Email Sent to Clients - November 16, 2011I don’t have to tell you that it has been an interesting (?) year in the financial markets. We have seen tremendous volatility in the stock market with swings of hundreds of points in a day pretty common. However, we could still end the year with positive returns in both the stock and bond markets.
From a tax standpoint, some things need to be done during the calendar year:
· If you have losses on holdings in taxable accounts,you can use them dollar for dollar to offset gains or even better to offset up to $3,000 or ordinary income. Unused losses may be carried forward.
· In taxableaccounts, it is better to Sell a mutual fund beforethe fund makes its distribution and to Buy afterthe distribution.
· Can you make any end-of-year catch up contribution to 401k or 403b plans? You can contribute up to $16,500 in these plans and an additional $5,500 if you are over age 50. Regularly contributing into these plans is the best way for most of us to save for retirement.
· If you utilize Flexible Spending Accounts at work, make sure that you have used all of the money in the account. Some companies give you a little more time to use the money, but check your plan to make sure.
· If you utilize 529 Plans for Education Funding, your contribution must be made in the calendar year in order to take the State tax deduction. I generally prefer the age based option which invests the monies more conservatively as the beneficiary gets closer to needing the funds. However, if College is a near term goal, in this environment, I recommend investing even more conservatively: Money Market accounts or short term bond funds.
Also, this is the time of the year when employees typically have to enroll in medical and benefit plans for next year. You might want to consider the following:
· Can you increase your 401k or 403b contribution next year? In 2012, the maximum contribution you can make is $17,000 plus an additional $5,500 if you are age 50+.
· If the Roth 401k is offered by your company, you might want to consider utilizing it. There are some tradeoffs, however.
· If Flexible Spending Accounts are offered by your company, you might want to consider utilizing them for child care and medical expenses.
· Does your company offer group life, disability or long term care insurance? Group insurance can be a relatively inexpensive way to purchase additional insurance.
· Most of us are aware of phishing schemes delivered by email but now scammers are using text messages sent to cell phones. If the message asks you to click on a link or call a telephone number; delete the message! Never disclose personal information to anyone contacting you by text message or email. Banks or the government will not contact you in this manner.
If you are due for a review yet this year, or if there is anything that you need help with, please call while we still have time to take action.
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