To help you understand the implications of the new tax law, we are pleased to share these papers from the investment professionals at Raymond James. These papers clearly and concisely details each tax component of the new law to help you understand how they may impact you.

These white papers also provides planning tips following each discussion to demonstrate how you may benefit from the new tax provisions. There is only a two-year window before we expect these provisions to change, so we encourage you to read these papers carefully and consider how we might deploy strategies for your situation.

Potential strategies include accelerating income in a single tax year to take advantage of lower rates, or leveraging lifetime gifts via trusts in your estate plan to better position assets for efficient wealth transfer.

The current law offers what may be an opportunity to realize significant tax savings. Please feel free to call us so we might plan – and act – accordingly.  We always look forward to speaking with you.

Click here to view these papers and video.

You can contribute to a traditional IRA, a Roth IRA, or both, as long as your total contributions don’t exceed the annual limit. You may also be able to contribute to an IRA for your spouse for 2010, even if your spouse didn’t have any 2010 income.

Traditional IRA

You can contribute to a traditional IRA for 2010 if you had taxable compensation and you were not age 70½ by December 31, 2010. However, if you or your spouse was covered by an employer-sponsored retirement plan in 2010, then your ability to deduct your contributions depends on your filing status and whether your modified adjusted gross income (MAGI) is within prescribed limits. Even if you can’t deduct your traditional IRA contribution, you can always make nondeductible (after-tax) contributions to a traditional IRA, regardless of your income level. However, in most cases, if you’re eligible, you’ll be better off contributing to a Roth IRA instead of making nondeductible contributions to a traditional IRA.

Roth IRA

You can contribute to a Roth IRA if your MAGI is within certain dollar limits. For 2010, if you file your federal tax return as single or head of household, you can make a full Roth contribution if your income is $105,000 or less. Your maximum contribution is phased out if your income is between $105,000 and $120,000, and you can’t contribute at all if your income is $120,000 or more. Similarly, if you’re married and file a joint federal tax return, you can make a full Roth contribution if your income is $167,000 or less. Your contribution is phased out if your income is between $167,000 and $177,000, and you can’t contribute at all if your income is $177,000 or more. And if you’re married filing separately, your contribution phases out with any income over $0, and you can’t contribute at all if your income is $10,000 or more.

Finally, keep in mind that if you make a contribution to a Roth IRA for 2010–no matter how small–by your tax return due date, and this is your first Roth IRA contribution, your five-year holding period for identifying qualified distributions from all your Roth IRAs (other than inherited accounts) will start on January 1, 2010.

Created by Forfield 2011

Compliance Approved till 12/31/2014

This look at the year ahead features informed and timely commentary from the knowledgeable professionals at Raymond James. Some of the key factors discussed include:

• The overall outlook for the economy
• Strategies for investors in 2011
• The impact of the mid-term elections on taxes
• Lessons learned from the Gulf oil spill
• Challenges unique to small business recovery
• The continuing drag on the housing market

We hope you will find these carefully considered observations both insightful and useful.

Please feel free to call us with any questions regarding the Raymond James 2011 Economic Outlook, your portfolio or current market conditions. We always look forward to speaking with you.

Here are highlights from its latest report:

• At four-year public colleges for in-state students, tuition and fees increased an average of 7.9% from last year to $7,605, and room and board costs increased an average of 4.6% to $8,535. Total average cost for 2010/2011 is $20,339.
• At four-year public colleges for out-of-state students, tuition and fees increased an average of 6.0% from last year to $19,595, and room and board costs increased an average 4.6% to $8,535. Total average cost for 2010/2011 is $32,329.
• At four-year private colleges, tuition and fees increased an average of 4.5% from last year to $27,293, and room and board costs increased an average of 3.9% to $9,700. Total average cost for the 2010/2011 year is $40,476.

“Total average cost” includes tuition and fees, room and board, books and supplies, transportation, and a small amount for miscellaneous expenses.

To read the Trends in College Pricing report, visit www.trends-collegeboard.com.

Student aid trends
The College Board notes that the average cost figure is not necessarily representative of what most college students pay. That’s because approximately two-thirds of undergraduate students receive grants that reduce the actual price of college. The largest provider of grant aid is individual colleges, followed by the federal government, private sources and employers, and state governments. Some students and their parents also benefit from federal education tax benefits.

The College Board estimates that for the 2010/2011 academic year, students at public colleges will receive an average of $6,100 in grant aid from all sources and federal tax benefits, while students at private colleges will receive an average of $16,000 in grant aid from all sources and federal tax benefits. Federal tax benefits include the American Opportunity tax credit (formerly called the Hope credit), the Lifetime Learning tax credit, and the deduction for qualified higher education expenses.

Every year, the College Board releases a sister report to Trends in College Pricing, called Trends in Student Aid, that examines student financial aid in more detail. To read this report, visit www.trends-collegeboard.com.

Source: Forefield Inc.
© Copyright 2006 – 2010 Forefield Inc. All rights reserved.  AD #: 09-05991

There has been a lot of talk lately in the media about Roth Conversions due to the limits for such conversions being lifted for 2010.  Although the limits have been lifted it still does not mean that converting your IRA to a Roth IRA is the right thing to do. 

Previously those individuals whose modified adjusted gross income was more than $177,000 for married couples and $120,000 for singles were not able to contribute to a Roth IRA.  However, in 2010 individuals whose income is higher than these levels  are able to convert their traditional IRA’s to a Roth IRA. This does not mean that you can contribute to a Roth IRA this year if your income is above these limits.  It only means that you can covert existing IRA’s to Roth IRA’s.    With this conversion, however, comes a hefty tax implication as taxes for that year are owed on the full amount that is converted.  Therefore, although it may be a great opportunity for those who have previously not been able to participate in this investment tool it may not be the best choice for everyone.  Our opinion is that converting your IRA to a Roth IRA is only worth it if you have money set aside outside the IRA now to pay the taxes on the conversion. 

 If you would like to discuss your personal situation with us please feel free to call our office at 801-295-7373 to determine if this conversion would be beneficial for you. 

AD #: C10-19734