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U.S. Economy Taking the Long Road to Recovery
Investors can expect some economic sectors, some households and some individuals to have a really hard time as the U.S. economy climbs out of this deep recession, but there are signs everywhere that recovery is under way. The Federal Reserve terminated some of the special lending facilities created at the height of the credit crisis - and the Fed's raising of the discount rate (paid by banks that borrow directly from the Fed) from 0.50% to 0.75% in mid-February is yet another step toward "normal." None of these measures is expected to lead to a tightening of credit for consumers or small businesses. However, in the future, consumers should pay attention to the interest rate the Fed pays on banks' excess reserves. Fed Chairman Ben Bernanke sees this rate as the floor, the discount rate as the ceiling and the fed funds rate - traditionally the main policy tool for setting general lending rates - in the center, says Raymond James' Chief Economist Scott Brown in this edition of Professionally Speaking, hosted by Larry Pugliese.
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On the Edge of a Major Technology Upgrade
You're in front of your television set watching American downhill skier Bode Miller schuss downhill and you'd like a little biographical information. Using your remote, you surf the Internet, locate your biographical facts, then switch back to full screen as Miller crosses the finish line. Fantasy? Hardly - the technology is here and working. This amazing age of high-tech gadgetry has produced computers the size of a dime, useful upgrades for smart phones, and an entire range of new products that could change the way we read, compute and interact. Investors with a long-term interest in technology should be aware that we may be in the early stages of an operating system upgrade the likes of which we haven't seen in 15 years, says Hans Mosesmann, Raymond James' technology analyst, in this edition of Professionally Speaking, hosted by Larry Pugliese.
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Unusual Risks Surround Estate Tax Strategies for 2010
As of January 1, 2010, the federal estate tax and the generation-skipping transfer tax disappeared - but there is considerable confusion regarding the future of these taxes. Congress may alter the current situation sometime during the year, and new rules could be imposed retroactively. In 2011, the old 2001 limits are set to reappear, imposing a $1 million exemption limit and a 55% gift tax rate. But investors should consider new estate planning and gift-giving strategies very carefully, always with legal assistance and in full knowledge that retroactive changes could occur. It is also important to check the formula clauses that attorneys have routinely included in estate plans to determine inheritances. Such clauses assumed the law would always impose limits, so they may not operate as expected in 2010, says Dave Ness, president of Raymond James Trust, in this edition of Professionally Speaking, hosted by Larry Pugliese.
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To Roth or Not? It's a Question for 2010
No matter how much anyone makes, in 2010 investors saving for retirement will have an opportunity to convert traditional IRAs into Roth IRAs, paying no federal taxes on the transaction until 2011 and 2012.* Before 2010, anyone making $100,000 or more annually couldn't make such conversions. The advantages of the Roth IRA are well known. Because they are funded with after-tax dollars, qualified distributions are tax-free, although unless certain criteria are met, Roth owners must be 59 1/2 or older and have held the IRA for five years before tax-free withdrawals are permitted. As no withdrawals are actually required, high-net-worth individuals can pass untouched Roth accounts to future generations. Conversion isn't for everyone, including those who expect to be in a lower tax bracket or who would have to use other retirement funds to pay the tax, says Susan Hartman, CFP(R), a tax and estate planning consultant with the firm's Financial Planning Group, in this edition of Professionally Speaking, hosted by Larry Pugliese. *The option to spread the federal income taxes over two years applies to 2010 only. For conversions occurring after 2010, the federal income taxes due must be paid in full the following tax year going forward. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
