Sunday, January 30, 2011

You need some new years resolutions?


OK, we passed 1 January 2011, and we can get some serious financial planning for our financial future. Tax rules are in place for the next two years, so we have a little more confident today than what we had a month ago.

While it is very important to go through the financial planning process to determine what is your personal situation and what actions are most appropriate to meet your goals and objectives, the list of savings and increase in wealth are many times the same – what are the changes in the amounts to be allocated to each category.

When I see a client today, here's what I like my list of priority actions for the clients connected to the location where you want to save:

For those who are used to use the plan 401 k/403b/457 employer to contribute at least the amount required to achieve any contribution of company match. This company match is a free gift from your employer and the only way to get that correspondence is to participate in the program of the employer.Depending on your level of income, contribute to a Roth IRA if you are eligible. If your income is too high to use the Roth IRA, then contribute to a traditional IRA before and then convert to Roth IRA under current laws. If your adjusted gross income (AGI) is more than $ 177,000 for married couples filing jointly ($ 120,000 per individual), you must use the traditional IRA. The limit to help both IRA is $ 5,000 per person and $ 6000 if you become age 50 or older in 2011 If your employer provides a program of Roth, who is a good place to put your money in 401 (k).If you are able to invest more in respect of amounts needed to implement the items from 1 to 3, invest in a pool of passive of mutual funds, preferably in index funds, to keep the amount of income tax to the minimum, while you work.  There is no limit to what can be included in these funds, so that this could be the end of choices for you. This pool also provides you with the money you need should you wish to perform conversions of 401 (k)/IRAs and Roth IRAs need money to pay the tax man.Put extra money in the plan of your employer, to the maximum extent permitted by law under those programs. I have this down in the list option from those above because I like the flexibility of having money in the pool of passive. I am referring to is flexibility: sets better manage taxable asset growth now and into the future.Access to capital at all ages without risk of fiscal penalties that may occur when you make early withdrawals from deferred tax categories of your investments.

I have not specified what amount to each of these categories, because it is part of the financial planning process where you get to understand what your needs are for those activities, whenever you need the money and what are the other goals and objectives.

If you are self-employed, there would be additional places to save money as SEP-IRAs or standalone programs 401 (k). Each of these special rules and fiscal consequences, in particular between now and April 15, 2011, when you are determining the taxable income for the 2010 tax return. Within these programs, you get to decide how much you want to contribute to these programs based on what is your income for the year that impacts on duty will be what the tax liability. The limits for the self-employed 401 (k) are up to $ 49,000 annually or $ 54,500 if more than 50 years. Contributions to these programmes must be made before 15 April to be able to reduce taxable income in the amount you contribute.

In addition, the standalone 401 (k) requires that the work of paper to open the account needs to be done before the end of the year to which you will apply the contribution. While this means that you may not be able to have this problem for your 2010 income, this means that now would be a good time to set the plan for the fiscal year 2011. You can determine the amount of the fee when you are preparing your tax return in 2011 and know what is your profit and then the amount that you want to contribute to this plan.

There are many other aspects of how much to contribute to these retirement plans that may need to address, but what is certain is that he will retire someday, and when you want to make sure at that time that you addressed this problem now and not later. Just a few minutes to know what your employer provides as an incentive to start saving for your retirement goal and start putting some money away today.

FrancisStOnge

Francis St. Onge, CFP ?
President
Total financial planning, LLC
Brighton, MI

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