve our mission
we use a consultative wealth management process, which includes both
investment consulting and advanced planning. Our approach assumes that
every client is unique; every client has varying needs and objectives;
and no two clients share the same risk tolerances, time horizons and
dreams. In addition to providing our expertise we work with clients'
existing advisors and, where there is a gap to fill, we use our own
outside experts in the fields of tax, legal and high-end Insurance.
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