Year-End Financial Assessment

As the year is drawing to a close and you take inventory of what has
happened this year, don’t forget to check your finances. Your financial
advisor is doing a good job for you if he is addressing several issues that
can save you a lot of money if you take action before year-end.

Ray LeVitre, a Certified Financial Planner and author highlights three
specific issues where action needs to be taken.

Capital Gains Taxes
#1: You need to take a look at the investments in your non-retirement
accounts to see if you have any capital gains that will add to your 2011
tax-burden. For example, let’s assume you bought a stock for $10,000 in
2009 and sold it in 2011 for $20,000 for a gain of $10,000. You will have
to pay a capital gains tax of $1,500 on your $10,000 profit. However, you
can avoid the tax by finding another stock in your portfolio trading at a
$1,500 loss. By selling the stock and incurring the loss it will cancel out
the gain for tax purposes. In this example the strategy will save you
$1,500 in taxes. If you like the stock you sold you can buy it back in 31
days later.

a 50% Penalty
#2: If you are over 70 ½ you are required to withdraw some money from
your IRA. If you don’t take the distribution you’ll have to pay a 50%
penalty. The penalty is 50% of the amount you were supposed to withdraw.
For example, if you were required to withdraw $40,000 and didn’t you
would have to pay a $20,000 penalty. If you are over 70 ½ make sure you
take your distribution.

Convert to a Roth IRA
#3: If you are in a lower tax bracket this 2011 because you retired or have
lower income due to being out of work. You should consider converting
some traditional IRA money to a Roth IRA. to is a great year to convert
some money from your traditional IRA to a Roth IRA. The pro is that once
the money is in a Roth the money will grow tax free and can be withdrawn
tax free during retirement which could save you a lot of money. The con
however, is that you will have to pay income taxes on the money you
convert. For those in a lower income tax bracket this year the conversion is
a no brainer. Pay the taxes now in a lower tax bracket and not have to pay
them later if you are in a higher tax bracket.

If your advisor is not talking to you about these cost saving strategies you
should contact them and have a frank discussion about why he/she hasn’t
contacted you to discuss these three strategies.

Free book offer. If you are retired or close to retirement, Ray will send you
a free copy of his book, 20 Retirement Decisions You Need to Make Right
Now. Simply go to,
click on “Contact Us” and
send a message requesting a free book. Ray will give away 50 free books.

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