December 31 is just around the corner. Here is a little secret that may be able to save you tax dollars in 2006 and 2007, ONLY! Any IRS required distributions from your 701/2 MRD (minimum required distributions form IRA’s and other tax favored accounts), that you gift to charity, will not be included in your taxable income. This is available and must be completed before December 31, so please contact us with your interest.

NOW, for the other great tax savings! I have great news regarding gifts for the “Kiddies, Grand Kiddies and even the Great Grand kiddies, for the holidays! These gifts are more valuable than anything that you can buy, in any store. GIFTS OF EDUCATION!
Because the Pension Protection Act has extended the 2010 sunset provisions, the College 529 gifts will continue to be tax free!

This is an extremely significant development in planning, because you now have the certainty of knowing that qualified expenses will not be subject to federal income tax! In light of this development, more exciting news is here!!

PENNSYLVANIA has also made the college 529 STATE TAX FREE, so more dollars stay in your pocket. So, you can pay yourself, while you give to your loved ones.

Control and Flexibility the owner, not the beneficiary, retains control of the assets and flexibility of their beneficiaries, and there are not complications or costs, worrying to change or set up expensive trusts and attorney fees.

Estate gifting benefits- contributions of $12,000 per person to each beneficiary can be gifted and not incur a federal gift tax, and up to five years worth of contributions can be made at one time. Transfer of gifts for estate planning purposes is very important for five year look back.

There are many different investment options and can be specifically modeled to your specifications.

There are various fees and expenses associated with any 529 or TAP credits. These and other features vary among plans! You should review the offering document carefully for complete details and talk about these during our time together.
Brenda 215 491 4346

We work with many different 529 providers and can help you select an appropriate plan for your individual situation. Please contact Brenda to discuss how you can help your family and wallet with the gift of giving.

Asset Financial Services
Author Brenda Bagonis-Cooke

Third Quarter 2006 Newsletter

Economy

The Fed left interest rates unchanged, citing a slowdown in economic growth and moderating inflationary pressures. The Index of Leading Economic Indicators declined during the quarter, indicating that the slowdown should continue into 2007. The Fed’s pause was validated by a sharp decline in energy prices that led to a tame inflationary report. The U.S. housing market continued its rapid decline with housing starts dropping nearly 20% from last year’s levels. Prices of existing homes declined for the first time in 11 years, as supplies jumped to 13-year highs. The job market remained on very strong footing, as jobless claims appear to be stabilizing at historically low levels. Falling gasoline prices fueled a larger than forecasted rebound in confidence among consumers, after reaching a 2006 low in August. The increase in confidence indicates the resiliency of the U.S. consumer, and may forecast continued support for the overall economy despite the recent signs of moderation.

Capital Markets

Stocks and bonds rallied in September amid signs that the economy is nearing a “soft landing”, and the expectation that the Fed may begin to ease monetary conditions in the upcoming year. The Dow Jones Industrial Average flirted with record highs and the NASDAQ continued its rally that began in mid-July. Growth stocks outperformed value stocks for the second consecutive month, after significantly lagging for much of the year. Large cap stocks outperformed in September and for the third quarter overall, as investors exceedingly looked towards well-established companies to help navigate the economic slowdown. This trend is expected to continue into 2007. The energy and utilities sectors posted negative returns in September, as a result of rapidly declining commodity prices. Technology stocks on the other hand have recently begun performing much better. International stocks continue to perform well, although emerging markets cooled somewhat in September, primarily as a result of declining commodity prices. The U.S. Treasury rally continued in September, as bond investors welcomed signals of economic moderation, and another FOMC meeting where the Fed left rates unchanged.

For the third quarter, the S&P; 500 was up 5.7%, the DJIA up 5.3%, the NASDAQ up 4.0%, and MSCI EAFE (international index) was up 3.9%. In addition, the Russell 1000 (large-cap) was up 5.1%, the Russell Midcap was up 2.1%, and the Russell 2000 (small-cap) was up 0.5%. Also, the Lehman Brothers Aggregate Bond Index was up 3.8%.

Legislative Issues

In August, Congress enacted major pension reform, the Pension Protection Act of 2006. This new legislation makes permanent retirement plan and IRA contribution limit increases that were set to expire after 2010. In addition, “catch-up” contributions for workers in retirement plans and IRAs, who are age 50 and older, will continue to be available. The new law also makes permanent the federally tax free status of qualified withdrawals from 529 college savings plans.

Administrative Issues

As always, should you have questions regarding fund choices, market conditions, appropriate investment allocations, etc. please contact our offices for any assistance on your accounts.

Brenda Bagonis-Cooke 215 491-4346

Women Business Owners and the Importance of a Retirement plan.

You may recall information on regarding retirement demographics and the need for you to plan your financial future. My, how time flies! With summer drilling down upon us, it’s really nice that there seems to be a few more hours built into every day to hopefully enjoy.

Whether summer avails you a bit more relaxed time to vacation or an opportunity to delve into important personal and business areas that need to be addressed for the fall, this note may prompt you to think about reviewing your financial picture or planning a better one.

In the meantime, here are some questions to mull over.

• What is the amount that I need to support my retirement? Will I have enough?

• How many accounts should I have when I retire? Why?

• Why is it so important to establish a Roth now versus waiting until 2010?

