Tax Planning
As 2009 draws to a close, I expect various mutual funds and money managers to take profits. These profits generally create both short-term and long-term capital gains. The STCG could be taxed as high as 35% and the LTCG could be taxed at 15% or may trigger AMT. Yes, LTCGs at 15%, if enough can trigger AMT.
Roth Conversions
This will be the hot item for 2010. Please be careful. If the conversion creates a 35% income tax, it will take 5.83 years to just get back to its current IRA value at 6%.
Roth conversion money and contributions cannot always be removed tax-free. I used two charts in the live review to illustrate all the possibilities of removing conversion and earnings money.
So clients could pay dearly on the way into the Roth and then again if they remove the money too quickly. Please be careful what you say.