Retirement

The American College has introduced a video-on-demand Web site that will provide information for financial planners on wealth management and related topics.

If you took an early distribution from your retirement plan, here are the top 10 things you need to know, according to the Internal Revenue Service:

How much, if any, of your Social Security benefits are taxable depends on your total income and marital status.

Retirement doesn’t have to be just about bingo and shuffleboard.

Clients are coming to their CPAs with concerns about their shrinking retirement savings as the recession deepens.

Manny Weintraub is the founder, principal, and portfolio manager of Integre Advisors, based in New York City. He was the former managing director of Neuberger Berman. Integre is a money management firm that was established in 2003 and specializes in risk/reward investing. In fact, their mission is to grow and preserve their clients’ worth. And, they’ve been pretty successful at it for the past five years. But, there has been no question that what is going on now has presented problems. Actually, says Weintraub, “It has been one of the most challenging years investors have ever experienced.” As a result, he has put together what he suggests are 10 resolutions for investors to help them navigate the coming year. They are certainly worth detailing here. 1. Never Put All Your Eggs in One Basket. Weintraub very quickly adds that it doesn’t matter how attractive that basket even is. “This relates to the Madoff case but it could apply equally to anything, such as putting all your pension money into the stock of your employer.” 2. Beware of Conventional Wisdom. He has said that when everyone knows something is going to happen, there’s a decent chance it won’t happen. “When oil was $100, everyone knew that we’re running out of oil and that the price can only go one way – up. It’s the same with China – everyone knew this was the Chinese Century – and that investments related to China would go up. There were all these certainties related to emerging markets that turned out not to be so certain.” 3. Know Your Goal. Weintraub’s admitted goal is to preserve wealth from the ravages of inflation. “If your goal is to outperform the S&P 500 every day, then you might chase things that have worked before but are now overvalued. 4. Match Your attention Span to Your Time Horizon. Weintraub believes that if you are investing money for 10 or 20 years, try not to look at those cable news shows constantly. “To watch these things jiggle up or down, when in the end it doesn’t make a difference, is really a huge waste of time – and a way to get worse results.” 5. Know That We Are Living in History. History is not just something that happened a long time ago. And that’s scary because a lot of scary things have happened in the last 70 years. So you have to be prepared for anything to happen now and in the future. You must have some humility to know that you can’t ever know exactly what’s going to happen, which now brings us to... 6. Avoid Leverage. Anything can happen. The problem with leverage is that it cannot only magnify returns up or down, but leverage is the thing that can say: “game over.” A margin call can sell you out at the worst time whereas, if you’re not leveraged, you can come back some other time. 7. Try to Be as Unemotional as Possible Regarding your Investments. Weintraub says that your stocks don’t “love you” when they’re up or “hate you” when they’re down. They haven’t been “good to you.” “They’re just up. Maybe once a year focus on your investments and ask yourself if you would buy the same thing today, and why. If you don’t have a really good reason, sell.” 8. Paper Losses are Actual Losses. Weintraub points out that alot of people say, “It’s not really a loss unless I sell it.” He retorts, “In that case Warren Buffett isn’t actually a billionaire because he’s a billionaire on paper. One can realize a loss and move on.” 9. Don’t Let Taxes Move Your Portfolio. In other words, don’t let the tail wag the dog. Taxes are important, he says, and if one has the opportunity to buy a triple tax-free bond yielding five percent instead of a corporate bond yielding six percent, go for it. “That’s different from not wanting to sell an investment because you have to pay taxes. A lot of people got completely and totally wiped out by borrowing against their stock instead of selling their stock and paying taxes. They got leveraged and forgot they were living in history. It all ties together.” 10. Wealth is Relative. There you go.If you’re down but not out, you’re in pretty good shape. Even if you’re down 20 percent, you can still buy more yield with the remaining corpus--or more gas, more country house, more modern art, or more expensive clothes--than you could before. If you would like to speak with Manny about Integre, the market, or the stocks in his portfolio, contact Davia Temin, Christine Summerson, or Lauren Balog of Temin and Company at 212.588.8788 or e-mail them at news@teminandco.cominfo@integreadvisors.com.. Or e-mail

Many Americans are planning to delay retirement, postpone vacations and reconsider buying or selling their homes as the result of the economy, according to a new survey by the American Institute of CPAs.

