RMR Wealth Management, LLC

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Dear John,

On Tuesday, November 6, 2012, we the people of the United States of America will be making a decision that will affect our lives.  Whether we decide to make a change and vote Romney or we decide to keep Obama in office, we can expect some significant changes to our economy and our tax system, which in turn will affect many of our financial decisions.

First, is your portfolio prepared for the Fiscal Cliff?  What is the Fiscal Cliff?  The Fiscal Cliff is a term used to describe the various challenges that government will face at the end of 2012.  Specifically, they relate to the following:  end of payroll tax cuts, end of certain tax breaks for businesses, shifts in the alternative minimum tax, end of the “Bush tax cuts”, and lastly beginning of taxes related to the Obama healthcare law.

The election will almost certainly have an impact on the direction of future policy, particularly if one party earns a decisive victory.

If you refer to my past article Impact of Tax Code Changes for 2013 you can see there is a constant recurring theme and that is…taxes, taxes, and taxes.

How does this affect your portfolio?  If we see an end to the “Bush Tax Cuts”, that could mean a significant decrease in your net profit from your investments.  It is not what you earn but it is what you get to keep.  Long term capital gains may increase from 15% currently to ordinary income rates (which means if you are in a high tax bracket you will see taxes double).  Even buy and hold strategies would be affected, as dividends may also reset to ordinary income rates.  If you are retired living off of the income from your investments, these changes can have a significant impact on your portfolio.  Bottom line is this coming election is going to have an effect on the portfolios of all Americans, whether accumulating assets or distributing assets during retirement.

There are a few solutions:

1. You can begin to think about tax advantaged investments and accounts designations such as:



    Municipal Bonds


    Permanent Life Insurance

    College 529 plans (for those saving for education)

2. Have a plan in place

By having a plan in place you can strategically position your assets to maximize your after tax returns.  For example, securities that are traded more frequently, pay dividends, or generate income could be allocated to tax-deferred accounts such as those mentioned above.  For taxable accounts, you may want to consider a portfolio of non-dividend paying securities, or set up a municipal bond ladder, which could offer triple tax free interest depending on your geographical location.

You are not alone.  The majority of individuals have the same concerns.   You can start today by having a plan in place and working with an advisor like me, an advisor with unbiased opinions and one who will actively monitor and execute your financial plan.

Schedule a consultation with John J. Fiorito today at 212-785-4377 x224 to discuss ways to alleviate the impact of higher taxes on your portfolio.  Remember, “It is not what you earn, but it is what you get to keep”.

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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