Beginning in 2010 the AGI limit for Roth conversions is lifted. This raises new questions about when a Roth IRA conversion makes sense. It isn't an easy question to analyze. One thing for certain, when you make a conversion you are choosing to pay tax today to avoid tax tomorrow. Voluntary early tax payments are generally not on the top of any one's "fun things to do today" list.
There are some situations where conversions make sense. The key is to analyze your situation very specifically and avoid generalizations.
This is one of the best articles I have seen on the subject from David Loeper of WealthCare Capital Management.
May prosperity be yours,
Mackey McNeill, CPA, PFS, IAR
www.CultivatingProsperity.com
Friday, November 27, 2009
Thursday, November 12, 2009
Once again, Mackey has done it again. Enjoy another great article from our November newsletter.
Caution – it’s the holidays!
When I was young, our Christmas celebration consisted of fruit, candy, a practical present or two (like PJs and underwear), and one treasure you really could not live without, like a Barbie doll or a BB gun!
In 1966, when I was eleven, we spent Christmas with my mother’s brother and his family of five children. He was a very successful physician and much more well to do than my family. Not wanting to be outdone, my parents rose to the occasion by increasing their gift-giving. I received a black and white portable television - my own personal TV! At the time, the cost of such an item was about $100, much more than my parents’ normal Christmas gift budget. This was my first taste, and one that has stuck with me all these years, of “keeping up with the Jones.”
The holidays, more than any other time, challenge us with balancing the desire to please and measure up as providers with the sanity of fiscal prudence. We know that the kids will be comparing their presents with their friends. Did they get the latest and greatest cool toy or electronic gadget? Do they have the right clothes to fit in?
Human beings change in one of two ways: either very slowly or in crisis. This past year has created economic crisis for many people. As a country, we needed a change in our money habits. We needed to cure our addiction to debt and get back to saving. And that is exactly what is happening. The economic crisis has reminded us that we need to prepare for the lean times when we are fat and happy, knowing that it is not if something will interrupt our lives but when.
The holidays offer a great opportunity to teach the value of moderation to our children and to help them understand what it means to live on a budget and to make good financial decisions, today and for your and their tomorrow.
Make this upcoming holiday season the best yet. Look over your cash flow and decide on a spending budget. Allocate that budget to all of those for whom you wish to bless with a gift. Shop wisely and stay within your budget. And enjoy the feeling of freedom and comfort that comes from knowing there are no credit card bills coming to haunt you in 2010! Now that is a reason to celebrate the new year!
Personally, my favorite holiday gift is one I ask for every year. I ask my kids to write down and give me one of two things: a short story of their own creation, or the top ten best things that happened to them over the past year. They read the story or list out loud and talk about it on Christmas day. In turn, I bake them a tin of their favorite cookies. While we still have “store bought” presents floating around our house, the cookie and story exchange is by far my most treasured exchange.
Caution – it’s the holidays!
When I was young, our Christmas celebration consisted of fruit, candy, a practical present or two (like PJs and underwear), and one treasure you really could not live without, like a Barbie doll or a BB gun!
In 1966, when I was eleven, we spent Christmas with my mother’s brother and his family of five children. He was a very successful physician and much more well to do than my family. Not wanting to be outdone, my parents rose to the occasion by increasing their gift-giving. I received a black and white portable television - my own personal TV! At the time, the cost of such an item was about $100, much more than my parents’ normal Christmas gift budget. This was my first taste, and one that has stuck with me all these years, of “keeping up with the Jones.”
The holidays, more than any other time, challenge us with balancing the desire to please and measure up as providers with the sanity of fiscal prudence. We know that the kids will be comparing their presents with their friends. Did they get the latest and greatest cool toy or electronic gadget? Do they have the right clothes to fit in?
Human beings change in one of two ways: either very slowly or in crisis. This past year has created economic crisis for many people. As a country, we needed a change in our money habits. We needed to cure our addiction to debt and get back to saving. And that is exactly what is happening. The economic crisis has reminded us that we need to prepare for the lean times when we are fat and happy, knowing that it is not if something will interrupt our lives but when.
The holidays offer a great opportunity to teach the value of moderation to our children and to help them understand what it means to live on a budget and to make good financial decisions, today and for your and their tomorrow.
Make this upcoming holiday season the best yet. Look over your cash flow and decide on a spending budget. Allocate that budget to all of those for whom you wish to bless with a gift. Shop wisely and stay within your budget. And enjoy the feeling of freedom and comfort that comes from knowing there are no credit card bills coming to haunt you in 2010! Now that is a reason to celebrate the new year!
Personally, my favorite holiday gift is one I ask for every year. I ask my kids to write down and give me one of two things: a short story of their own creation, or the top ten best things that happened to them over the past year. They read the story or list out loud and talk about it on Christmas day. In turn, I bake them a tin of their favorite cookies. While we still have “store bought” presents floating around our house, the cookie and story exchange is by far my most treasured exchange.
Monday, November 2, 2009
Choosing Less
We have been raised in a culture whose message is to choose more. More clothes, more entertainment, bigger homes, more work, more money. There is certainly a great deal to be said about what has been accomplished in the world when we seek more.
What we often miss is the blessing of less. What about less work, less money, fewer possessions and a simpler life? This path isn't revered by our society, yet it is a path that offers great riches.
I have been blessed to work with individuals on both the "more" and "less" path. Both paths can give rise to fulfilling and prosperous lives. Yet my experience is that it is rare to find someone who can walks "more" path in peacefulness and contentment. More likely I find my clients on the "less" path are peaceful and content.
Any choice to live outside the norms set by society, requires thoughtful introspection. My theory is that this required introspection for those on the "less" path leads to the experience of peace and contentment.
Where are you on the continuum of "more" or "less?" Of "peaceful with my lot in life" and "anxious?" Where do you want to be? What new choices are required for you to shift?
What we often miss is the blessing of less. What about less work, less money, fewer possessions and a simpler life? This path isn't revered by our society, yet it is a path that offers great riches.
I have been blessed to work with individuals on both the "more" and "less" path. Both paths can give rise to fulfilling and prosperous lives. Yet my experience is that it is rare to find someone who can walks "more" path in peacefulness and contentment. More likely I find my clients on the "less" path are peaceful and content.
Any choice to live outside the norms set by society, requires thoughtful introspection. My theory is that this required introspection for those on the "less" path leads to the experience of peace and contentment.
Where are you on the continuum of "more" or "less?" Of "peaceful with my lot in life" and "anxious?" Where do you want to be? What new choices are required for you to shift?
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