1 Copyright ©2010 Copyright 2007 Asset Accumulation, Protection, Preservation, and Transfer, LLC.

1 Copyright ©2010Copyright 2007

Asset Accumulation,Protection, Preservation,

and Transfer, LLC


North Georgia Technical CollegeMarch 18, 2010


Big Canoe March 23, 2010


Woodstock, GeorgiaMay 13, 2010



and Transfer, LLC

Go Navy!


• Registered Investment Advisory Firm John A. Cory, Member(Your Wealth/Legacy Planner/PractitionerTM)

• Securities offered through Resource Horizons Group, LLC, broker-dealer, Member NASD, SIPC

Asset Accumulation, Protection, Preservation, and Transfer, LLC


ResourceHorizons Group, LLCcommissionFINRA

AAPPT, LLCfeeSECADV

Compensation

generally


Fee versus Commission

• RIA: Fiduciary duty• Broker Dealer: Suitability• Compensation: Investment vehicle or product


Relationship

• Advisory Services through AAPPT, LLC• Securities through Resource Horizons Group,

LLC• AAPPT, LLC is not otherwise affiliated with Resource Horizons Group, LLC

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Planning

Implementation


Uncertain World

• Political: Afghanistan, Iran, Terrorists, Congress

• Economic: Budget Deficits, Uncontrolled Spending, Oil and Gas, Greece, PIIGS

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• Funding• Conversions• Distributions• Trust Beneficiaries• Examples• Investments• Estate Tax• Questions and Answers

Agenda

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What’s a Roth IRA?• New Individual Retirement Account introduced in 1998

– Named after Senator William Roth of Delaware, who ledthe fight to establish it

• Same annual contribution amounts as traditional IRA

• Different income restrictions

• Contributions permitted after age 70½ if still employed

• No required distributions (RMDs) from a Roth after reaching age 70½

But the BIG difference is…Taxes!

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Roth IRAs

Similar to traditional IRAs except for these important differences:– No deductible contributions– Tax-free qualified distributions – Owner has no required distributions

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Roth IRA: Pay Tax Now Instead of Later

ContributionsNot Tax Deductible

EARNINGSTAX FREE

Qualified Withdrawals

Investments inside a Roth IRA grow tax-freeAfter-tax Money

After-tax Money

After-tax Money

After-tax Money

Tax-Free Income

Tax-Free Income

Tax-Free Income

Tax-Free Income

Roth IRA

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Funding

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Contributions for 2010• $5,000 (or $6,000 if 50 or older by end of

year)• Two requirements

– Earned income at least equal to amount contributed

– Below modified adjusted gross income (MAGI) thresholds

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MAGI Phase-out Ranges Married filing jointly

$167,000–$177,000

Single $105,000–$120,000

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What Is MAGI?A rollover of assets from:

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Traditional IRA

SEP IRA

SIMPLE IRA

Eligible Employer Plan

[including 403(b) and 401(k)]*

What’s a “Roth conversion”?

Roth IRATO

*Other examples include profit sharing plans, stock bonus plans, pension plans and government 457 plans.

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Conversions• Rollover of assets from a traditional IRA,

SEP-IRA or SIMPLE IRA to a Roth IRA– Two-year period must be met if converting a

SIMPLE IRA

• IRA owner pays taxes on pretax dollars • 10% penalty does not apply

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Conversion Process

IRAIRA Roth IRARoth IRA2) Direct rollover

• 1099R reporting• No 60-day rule

3) Indirect rollover• 1099R reporting• 60-day rule applies• No 12-month restriction

1) Redesignation

• 1099R reporting

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Who’s Eligible to Convert?Through 2009

Filing Status Income Limit

Single MAGI does not exceed $100,000

Married, filing Joint MAGI does not exceed $100,000

Married, filing Separate Ineligible

*Tax Increase Prevention & Reconciliation Act of 2005 (TIPRA)

Starting January 1, 2010*Income LimitFiling Status

Eligible & no income limit

No income limit

No income limit

Married, filing Separate

Married, filing Joint

Single

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Conversions in 2010Convert to Roth IRA• No MAGI limits

– Anyone can convert regardless of income level

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Conversions in 2010You can pay tax on the conversion in 2010 OR split the bill, defer tax and pay:

■ One-half in 2011

■ One-half in 2012

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To Convert…or Not To Convert?

