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In this Issue

Year-End Thoughts
Two New Tax Impacts on Affluent Seniors

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In Other News

Robin’s Marketing Tip:

Major asset management companies have been struggling with messaging, as some of their marketing materials are becoming dated, particularly, those written pre-crisis. For instance, it may not be effective to say that you have 100 years of cumulative experience, because it may sound like hyperbole to some. Keep in mind that today’s institutional investor wants to know more about a firm’s present and future than its distant past.

Rich White in FreeERISA

This month, Rich White gives more detail on the Tax Impact on Affluent Seniors in FreeERISA

A Visit with the Retirement Yenta

Robin continues to blog non-financial retirement tips. Come sit a spell, and visit with the Retirement Yenta for a few good laughs.

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Tuesday November 16, 2010

Year-End Thoughts

Happy Thanksgiving and welcome to the Holiday Season. This is a very busy, and a very sentimental time of year.

I recently learned of the loss of Pete LiPuma, a colleague and mentor of mine at Equitable. He will be greatly missed.

Regardless of how busy we are and what’s at stake, I believe this is the perfect time to take time off, and enjoy the company of your family and friends.

Happy Holidays and a prosperous New Year,
Robin Murray

Two New Tax Impacts on Affluent Seniors

Everybody is focusing on whether the “Bush tax cuts” will be extended before they expire on 12/31/10. But for affluent retired people, Congress has already raised taxes TWICE in 2010.

The Health Care and Education Reconciliation Act of 2010 included a new 3.8% Unearned Income Medicare Contributions Tax (UIMCT), effective in 2013. The tax will be imposed on the lesser of: 1) net investment income; or 2) modified Adjusted Gross Income over a threshold amount. The threshold amounts are $250,000 for joint filers and $200,000 for single filers. “Net investment income” includes interest, dividends, royalties, rents and capital gains. (It does not include distributions from qualified plans or IRAs.) According to several legal sources, the taxable portion of non-qualified annuity income payments (or withdrawals) and taxable life insurance withdrawals will be subject to UIMCT. Since affluent seniors rely on unearned investment income more than working people, they will be the group most heavily impacted by this new tax.

The Patient Protection and Affordable Care Act of 2010 imposes the same "income-relating" to Medicare Part D (prescription drug) premiums that already exists for Part B. Effective in 2011, premiums for Part D will increase in tiers for taxpayers with Modified Adjusted Gross Incomes above $85,000 for individuals or $170,000 for couples. Like Part B, the higher Part D premium will be determined based on a two-year look-back: 2011 premiums will be based on reported MAGI in 2009.

This is a good time to suggest tax planning ideas to affluent seniors.