• Do I understand IRA conversions and if I should consider them now?

• Do I understand stocks and how they work when I take distribution?

• What is the difference between mutual fund management and no load mutual funds?

We find that most women do not know the answers to these questions and often rely on piecemeal information or routine habits from the past in hopes that everything will work out fine. Banks, attorneys, tax advisors, financial advisors, insurance agents, or stock brokers help to provide “parts and services” along the way, but who pieces it all together for you?

If you believe that an independent review, integration planning, and soft positive coaching are important to the success of your financial life or you would just be interested in a second opinion on a particular area of your financial plan, we are happy to answer questions that you may have.

So, feel comfortable in giving us a call.

Regards, Brenda Bagonis-Cooke 215 491 4346

Look us up in the YELLOW BOOK under Financial, Investments, Pensions and Retirement plans.

Women Business Owners and the importance of a Retirement plan.

You may recall information on retirement demographics and the need for you to plan your financial future. My, how time flies! With summer upon us, it’s really nice that there seems to be a few more hours built into every day to enjoy.

Whether summer avails you a bit more relaxed time to vacation or an opportunity to delve into important personal areas that need to be addressed, this note may prompt you to think about reviewing your financial picture or planning a better one.

In the meantime, here are some questions to mull over.

• What is the amount that I need to support my retirement? Will I have enough?

• How many accounts should I have when I retire? Why?

• Why is it so important to establish a Roth now versus waiting until 2010?

• Do I understand IRA conversions and if I should consider them now?

• Do I understand stocks and how they work when I take distribution?

• What is the difference between mutual fund management and no load mutual funds?

We find that most people do not know the answers to these questions and often rely on piecemeal information or routine habits from the past in hopes that everything will work out fine. Banks, attorneys, tax advisors, financial advisors, insurance agents, or stock brokers help to provide “parts and services” along the way, but who pieces it all together for you?

If you believe that an independent review, integration planning, and soft positive coaching are important to the success of your financial life or you would just be interested in a second opinion on a particular area of your financial plan, we are happy to answer questions that you may have.

So, feel comfortable in giving us a call.

Regards,

Brenda Bagonis-Cooke 215 491 4346

Look us up in the YELLOW BOOK under Financial, Investments, Pensions and Retirement planning.

Fifth of seven brought to you by the Women’s Business Forum of Bucks County.

Small business owners, beware. How you set up your business – as a sole proprietorship, limited partnership, C corporation, S corporation or limited liability company – depends on how much control you want and affects everything from how you are taxed to how you receive income to whether you can hire your kids!
Helping make sense of accounting issues was Cathy Ponist, a Certified Public Accountant, who heads Catherine A. Ponist CPA. She amazed the more than 50 business owners at the Women’s Business Forum seminar with little-known or easily-overlooked areas they need to pay attention to as they move their businesses forward. (A collection of checklist and forms mentioned below are available at www.womensbusinessforum.org.)
Ponist’s advice included the following:
Entity choices to reduce some of the tax bite…
• Consider changing from a sole proprietorship to an S-corporation. You will need to issue a shareholder/employee check, but you can take distributions of previously taxed profit that are not subject to the 15.3% self-employment tax.
When people work for you…
• Be clear about whether you are hiring a subcontractor or an employee. If you treat them as employees – they are under your “direct control and supervision” but you pay them as a subcontractor-- you may end up having to pay a penalty equal to the Social Security and Medicare taxes.
• If you pay a subcontractor more than $600 per year, have them complete Form W-9 before you pay them because you must issue a 1099 at the end of the year.
• Get copies of liability and worker’s compensation insurance certificates from your subcontractors to help avoid an increase to your worker’s compensation premiums.
• Check references. Ponist says failing to check is the biggest thing small business owners fail to do and is the easiest way to find out important information about a potential employee.
• Even if you only have one employee at first, make sure you have an employment application, job description, employee orientation and separation checklists and employee manual – and have them sign it. Such practices set the tone that this is a real business and establishes expectations and consequences.
• Also, keep a file on all employees. Include an employment application, W-4, and employment eligibility verification form. The last form has a check list of items that verify the individual is eligible to work in the US.
“It’s all about protecting yourself from fines and penalties issued by various agencies, like the IRS,” Ponist explained.
Another way to save: Deductions
Home Office
“As long as you use a space exclusively for business, you may be able to deduct the expense (of a home office) on your return. This applies to renters, too.” Ponist said. (Please consult your tax advisor regarding your specific situation.)
Some examples of deductible expenses for home-office – prorated, of course! include:
• Homeowner’s insurance
• Real estate taxes
• Utilities
• Mortgage interest
“You can even borrow money against your house for your business, and if you use the proceeds to pay for business expenses, you can deduct that interest as a business expense,” Ponist explained.
Business Meals
• Meals where business is discussed (“But they can’t be lavish,” Ponist added.)
• Some meals may be 100% deductible, such as dinner for employees working overtime. (Please consult your tax advisor regarding your specific situation.)
Health insurance savings
Perhaps the biggest surprise for many in attendance was the fact that health insurance for the self-employed and shareholder/employees of S-corporations is deductible on the front of your return. So you should always separate your medical expenses from your health insurance for the best tax advantage.
Before using any advice presented in this article, please consult your tax advisor regarding your specific situation.