1. Retirement Plan and Notes in 2010 and 2011 Connie Dello Buono CA Life Ins Lic 0G60621 408-854-1883
motherhealth@gmail.com 1708 Hallmark Lane San Jose CA 95124
what is new in 2010
• everybody can have a Roth IRA
• can no longer make $100k gift directly to charity from your IRA
• return of required minimum distribution
how much to convert? Leave $500 from your current IRA when converting to a Roth IRA
tax planning tips
• take advantage of the amounts limits
• withdrawals from an annuity (life insurance, another product)
• accelerate withdrawals from an IRA (Roth conversions)
Only 2010 before April 15
• Only 2010 before April 15: 0% Long term capital gains tax
For 65yr old single, first $44.75k of income taxed at 15% or below and over $44.750 is taxed at 25%
Social security taxation: above certain limits social security can be taxed based upon " provisional
income"
Municipal bond are fed income tax free but in low income bracket
Provisional income: Adjusted growth income and add half of SS benefits and municipal bond interest
and other adjustments
Social security taxation for married over $44k , 85% of benefit is subject to tax
Avoid: CD, IRA should move to vehicle that does not trigger taxation such as life insurance
What will happen in 2011 (Bush Tax Cuts Expire)
1. 10% bracket disappears
2. rate go back up (max from 35% - 39.6%
3. capital gains goes back to 20%
Will taxes go up and for whom? maybe time to convert to Roth IRA for higher income earners

2. Estate and Gift Taxes
• 2010 no estate tax
• 2011 estate tax returns: $1M exemption and 55% top rate
• 2010 retain the gift tax: $13k annual exclusion, $1M lifetime exemption, flat 35% rate on non
exempt gifts
Stepped Up Basis Example:
Stock value from $2M to $7M, heirs get a new basis of $7M, effectively eliminate any capital gains
For 2010, Modified Stepped Up Basis (not a full stepped up basis) with new Basis at $5M
Buy/Sell Agreement: I will buy her out if she dies or she buys me out if I die
Where do we go from here? Estate tax could be reinstated for 2010 with $3.5M exemption
What should I do?
• do not panic
• leave plans in place
• keep an eye on state estate taxes
• continue any life insurance and gifting programs
• remember life insurance pays estate taxes