Roth IRA Considerations

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What Will Your Tax Rate Be?

“New” income tax rates scheduled to sunset; “old” rates scheduled to return to your tax bill

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Conversion Caution

• Using assets outside of the IRA to pay tax:– Reduces taxable estate– Maximizes long-term tax deferral

• Using IRA assets to pay tax may:– Subject some assets to income taxation– Incur a 10% early withdrawal penalty if under 59 ½

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Converting IRA After Age 70½ RMD amounts cannot be

converted or rolled to a Roth IRA

IRAIRA Roth IRARoth IRA

1. Distribute RMD amount from IRA

2. Convert balance to Roth IRA

RMD

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You Can Now Convert from an Employer Plan

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Who Let the Roth Out?You can now also convert an inherited

account• Applies only to eligible rollover distributions

from employer plans• Spouse only can roll to an inherited Roth IRA• Which distributions must be taken from

Roth IRA?• Does it make sense for you?

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Are You Looking to Accelerate a Deduction?

Section 691(c) deduction• Itemized deduction for estate taxes paid• Conversion causes you to pay income

taxes sooner, BUT also accelerates use of this deduction, potentially reducing tax bill in half

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Conversion Do-oversRecharacterization• First do-over

– By tax return due date, including extensions

Reconversion• Doing over the do-over

– In year following year of conversion– 30 days after recharacterization

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Do-over Timeline

Conversion Period

10/15Last day to recharacterize

Reconversion Period After 30 days

1/1 to 12/31

Year 1Year 1 Year 2Year 2

1/1 to 12/31

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Reconversion Examples

ScenarioScenario ConversionConversion RecharacterizationRecharacterization ReconversionReconversion

1 4/1/10 8/1/10 1/1/11

2 4/1/10 12/25/10 1/24/11

3 4/1/10 4/15/11 5/15/11

Time restrictions for eligible recharacterizations and the earliest reconversion date

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Roth 401(k) and 403(b)

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Roth IRA Distributions

• Qualified• Nonqualified• Required

(for beneficiaries)

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Qualified (Tax-free) DistributionsTwo requirements

1. Five years since you established a Roth IRA

2. Distribution is made for one of the following reasons:– Age 59½ or older– Disabled – Deceased– First-time home buyer

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When Can I Withdraw Converted Assets?

• There is no income tax when converted amounts are withdrawn

• However, there will be a 10% penalty unless:– The amount was converted at least 5 years ago, OR– The IRA owner is one of the following:1

• Age 59½ or older

• Deceased

• Disabled2

• Taking “substantially equal periodic payments”

• Paying medical expenses in excess of 7.5% of AGI

• Eligible for a qualified disaster recoveryassistance distribution

The bottom line:After 5 years, converted amounts come out tax- and penalty-free

1.IRC Sec. 72(t)2.Social Security definition of “disabled” essentially means you are unable to perform ANY kind of meaningful work, i.e. not simply that you are

unable to continue to perform the work you were doing prior to your disability.3.After being unemployed for 12 consecutive weeks

• Paying health insurance premiums3

• Paying college expenses

• Withdrawing $10,000 to buy a “1st time” home

• A qualified reservist on active duty

• Withdrawing funds to satisfy an IRS levy on a qualified plan or IRA

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Nonqualified DistributionsIf you take a distribution but fail to meet requirements for a qualified distribution, then the distribution is made in the following order:

■ Regular contributions

■ Conversion and rollover contributions• 10% penalty if within five years

■ Earnings• Taxes and 10% if no exception

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Tricky Rollover Rules

• New Roth IRA, then new five-year period

• Existing Roth IRA, then rollover tracks Roth IRA five-year period

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Tricky Rollover Rules

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DRAC (Designated Roth Account) Rollover Example

Amount includes $65,000 after-tax contributions and $35,000 earnings• Qualified distribution

– $100,000 included as Roth IRA basis

• Nonqualified distribution– Basis and earnings track to Roth IRA

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You May Wish to Get StartedIn anticipation of a DRAC rollover, establish a Roth IRA now with either:• Contributory Roth IRA • Nondeductible IRA that is then converted to Roth IRA

