Latest News From Keir

Retirement Planning: To Inflate or Not to Inflate
In retirement planning, the question arises as to when to adjust income and assets for inflation. This problem appears often in questions posed by the CFP® Board on the certification examination for the CFP® designation. Students are frequently unsure as to when a calculation of retirement income or of a retirement fund should be adjusted for inflation. The effects of inflation can have a huge impact on these calculations, and it is important to adjust adequately for inflation to prepare clients for retirement.

Life Insurance and the Series 65
As regulatory changes wind their way through Congress, one issue that has been heatedly debated is whether life insurance agents who sell variable products will be required to register as investment advisors or not. In the Investment Advisers Act of 1940 insurance companies and their representatives were exempted from registration. But in light of the economic collapse at the end of 2008 and the ensuing and continuing financial scandals, there is a distinct possibility that may change. If so, insurance agents will find themselves in need of the Series 65.

Notes from the FPA Virtual Town Meeting…
This week the FPA held a “Virtual Town Meeting” phone conference to update us on the activities of the association. The speakers for this program were:

New Tax Rules for the November 2010 CFP® Certification Examination
President Obama signed the Hiring Incentives To Restore Employment Act on March 18, 2010 which included one provision that impacts the CFP® Certification Examination. The one change relates to the Section 179 deduction covered in Topic 51 on the CFP Board’s 89 Topic list.

How the Basis Step Up Rules Work in 2010
Taxpayers who die during 2010 will not owe an estate tax as it has been repealed for the year 2010 under the Economic Growth and Tax Relief Reconciliation Act of 2001 (2001 Tax Act) signed by President Bush. However, there is a downside to no estate tax which is a carryover basis system. For all years except 2010, the heirs receive the estate assets with a basis equal to fair market value at date of death. However, under the carryover basis system in place for 2010, the deceased taxpayer’s basis carries over to the heir (limited to fair market value at death). In addition, the executor has the ability to step up the basis by $1.3 million on assets passing to any heir plus an additional $3 million of basis step up on assets passing directly to the surviving spouse.