Set forth below are some important tax dates for the remainder of this year. If you have questions about these dates or your personal tax situation, you should consider contacting your tax preparer or accountant.
You may have noticed that you did not receive a capital gains and loss report in your packet of quarterly account information. Due to recent tax law changes related to the annual reporting of capital gains and losses on fixed income instruments purchased at a discount or premium to par value, this information will now be prepared and sent to you by the custodian of your assets.
For many retirees, Social Security is a key source of financial support during retirement. Indeed, for all participants, Social Security is essentially like a pension plan that pays you inflation-adjusted monthly benefits from the time you elect to begin taking benefits until the time of your death. You cannot outlive your Social Security retirement benefits!
Now that health care reform has been upheld by the Supreme Court, a new series of tax hikes are poised to take effect in 2013. The Supreme Court recently decided that the provisions of the law requiring people without health coverage to buy insurance or pay a fee is constitutional under Congress’ power to impose taxes. While vowing to overturn the entire health reform law if elected, Mitt Romney and the Republicans would have to not only retake the White House and Senate, they would also have to retain the House this November to have any chance of reversing this law. With that being far from certain, and requiring a lot of things to go right for Mitt Romney as his campaign comes down the home stretch, it probably makes sense to take a look at what is likely to happen in 2013.
There are a number of assets you may have that, upon your death, will pass to your heirs pursuant to your beneficiary designations rather than the terms of your will or your other estate planning documents. A beneficiary designation is simply an account-holder’s way to legally state who will inherit certain assets that will pass outside the account-holder’s estate upon death. For example, your IRA will pass to the person(s) you listed as your primary beneficiary in the account paperwork you completed when you opened (or updated) this IRA account. If your primary beneficiary predeceases you, then, your IRA will pass to the person(s) you listed as your contingent beneficiary.
Over the last month, bond yields have begun to climb. As the economy continues to recover, we expect the Federal Reserve will eventually take a more hawkish stance and slowly begin to raise interest rates. While an increase in the federal funds rate may still be up to a year away, we think it behooves investors to be mindful of the growing potential for rising interest rates and thus rising bond yields. Rising bond yields, in turn, mean falling bond prices as the two variables have an inverse relationship.
Particularly in this type of environment, we keep a close eye on bond duration. Bond duration is the calculation of an investment’s price sensitivity to a change in interest rates. Duration is expressed in a number of years. Although determining duration is a somewhat complicated calculation involving present value, yields, final maturity, call provisions, and sinking funds, there is good news in that bond and bond fund duration is a standard calculation. Duration is provided in the presentation of comprehensive bond and bond mutual fund information. Some digging may be required, but duration is disclosed.
Last year, one of our Newsletter articles discussed some of the basics about claiming Social Security benefits. Because we get so many questions from clients about Social Security, we thought it might be helpful to revisit this topic and further elaborate upon some of the strategies you might be able to use to help maximize your retirement benefits.
After a brief hiatus, we are again including our “Spotlight” column. In this issue, we feature The Highlands Mansion & Gardens. Many of you may have already visited The Highlands as it is the venue for our annual client holiday party. This wonderful historic property is owned by the Commonwealth of Pennsylvania and administered by The Highlands Historical Society, a non-profit educational organization dedicated to the restoration, preservation, and interpretation of The Highlands.