– BUT beware of the aggregation rule

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Required Distributions at Death• Death before required beginning date

(RBD) rules• Designated beneficiary (DB)

– May use five-year rule or life expectancy

• No DB– Must use five-year rule

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Death Distributions and the Five-year Rule

• Required distributions waived for 2009• Five-year rule is currently a six-year rule

– For deaths occurring between 2004 and 2009

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Nonqualified Death DistributionsRoth IRA owner dies before end of five-year period beginning with:

■ First taxable year for which a contribution was made

■ Year of conversion contribution from traditional IRA or rollover

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Qualified Death Distributions

• Spousal rollover– Earlier of spouse’s or decedent’s five-year holding

period

• All others– Decedent’s five-year holding period

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Who’s Your Beneficiary?

• Designated beneficiary (DB)– Spouse– Non-spousal individual– Qualifying trusts

• Non-DB—estates, charities, etc.

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Spouse

• Lump sum• Five-year rule• Inherited Roth IRA

– Annuitization– Spouse’s recalculated life expectancy

• Delayed until owner would have reached age 70½

• Rollover

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Non-spousal Individual

• Lump sum• Five-year rule• Inherited Roth IRA

– Annuitization– Life expectancy of beneficiary

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Qualifying Trusts as Designated Beneficiaries (DBs)

• Valid under state law• Irrevocable at death• Identifiable beneficiaries• Trust documentation by 10/31 of year

following year of death

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Qualifying Trusts

• Lump sum• Five-year rule• Trust-owned inherited Roth IRA

– Life expectancy of oldest trust beneficiary

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Trusts•Balancing Control with Flexibility (the terms of

your trust) and Cost.•Revocable, irrevocable, contingent, or

testamentary.•Assets: securities, real estate, life insurance,

retirement plan/IRA (Traditional or Roth).•Provisions: disability, asset/creditor protection

(spendthrift), educational, income and estate tax reduction, second marriage issues, attempted value incentives, special needs, generation skipping, and dynasty provisions.

•Assets to be accumulated, protected, preserved and transferred. (AAPPT, LLC).

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Non-designated Beneficiaries

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Multiple Beneficiaries

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Important Dates for theYear AFTER Death


Stretch IRA

No Stretch IRA

• Loses Tax Deferral• Taxes Due on Full Amount• No Legacy Left for Children

®

IRAACCOUNTS

OWNER SON GRANDCHILDIRAACCOUNTS

IRAACCOUNTS

IRAACCOUNTS

OWNER

SON

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Roth IRA and Social Security

●Distributions from Traditional IRA’s and 401(k)’s are included in provision income (in excess of two thresholds).

●Distributions from Roth IRA’s are not.

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Roth IRA Advantages

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Roth IRA Disadvantages

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Do the MathAnalysis is required, because everyone’s situation is differentAssumptions include:

• When distributions will be taken

• What tax rates will be at the time of distributions

• Earnings during the interim

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Possible Opportunities• You don’t need your traditional IRA for income

and wish to leave it to someone.• You need your IRA to fund your credit shelter

trust.• You are willing to pay income tax on conversion

to reduce your estate (and thus your estate tax).• You have charitable deduction carryovers,

investment tax credits, etc., that will offset income on conversion.

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Case Study$750,000 Roth IRA• 75-year-old owner dies having named two

beneficiaries

Grand- Grand- daughter,daughter,

Age 25Age 25

Son,Son,Age 50Age 50

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Opportunity for Separate Accounts

• Separate accounts established by 12/31 of the year following the year of owner’s death

• Son has 34.2 years during which to take distributions

• Granddaughter of deceased daughter has 58.2 years during which to take distributions

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Thanks, but No ThanksDisclaimers• Son executes a qualified disclaimer• His sons, ages 22 and 20, inherit his interest• Separate accounts established by 12/31

deadline• 22-year-old son’s distribution period is 61.1

years • 20-year-old son’s distribution period is 63 years

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Conversion Scenario: The Chen’s• At ages 68 and 67, Lee and Grace Chen are

already retired

• Lee has a $100,000 Traditional IRA

• Tax bracket: 25%

• Depending upon how their other investments perform, in some years the Chen’s may need $10,000 from Lee’s IRA after-tax to cover their retirement expenses.