Retirement recordkeeping software developer ExpertPlan has acquired Actuarial Enterprises Inc., a third-party administrator of defined benefit and insurance plans.

Eighty-eight percent of financial advisors now say that their clients are “off-target” for a timely retirement, primarily because of market depreciation, as opposed to 46 percent at the beginning of 2008, according to Brinker Capital, a leading investment management firm, that released the year-end results of its Brinker Capital Retirement Indicator, a gauge of financial advisor sentiment regarding retirement-related issues. In effect, it shows that the clients’ retirement security has been severely jeopardized by ongoing market deterioration. In fact, of the respondents who said they were off-target, some 74 percent claimed it would take between one and five years to make up the retirement savings shortfall. As to the reasons for being so, 97 percent said "market depreciation," 51 percent noted "didn't start saving soon enough," and 47% percent said "general procrastination." Brinker says that the question which provoked the most vigorous response was: "Are you seeing a disconnect between your clients' responses on their risk tolerance questionnaires and the level of risk they are willing to take today?" Some 75 percent of financial advisors weighed in with a resounding "yes." When asked if they think there should be a reassessment of the way clients' risk tolerance is measured, 76 percent also said "yes." Of course, going a little bit further down the road, when asked to comment on whether the government should mandate employee and employer participation in 401(k)s, 74 percent of advisors said "no." Moreover, a decisive 92 percent of advisors said "government should stay out of the management of 401(k)s." Clearly, these are rather strong responses. In addition, consider others such as:

U.S. households worth $1 million or more have seen their assets decline 30 percent during the financial crisis, according to a new report.

Patty Duke and her look-alike cousin from her old TV series are back, this time helping seniors apply for Social Security benefits online.

The Internal Revenue Service recently gave 403(b) plan sponsors an extra year to comply with new requirements.

It looks as though many Americans are cashing in their 401(k)s prematurely. So says Take Charge America, one of the nation’s largest non-profit financial education, credit counseling, and debt management companies-- based upon a recent survey. According to Take Charge America, more than one-third of the individuals polled said they would consider meeting current financial obligations through their 401(k) and retirement savings. Of course, add to this that pursuant to a recent AARP study, more than 10 percent of people 50-70 years of age had already retired and are going back to work because of the economy. “The age at which Americans can retire will continue to increase as many individuals look for quick fix solutions for current financial woes,” says Mike Sullivan, director of education for Take Charge America. The company offers certified credit counselors to provide financial advice for those dealing with the financial crisis and Sullivan has some good advice to navigate retirement planning: 1) Don’t Consider Cashing Out a 401(k) Early. He says this is almost always a bad idea because the individual is slapped with large penalties and taxes. He notes that if the person is under 59 ½, there is likely to be a 10 percent penalty plus taxes owed on the funds. “The government requires that 20 percent of the amount payable is automatically withheld on the taxable portion of the withdrawal and that could mean a total of 30 percent of the investment paid in taxes and penalties.” 2) Don’t Retire, Hold onto the Paycheck. Sullivan adds that postponing retirement can provide larger benefits. In fact, he notes that the government is now looking at age 67 as the new retirement age although many people are targeting 69 or 70. 3) Take Care of Health. Sullivan points out that staying healthy helps avoid medical costs and though its sounds simple, he says that keeping weight in check by eating less and avoiding fats and sweets can pay dividends in the future. Plus, exercise regularly and vigorously, and avoid alcohol and tobacco. 4) Change the Lifestyle. Although he admits it may seem drastic, Sullivan says that the best response to credit issues is to stop charging, put away credit cards, and get on a budget. He concludes that it is tempting to look at the 401(k) as a resource to alleviate current financial burdens but that changes in lifestyle, including spending habits, taking care of health, and eliminating excess expenditures can help secure financial independence “without jeopardizing” the future. Take Charge America can be reached at (888) 822-9193. Their Web site is www.takechargeamerica.org.

The Financial Accounting Standards Board has released a staff position officially deferring the effective date of FASB Interpretation 48, "Accounting for Uncertainty in Income Taxes," for nonpublic pass-through entities and nonprofit organizations, and released guidance on accounting for the assets in postretirement plans.

A group of 61 members of Congress has written to President Bush asking him to suspend rules that require senior citizens to withdraw money from their severely depleted retirement accounts by the end of the year.

