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Greetings!
In late
December, Congress passed The Worker, Retiree, and Employer Recovery Act of 2008. Among the
provisions of this new law is a temporary waiver (effective for 2009 only) on
Required Minimum Distributions (RMD) from retirement accounts. This
provision could have important tax-saving implications, depending on your
individual filing situation. If you are currently taking an RMD from your
retirement account(s), we strongly encourage you to consult with your tax
advisor to see whether suspending such distributions for 2009 would be
advantageous from a tax-planning perspective.
If you are not yet of an age when you are required to take an RMD, but
are nevertheless drawing income from your retirement accounts, now might also
be an opportune time to consider shifting to taxable assets as a source of
funds, at least for the near term. With equity markets currently near
multi-year lows, long-term investors could be better off maximizing the pool of
tax-deferred assets that they have available to participate in an eventual
market recovery. In many cases, investors will find that by taking a
greater proportion of their periodic withdrawals from taxable accounts,
they can generate the same cash-flow while potentially lowering their tax
bill. In this way, money that would otherwise go toward paying taxes on
retirement distributions in 2009 can instead be left to compound tax-deferred
for a longer period of time.
As always, we
recommend discussing these issues first with your tax advisor. If you would like more information
or need assistance in updating your distribution schedule, please don't hesitate to call or email.
Regards,
Investor Services
Bristlecone Value Partners
10880 Wilshire Boulevard, Suite 880
Los Angeles, CA 90024
T: (310) 806-4141; F: (310) 806-4140
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