• If there is anything left in Lee’s IRA, they would like to leave it to their grandson.

The Chen’s want to know if converting makes sense for them. They would pay the $25,000 income tax bill using the money in a CD

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Conversion Comparison for the

Chen’s

Assumptions:• Hypothetical IRA Average Annual Total Return: 8%

• Hypothetical CD Annual Fixed Rate of Return: 2.5%

• Retirement Tax Bracket: 25%

Withdrawals are taken at start of each year

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Conversion Comparison for the Chen’s

Assumptions:• Hypothetical IRA Average Annual Total Return: 8%• Hypothetical CD Annual Fixed Rate of Return: 2.5%• Retirement Tax Bracket: 25%Withdrawals are taken at start of each year

This chart is for illustrative purposes only and does not reflect the performance of any Franklin, Templeton or Mutual Series fund. Please consult with tax and legal professionals for specific individual recommendations and advice.

Tipping Point:Roth will have more money after 11 years

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Conversion Comparison for the Chen’s

Assumptions:• Hypothetical IRA Average Annual Total Return: 8%• Hypothetical CD Annual Fixed Rate of Return: 2.5%• Retirement Tax Bracket: 25%Withdrawals are taken at start of each year

This chart is for illustrative purposes only and does not reflect the performance of any AAPPT,LLC or Resource Horizons Group LLC investment. Please consult with tax and legal professionals for specific individual recommendations and advice.

Tax-Free Amount Left to Lee’s Grandson (if no withdrawals):$466,096

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Leaving a Roth IRA to a Young Beneficiary

Assumptions: 1.AAR on investments: 8%.2.Jason withdraws just the minimum amount required each year

For illustrative purposes only. This illustration does not reflect actual investment results of any,AAPPT,LLC or Resource Horizons Group, LLC investment and is not a guarantee of future results.

Jason is age 6 in the year after he inherits grandpa’s Roth IRA

Tax-Free!

Total CumulativeIncome Received by Age 82:$2,142,458!

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Conversion Scenario: The Parkers• Janet and Brian Parker are both 46 years old

• Janet has a $50,000 Traditional IRA

• Tax bracket:– Today: 25% – In retirement: 15%

• When they retire at age 66 they will need to withdraw $20,000 from Janet’s IRA each year on an after-tax basis.

• The Parkers want to know if it makes sense to convert Janet’s Traditional IRA to a Roth IRA.

• They would pay the income tax using the $12,500 they have in a CD (Certificate of Deposit)

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Conversion Comparison for the

ParkersAssumptions:• Hypothetical IRA Average Annual Total Return: 8%

• Hypothetical CD Annual Fixed Rate of Return: 2.5%

• Current Tax Bracket: 25%

• Retirement Tax Bracket: 15%

• No further contributions to IRA

Withdrawals are taken at start of each year

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Conversion Comparison for the Parkers

This chart is for illustrative purposes only and does not reflect the performance of any AAPPT, LLC. and Resourec Horizons Group, LLC.lRelease consult with tax and legal professionals for specific individual recommendations and advice.

Assumptions:• Hypothetical IRA Average Annual Total Return: 8%• Hypothetical CD Annual Fixed Rate of Return: 2.5%• Current Tax Bracket: 25%• Retirement Tax Bracket: 15%Withdrawals are taken at start of each year


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Conversion Comparison for the Parkers

Assumptions:• Hypothetical IRA Average Annual Total Return: 8%• Hypothetical CD Annual Fixed Rate of Return: 2.5%• Current Tax Bracket: 25%• Retirement Tax Bracket: 25%Withdrawals are taken at start of each year

This chart is for illustrative purposes only and does not reflect the performance of any AAPPT, LLC and Resource Horizons Group, LLC. Please consult with tax and legal professionals for specific individual recommendations and advice.


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What About Taxes?• If you convert, you must pay income

tax on amounts not previously taxed

Type of IRA Assets Taxable at Conversion?

IRA Contributions (deducted) Taxable

Earnings Taxable

Pre-tax rollovers from retirement accounts

Taxable

IRA Contributions (not deducted)

Not taxable

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What About Taxes? (Cont’d)Best to use non-IRA money to pay the tax• More assets go into Roth

• 10% penalty and income tax on all amounts withdrawn (or withheld) prior to age 59½—even if used to pay conversion tax

• If you later “re-characterize” (un-do) the conversion, money taken from an IRA to pay the conversion tax cannot be returned to the IRA it came from

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What About Taxes? (Cont’d)• When do I pay the tax?

