RMR Wealth Management, LLC

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Dear John,

I wanted to wish you a Happy, Healthy and Prosperous New Year!

I’m sure you made your New Year’s resolutions. However, many of us unfortunately fail to follow through on them.  Why?  Many don’t ever fulfill their resolutions because they are basically empty promises.  If you want to make 2013 a better year, then make plans not resolutions.  Throughout 2012, I discussed why having a solid financial plan in place is critical to achieving what is most important to you and your family.

Having a plan is only the start, ACTING on your plan is most important.  So now that we watched our leaders stall until the last minute to address the fiscal cliff and modify taxes, we can begin to take ACTION immediately.  Taxes have increased for all of us, and those in higher tax brackets will see an added 3.8% ObamaCare tax on investment income, interest, and dividends.  In 2013, long term gains/dividends will now be taxed at 20% and anyone over $200-250k will add another 3.8% (for a total of 23.8%).  What can you do to alleviate your tax burden?

For starters, think about addressing it through asset allocation. Take the assets that trigger the greatest tax consequences and place them in deferred accounts such as a 401(k), IRA, SEP-IRA, or ROTH IRA.  For taxable accounts you can look to municipal bonds for potential triple tax free interest if done within state of residence.  Note of caution here: as interest rates begin to increase, bond prices will fall. 

Another option is the annuity. Low cost annuities provide deferral on interest and gains within the account until money is withdrawn.  That means no taxes on any of the accumulated interest or gains.  Since many companies are no longer providing pensions, this is an option to create your own pension-like income stream and to compensate for the uncertainty of future social security benefit payments down the road.   

Permanent life insurance is the Swiss army knife of planning.  If used properly, permanent life insurance can act as a great tool to protect your family while building up cash value on a deferred basis (no taxes as money grows).  Moreover, it can potentially offer tax free income through policy loans and withdrawals.  It can act similarly to a ROTH-IRA with the ability to generate tax free income with after tax dollars.
This brings me to the last option of using a ROTH (whether it is a ROTH-IRA or a ROTH 401(k).  A provision tucked into the American Taxpayer Relief Act will expand the opportunities for employees to transfer funds from traditional 401(k) plans to Roth 401(k)s.  Having a portion of your portfolio to provide tax free income can significantly affect your assets, especially during retirement.  More than 40% of employers offer a Roth 401(k) plan feature.  This is sure to increase as more people will take advantage of the opportunity to cut taxes they would have had to pay on distributions.

Please contact John J. Fiorito at 212-785-4377 x224 to create your 2013 plan. 

BE Prepared, BE Educated, and BE Proactive!



John J. Fiorito
Financial Advisor
“Retire Comfortably and Remain Comfortably Retired”

Securities offered through Dinosaur Securities, LLC Member FINRA, SIPC, NFA.

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.  RMR Wealth Management, LLC does not provide legal, tax, or estate-planning advice. For questions about a specific situation, please consult a qualified adviser.   

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