FINANCIAL IDEAS AND NOTES FOR 2009
By Wes Wellman.

Capital Gains Taxes
Very little is clear about the future right now except for the probability of higher income taxes. Only the amount and effective dates are not certain. The alert individual can apply certain advantageous strategies in light of probable tax increases.

If you have an appreciated property that you plan to sell in the near future without doing a 1031 exchange, it may be advisable to sell sooner rather than latter. Traditionally, tax increases are not made retroactively or, when they are retroactive, do not reach back particularly far. Higher capital gain rates are clearly in the political cross hairs so, if you plan to sell soon, prior to new tax increasing legislation, you can likely take advantage of today’s low capital gain rates rather that paying at tomorrows higher levels.

If you have stocks that have substantial long-term paper losses, you might consider combining the sale of these with the sale of an appreciated piece of investment real estate to offset portions of the gain on the sale of property by losses from the stocks. If you wait 31 days after the sale of the stocks, you can even buy back the same stocks to avoid the IRS’s wash sale rules. Selling investment real estate that has a long-term paper loss position can be useful in this scenario as well.

IRA’s
If you have a traditional IRA and your Modified Adjusted Gross Income is less than $100,000 it may be advisable to convert your traditional IRA to a Roth IRA. The advantage of the Roth over the traditional IRA is that you do not have to take any distributions during your lifetime. This allows IRA funds to continue to grow tax-deferred indefinitely. During your lifetime, after age 59 1/2, you can chose when and in what amounts to withdraw funds, if at all. Additionally, subject to income limitations, you can continue to make contributions to a Roth IRA after age 70 1/2, providing you have eligible compensation, which is not permitted in a traditional IRA.

Insurance
Troubled times increase the likelihood of lawsuits against deep-pocketed individuals by attorneys representing financially strapped individuals. The first line of defense against this type of exposure is adequate insurance coverage. If you haven’t done so recently, it is advisable to do a comprehensive review of your coverage with your insurance/and or financial advisor to make sure that all contingencies are covered. Be sure not to overlook the importance of a generous umbrella liability policy. Large amounts of umbrella coverage is available at surprisingly affordable rates.

Social Security
The AARP Bulletin announced good news concerning social security. Beneficiaries will receive a cost of living increase of 5.8% in 2009, the largest increase in 26 years, and the standard Medicare premium will remain unchanged from $96.40. Premiums will only increase for singles earning more than $85,000 annually, or for couples earning more than $170,000.

Also on the Social Security front, many Americans will be turning 62 this year which qualifies them to begin receiving early retirement benefits. However, by delaying filing for benefits, a person can increase their future checks by 7% per year until they reach age 66. With longer life expectancies, the decision to postpone receiving social security until age 66 can have enormously beneficial long-term advantages.

FDIC Coverage
A couple of changes by the Federal Deposit Insurance Corporation are worth noting. Deposits at FDIC-insured institutions are now insured up to at least $250,000 per depositor until December 31, 2009 after which coverage will revert back to the $100,000 level, except for the coverage of certain retirement accounts, including all IRA deposit accounts, that was permanently increased to $250,000 in 2006. All personal and business accounts that DO NOT BEAR INTEREST at participating FDIC institutions are covered in full until December 31, 2009.

Mortgage Rates
Finally, with mortgage rates at their lowest levels in fifty years, it is prudent to compare any existing mortgage with those available presently and weigh your options.

Wes Wellman is a Registered Representative with and offers securities through AFA Financial Group, LLC, Member FINRA/SIPC. This information is for educational purposes only and has been obtained from sources believed to be reliable. Investors should perform their own investigations and consult with their legal and tax advisors before considering any investment. Office of supervision: 26637
W. Agoura Road, Calabasas, Calif. 91302