• Taxable portion of conversion is reported as “income” in the year you do the conversion– Could push you into higher tax bracket– Could make you subject to AMT (Alternative Minimum Tax)– Could require you to make quarterly estimated tax payments

• Special option for 2010 conversions only– Declare as income on 2010 tax return

OR– Declare 50% as 2011 income and 50% as 2012 income– Consider: when might your tax bracket be lower?

• Must file Form 8606 with federal tax return

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Retirement Plan/IRA Taxation• Federal Income Tax• State Income Tax• Too Soon Penalty: 10%• Too Late Penalty: 50%• Federal Estate ax• State Estate Tax

How much shrinkage is in your retirement plan?

Consider giving it to charity or you own Donor Advised Fund.

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Reasons to Convert

Reason Benefit

Lock in today’s tax rates • Do you know your retirement tax bracket?

Achieve tax diversification

• Conversion adds flexibility to choose which accounts to pull income from

• Manage your tax consequences

Turn investment losses into a positive

• Lower IRA value means lower tax bill to convert assets

No required distributions at age 70½

• Assets continue to appreciatetax-free

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Reasons to Convert (Cont’d)

Reason Benefit

Roth withdrawals don’t affect taxation of Social Security income

• May prevent up to 85% of Social Security income from being taxed

You can withdraw conversion amounts without penalty

• No penalty applies after five years if you are under 59½

• The five year requirement does not apply if you are 59½ or older

Estate planning considerations

• Taxes paid on the conversion will reduce your taxable estate

• Leave Roth IRA to a beneficiary: spouse, children, grandchildren

• Beneficiary receives tax-free income for life

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ConsiderationsKeep in mind• Expected return on Roth IRA

investments

• Conversion amount

• How long will assets remain in the Roth IRA

• Use non-IRA assets to cover the tax bill

• Consider your beneficiaries

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Roth Conversions: Key Factors

• How old is the investor?• How much does the investor spend relative to portfolio

value?• How much relative wealth is held in taxable vs. tax-deferred

(or tax-free) accounts?• What is the investor’s asset allocation?• Can the investor afford to pay the income tax cost of

conversion from taxable assets?• What is the investor’s blended income tax rate currently?

– What is it expected to be in 2010?– In 2011 and 2012– Thereafter?

• Will the designated beneficiary take only minimum required distributions?

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Potential Candidates for Roth Conversion

• Do not expect significant decline in effective tax rate in retirement years.

• Intend to transfer IRA to family member who will stretch.• Don’t expect to spend meaningfully (or at all) from IRA in

retirement.• Can pay conversion taxes from other (non-retirement)

assets.• Don’t plan to leave IRA to charity

but that begs the question… SHOULD these assets be going to charity?

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13 Roth Conversion Traps Part 1

1. 60-Day Rollover Mistakes

2. Partial Conversions Involving After-Tax Money and Mid-year Rollovers

3. RMDs Must be Taken First

4. Some Funds are Not Eligible for Conversion or Contribution

5. Non-Spouse Beneficiaries Can't Convert Inherited IRAs

6. On a 2010 Conversion the lncome is Split, Not the Tax

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13 Roth Conversion Traps Part 2

7. The 10% Penalty Trap/ SIMPLE IRA 25% Penalty

8. Not Using Separate New Roth IRA

9. New Roth Accounts Need New Beneficiary Forms

10.Loss of Credits, Exemption, Deductions

11.Social Security Taxation and Medicare Costs

12.Financial Aid Loss

13.Net Unrealized Appreciation (NUA)

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Frequently Asked QuestionsIf I convert in 2010 and want to spread the tax over the next two years, what income tax rate will apply?Whatever rates are in effect for the year in which you declare the converted amount as income.

Do I have to convert all of my non-Roth IRAs?No. You can convert as much—or as little—as you wish.

Do I have to convert everything I want to in a single year?No. You can spread it out, converting as much as you wish—or none—from year to year.

