Ellen Rinaldi has held a variety of leadership positions since joining Vanguard in 1997. At present, she serves in our Planning and Development division, where she is responsible for protecting client information, among other key responsibilities.
We’re coming to the close of 2009. It’s been an eventful year, a year of change, and over the next few weeks you’ll be seeing a lot of articles putting it all in perspective.
It’s also the close of the tax year, and year-end planning should be commanding some of your attention. One of the few tools not blunted by this soured economy is tax-loss harvesting—a strategy that can shelter income and reduce portfolio risk. And one might say this has been a banner year for tax losses.
You see it all too often: A caretaker is arrested for stealing funds from a senior under his or her care. What you don’t see as frequently—though I believe it’s a great deal more prevalent—is family financial fraud, primarily targeting seniors. It generally takes the form of identity theft and account takeovers. It often involves close family members, in-laws, and friends, and it can leave seniors virtually destitute.
There’s a savings vehicle in which all earnings, appreciation, and interest can be free of income tax forever. If the rules are met, there’s no RMD to be taken, no income tax due on withdrawals, and, while the account assets are included in your estate, withdrawals by your beneficiaries can also be tax-free. It hasn’t been available to everyone because of income limits, but it soon will be.
I’m speaking about the Roth IRA, of course. Until now, higher-income taxpayers ($100,000 modified adjusted gross income or higher) couldn’t convert their savings from a traditional IRA to a Roth. But that’s about to change.
Ben Franklin definitely had it right when he said that nothing is certain except death and taxes. And you can be sure that as we get closer to the end of the year, we’ll hear lots of discussions on tax planning.
Usually, we read about potential tax legislation along with warnings to avoid making any major financial decisions until the ink is dry. But is this time different? As Laura Saunders stated succinctly in a recent Wall Street Journal article, “tax increases are coming.”
This comment on Steve Utkus’ recent post about retirement struck a major chord with me:
“Our children’s incomes are not increasing, and they have their own children to support, let alone saving for their own retirement. No one is to blame or is being stingy; we simply must plan for and take charge of our own later years.”