WebCPA's financial crisis survey is gauging the reactions of accountants and their clients to the financial crisis.

There are possible tax strategies that are particularly suited to the times that we are in. Here are two that I keep seeing, with the latest in a press release from a major tax publisher. According to analysts with the Tax & Accounting business of Thomson Reuters, C corporations may secure a refund of overpaid estimated taxes, or use projected current-year NOL to offset taxes owed for the previous year.

There is no question that in today’s economic climate, lots of people have lots of different questions. In my own family and among my own friends, I hear the same recurring questions being asked. So, here with the help of my friends in the financial planning/services community, are some answers you might consider telling your clients. Naturally, there might be a difference of opinion but here goes: Are bank accounts, IRAs, and 401(k)s insured? The Federal Deposit Insurance Corporation (FDIC) has raised the limit for individual bank deposits from $100,000 to $250,000. Joint accounts held by a husband and wife would be covered up to $500,000. Unfortunately, defined contribution plans such as 401(k)s are not protected against market losses. But federal protections are present in the event the employer or the company managing the account goes under. In fact, under the Employee Retirement Income Security Act, the amount on the 401(k) account cannot be claimed by creditors of failed companies. How about money market funds? The government now temporarily insures money market funds against losses for the next year. A brokerage account, which may include mutual funds, stocks, or bonds, is not protected against market fluctuations. However, the account is protected against fraud and that’s where the Securities Insurance Protection Corporation (SIPC) comes into play. It insures the account up to $500,000. It’s important then to make sure that the brokerage is SIPC-insured. Don’t stay in the market? People talk about bailing out. Experts advise it is usually best to stay the course, because a highly diversified portfolio generally reflects the amount of risk that the individual has been comfortable with as well as goals. Many advisors are recommending that one just hangs in there and avoids panic selling. Of course, there are some who simply can’t ride out the storm, so where do they put their money? Experts claim that the safest investments are certificates of deposit and money market funds, particularly those that invest in Treasury bills. However consider the tradeoff. The safest investments generally produce the lowest returns. Buying annuities, or charitable gift annuities from a charity or university, which do come with tax breaks, may be an alternative for investors who are looking to reduce their stock exposure and who want an income stream for life. What about those annuities? Many leading experts in financial circles advise that because variable annuities fluctuate with the market, they do provide an opportunity to take advantage of a market boom. Conversely, they may not protect from a down market unless a guaranteed minimum withdrawal benefit had been purchased, which affords a guaranteed income stream regardless of the performance of the investment accounts. However, there is a downside here: it costs more and most insurers restrict the investment choices. Some experts suggest transferring a variable annuity to a fixed annuity where the principal is guaranteed and withdrawals of up to 10 percent of the account value are permitted each year without a penalty. But, keep in mind that this may incur heavy penalties for just switching from one to another. Is it better to use a credit card or a debit card for purchases? Much depends on the individual’s situation but it doesn’t take being a brain surgeon to realize that a credit card should only be used if the full balance can be paid off each month. That way, it’s really borrowing someone else’s money to finance a monthly purchase and at no interest. Of course, if there already exists a heavy balance, then obviously, that shouldn’t be added to; therefore, consider using the debit card to keep the debt load down. Finally, keep in mind that savings itself should be handled based on age and years until retirement. The most important factors are the post-retirement income and the value of the overall investments in determining how to allocate a portfolio. Diversified investments focusing more on capital preservation and income generation, and less on riskier growth stocks, are usually considered the best bets. Older investors may opt for the safety of money market funds.

It's hard to believe we can write another column about pensions and the bad GAAP applied to them, but here we are again, beating the same old drum. In addition, there is a new drum in the Pension Protection Act of 2006.While we're putting this column together, the market is continuing its sliding and bouncing, and the government is doling out money left and right (and in between) to bail out insurers, mega-banks, regional banks, investment banks, depositors, money funds, brokerage houses, and who knows what else.

Government officials now expect 401(k) plan sponsors to conduct periodic due diligence reviews. With respect to their 401(k) or other retirement plans, the problem is that most sponsors (owners) do not have the in-house resources to do so.This is not something that 401(k) plans historically did. On the heels of the recent mutual fund scandals, though, Labor Department officials indicated that sponsors had a duty to periodically investigate plans and benchmark funds and fees.