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Frequently Asked Questions (Cont’d)

In some years my income was too high to allow me to deduct my IRA contribution, so I used after-tax money for this. Will I have to pay income tax on this again when I convert?

No. But figuring how much of your conversion will be taxable is a bit tricky, so you should consider working with a professional to get it right. AAPPT, LLC has created a worksheet that will help us estimate this.

However, the final calculation includes certain amounts that won’t be known until the end of the year, so we won’t be able to compute the exact amount until then.

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Frequently Asked Questions (Cont’d)

If I have a Roth option in my 401(k) or 403(b) plan at work, can I convert my pre-tax assets to the tax-free Roth option in the plan?No. However, when you retire or leave your job, you can roll assets in the Roth side of your 401(k) into a Roth IRA. Pre-tax assets in your 401(k) can either go into a traditional IRA or a Roth IRA. If you roll them into a Roth IRA, you will owe income tax on the amount.


There have always been reasons not to invest


9/11


9/11


9/11


Impact of Events

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IT’S THE TOTAL DEBT

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Perspective | Defining recessions A recession is…

•Determined by the National Bureau of Economic Research

•Based on significant declines in industrial, production, employment, real income and wholesale-retail trade

•Ten previous recessions since World War II, each lasting between 6 and 18 months

•Recessions are not officially confirmed until months after they begin, including the current recession

•The current recession, which was confirmed in December 2008, started in December 2007

Source: National Bureau of Economic Research, http://www.nber.org/, 2008

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United States Recessions Since 1945Duration in Months

Perspective | Previous recessions

Source: National Bureau of Economic Research

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Perspective | Stock Market Has Delivered Long Term

• From 1968 through 2008, the S&P 500 has returned an average of 9.03%. However, the returns received each year varied greatly, from -37% to +37% 1

• The two worst years of performance (1974 and 2008), prior to 2008, were followed by the two best performing years, 1975 (+37%) and 2009 (29%).

Past performance does not guarantee future results. Sources:1 Ibbotson Associates, SEI , 2008

The benefits of patience…

9.5%14.1%

Average gain 10 years after market

high

Average gain 10 years after market

low

Markets have recovered in 8 bear markets since 1956:*


Perspective | Market Recovers Before Recession Ends

1050

1100

1150

1200

1250

1300

1350

1400

1450

1500

-12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Average Stock Market Performance (Last 10 Recessions) 1990-91 Recession

Start of recession 18 months after start of recession12 months before start of recession

NBER Recession Start Date and Average Length of 10 months

Recoveries begin before recessions end


Looking forward: | Prospects through 2010

What are economists saying?

Source: Blue Chip Economic Forecast, 2009

103 Copyright ©2010Source: Bureau of Economic Analysis

Tailwinds: | Country is more productive

Gross Domestic Product1st quarter 2007 to 3nd quarter 2009


Purchasing Managers IndexJanuary to December 2009

Source: Institute for Supply Management

Tailwinds: | Manufacturers increasing production


U.S. Unemployment Rate (%)January to December 2009

Source: U.S. Bureau of Statistics

Headwinds: | Unemployment remains too high


0

50

100

150

200

250

300

350

400

450

Jan 09Fe

b 09

Mar

09

Apr 09

May

09Ju

n 09Ju

l 09

Aug 09

Sep 09

Oct 09

Nov 09

Dec 09

Jan 10

New Home SalesJanuary 2009 to January 2010

Source: National Association of Home Builders

Winds: | Housing market


Looking forward: | Sizing up the recovery

• What will recovery look like?

• V = Quick recovery

• U = Lengthy recovery

• W = Double dip recovery


Capital Market OutlookCapital Market Outlook• 2008: $X Trillion of assets disappeared• Central Banks print money (stimulus)• How will governments “unwind”• Political Events/Health Care• County Debt/Budget Deficits (Sovereign risks)• Bank Debt/Credit Markets• Weak dollar (Currency)• Low interest rate (deflation/inflation)• Economy: Square Root• Unemployment• Manufacturing Sector• Stock Market/Regulation• Commodities/oil• Taxes: income Bush tax cuts/estate • Residential/Commercial real estate


Think positive, remain cautious But be realistic…..Think positive, remain cautious But be realistic…..

Economic tailwinds• Improving equity markets• Increased manufacturing activity• Reviving auto market

Economic headwinds• Employment level remains troubling• Commercial real estate• Cautious consumer spending, but perking up


Investing : Ask the right questions

• What are your investment objectives?• What role does the investment vehicles you’re

considering play in meeting objective?• How will the timing of your buy affect your return?• Are you willing to practice patience and not sell after

a negative year?• Are you properly diversified beyond the investment

you’re making in any one fund?• Are you willing to keep your sights focused far down

the road?


Investing: Believe in asset allocation

• Consider changing your allocation only . . . – When your situation changes– When there is a change in the risk-reward tradeoff in markets

• Recent events have not altered our assumptions about the markets

• Do not change you asset allocation out of fear or greed

We can help you modify an allocation appropriate for your goals


Investing: Rebalance regularly

January 1, 2010 June 30, 2010

60%

40%40%

60%

Your advisor can help you keep your portfolio on target

Steep market changes can alter allocation dramatically

For illustration purposes only, not related to any investment


The Right InvestmentsTraditional IRA

Inside IRAInside IRA• Growth Mutual Funds• Short-Hold Stocks• Taxable Bonds

Outside IRAOutside IRA• Index/Low Turnover Mutual

Funds• Long-Hold Stocks• Tax-Free Bonds

Roth IRA•Risk/Return Analysis

•Time Horizon


Moderate Growth

Managed Futures

Target Asset Classes

Cash 5%

Global Bonds 24%

Global Equity 45%

Alternatives 25%

Total 100%

Contemporary Portfolio Allocation


Target Asset Classes

Cash 5% Global Bonds 24% Global Equity 45% Alternatives 25%

Total100%


Planning and Implementation

What is your blend of taxable, tax deferred, and tax free investments?


Portfolio Review

• Diversification• Asset Allocation


Work with Your Financial and Tax Advisors

To estimate the taxon a Roth conversion

To choose the rightinvestments for yourRoth IRA

To file the proper paperwork


2009$3.5M

2002$1M

2004$1.5M

2006$2M

Unified Credit

The federal estate tax was repealed on 1/1/10 until 12/31/10. Beginning 2011, the federal estate tax will be reinstated with a federal estate tax exemption amount of $1,000,000 and a maximum estate tax rate of 55%. Congress continues to discuss and consider legislation that, if passed, could change the estate tax exemption and estate tax rates for 2010 and beyond.


History of Estate Tax• 1797: Stamp Act

• 1802: Repealed• 1862: Civil War

• 1870: Repealed• 1898: Spanish American War

• 1902: Repealed• 1916: WW I• 1924,1930’s,1976 – 1993 (9 Acts)• 2001: EGTRRA


Estate Tax 2010

• Zero?

• $1M Gift Tax Exclusion

• No Generation Skipping Tax

• Retroactivity ?

• $1M Estate Tax Exclusion in 2011

• Will Codicils and Trust Amendments


Don’t Procrastinate!

Because…


Don’t Procrastinate!

Because…


Question

What are you doing with your life’s resources, gifts, talents, opportunities, and abilities?


Life is like the

game of MONOPOLY…

When it’s all over, it all goes back into the box.


He was a great man, but…

…the one scenario he forgot to consider in his forecast, was the certainty of Death.


Death is the

last big move of your

Life.


“provide unbiased, multi-generational, multidiscipline planning, across the board, investment, retirement, estate, business, and charitable advice and implementation, from an independent conservative/moderate but global investment prospective, enabling clients to meet and maintain material needs, instilling family values, and achieving financial goals and objectives, while making this world a better place.”

Mission Statement


Thank you for attending today’s session.

Questions and Answers


This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state, or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. AAPPT, LLC and Resource Horizons Group, LLC and their respective representatives and advisors do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.


You should carefully consider an investment’s risks, charges, limitations, and expenses. This and other information are provided in the applicable product and underlying fund prospectuses. These prospectuses are available from your registered representative or by calling the toll-free numbers listed on the last page. Read them carefully before investing.


Disclosures

•There are risks involved with investing including possible loss of principal. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.

•Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

•Appreciation is expressed to SEI Investments, Franklin Templeton and Pacific Life for assistance in the preparation of these slides.



and Transfer, LLC

Go Dawgs!

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