Why is this Topic Important to Wealth Managers? Discusses how international planning can impact clients’ tax position domestically.  Provides discussion on a number of common international tax concepts as they relate to U.S. taxpayers.

In a previous blog, it has been briefly discussed that there may be a number of reasons a client may consider offshore planning, generally.  Today we will focus on one major component of offshore considerations, the impact of world-wide income on U.S. taxpayers. It is generally accepted that U.S. taxpayers are expected to pay income taxes on income earned from sources worldwide.[1] This concept is commonly referred to as “outbound” taxation. [2]

It is the case that many sovereign nations will also have taxes on personal and/or corporate income that an individual or corporation could become subject to, creating in effect “double taxation.”  And some foreign nations choose to have very low or no tax rate on certain types of income, or on corporations in general, thus allowing foreign income to potentially escape foreign taxation (and current U.S. taxation in the year that it is earned).

What are some rules that that Congress has attempted to avoid double taxation or subject foreign income to U.S. taxation?

Foreign Tax Credit

Under the foreign tax credit, the “United States allows its taxpayers to reduce their U.S. tax liability by some or all of the foreign income taxes paid on income earned outside the United States.” [3] The credit, created by Congress, reduces U.S. income by “foreign income taxes paid or accrued.”  “The credit is a dollar-for-dollar reduction of U.S. income tax liability.”  [4]

Controlled Foreign Corporations

As a general rule, “the income of a foreign corporation is included on the U.S. shareholder’s U.S. income tax return only when dividend income is received.” [5] Yet for certain situations when U.S. taxpayers have a shareholding in a foreign corporation, Congress has established special rules that “deem” a dividend to have been paid by the foreign corporation, regardless of whether it is actually paid or not.  These special rules are known as “anti-deferral” rules – rules that mitigate the tax advantages of taxpayers deferring U.S. tax until foreign income has been received.

In general the rules that most impact U.S. taxpayers with a shareholding in a foreign company are known as “controlled foreign corporation” rules (aka CFC rules).  A CFC exist when “any foreign corporation in which more than 50 percent of the total combined voting power of all classes of stock entitled to vote or the total value of the stock of the corporation is owned by U.S. shareholders on any day during the taxable year of the foreign corporation.” [6]

Not all income earned by a CFC will be deemed as a dividend to its U.S. taxpayers.  Congress does not want to stop U.S. taxpayers from investing or doing business overseas.  However, Congress is concerned that it is common that U.S. taxpayers will “shift the income-generating activity to a foreign entity where the income earned will not be subject to U.S. tax until repatriated.” [7] Congress considers that such business activities or investment activities could have or should have occurred in the United States, or at least should have been taxed in the United States regardless of where they occurred.

Thus, Congress has established complex rules to determine which types of income it will allow to be earned overseas without the U.S. taxpayers incurring current U.S. taxation on a deemed dividend, and correspondingly which types of income for which Congress will disallow deferral.  Income that Congress disallows deferral for is known as ‘tainted’ income.  It is this “tainted” income that is included in the gross income of its U.S. shareholders without regard to its actual distribution.

Income that is subject to current taxation from a CFC, “can be characterized as income that is easily shifted or has little or no economic connection with the CFC’s country of incorporation” [8] and may include, “foreign personal holding company income, foreign based company sales [and service] income, …as well as certain insurance income, …and certain other narrowly defined categories of income [including passive income, ‘such as interest dividends rents and royalties’[9]].” [10] Well, that’s a mouthful of legal terms that we will need to discuss in future blogticles.

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[1] 26 U.S.C § 61; See also, Taxation of Business Entities.  James E. Smith, William H. Raabe, David M. Maloney.  Chapter 13.  2007 Annual Edition, citing 26 U.S.C § 61, “Gross income for a U.S. person includes ‘all income from whatever source derived’.  ”Source“ in this context means not only type of income (e.g., wages or interest) but geographic source as well (e.g., the United States or Belgium). Westlaw.

[2] Corporations, Partnerships, Estates & Trusts.  Chapter 9.  , 2007 Annual Edition.  Westlaw.

[3] Taxation of Business Entities. Ch 13

[4] Id.

[5] Id. citing, Subpart F, §§ 951-964 of Title 26 of the United States Code.

[6] Taxation of Business Entities.

[7] Id.

[8] Id.

[9] Id.

[10] 3 Legal Compliance Checkups § 20:35 (2009).  Westlaw.

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• Mark Hoban says CFC reform is coming closer (accountancyage.com)
• Foreign profits may help at home (washingtonpost.com)

When your clients roll over a retirement account into an annuity, stay alert. They could lose significant tax benefits if they don’t document their investment in the contract.

Gains realized on surrender of an annuity are taxed as ordinary income, but the entire amount received on surrender might not be taxed, since a taxpayer is entitled to receive their investment in the contract back tax-free.

Keeping track of investment in the contract is simple enough when a person pays premiums out a checking account into the annuity—the total amount of the premiums will constitute investment in the contract. But when a rollover is made from a pre-tax retirement account like an IRA, things get more complicated, and documenting investment in the contract is essential to preserve its tax benefit.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of annuities  in Advisor’s Journal, see Annuity Respect: Earning It! (CC 11-150), IRS Streamlines Partial Exchanges of Annuities (CC 11-153), and GAO Report Touts Annuities in Uncertain Retirement Environment (CC 11-141).

For in-depth analysis of the taxation of distributions from an annuity, see Advisor’s Main Library: A—Amounts Received As An Annuity & B—Amounts NOT Received As Annuities.

Author: Jesse Mackey

Today’s blogticle concludes our 3 part series on tax efficient investment opportunities. Please see the two previous days coverage for the full story.

Tax Loss Harvesting- A fundamental technique for tax-efficient investment portfolio management that can be used with mutual funds, individual securities, or any other asset that can generate capital gains, is Tax Loss Harvesting – the active realization of capital losses for tax purposes, without incurring an actual loss for the investor’s portfolio. In its simplest form this is accomplished by selling a security that has experienced a loss, waiting thirty days (to avoid the IRS’s “Wash Sale Rule”), and purchasing the same security back in order to regain exposure. The tax loss that is generated as a result can be applied on the investor’s tax return to offset any gains created elsewhere and to claim a loss up to a maximum of $3000 per year, with the balance of the loss to be carried forward for use in future years. In addition to this most basic use of the method, more sophisticated techniques may be used with both mutual funds and individual securities to further minimize/offset taxation and maintain constant market exposure, permitting appreciation that may occur during the 30 days that the investor would otherwise be un-invested.

Mixed Account Type Portfolio Construction – One common technique utilized amongst comprehensive financial planners and investment planners for their clients is appropriate if the investor has multiple accounts with different registration types that are meant for the same investment objective. An example is when an investor has a joint taxable account and an IRA that are both intended to accumulate assets for retirement. In this instance, a single fully diversified portfolio may be constructed with the assets from both of the two accounts. Since some of the assets in this diversified portfolio will be more tax-efficient than others, the planner will purchase the assets that generate the greatest tax liabilities in the tax-deferred IRA account, and the assets that generate the least tax liabilities in the currently taxable joint account. The overall tax bill to the investor will thus be minimized every year.

Tax Transitioning- Tax transitioning is a technique best used when implementing a new portfolio by transferring existing securities holdings from an old portfolio manager to a new portfolio manager. The objective of the technique is to minimize the capital gains tax burden in a single year that might result from the liquidation of low cost basis stock holdings. When an investor owns stock that was originally purchased at a low price and has experienced significant appreciation, the capital gains tax liability associated with selling the entire holding at once may be too much to come up with in that year, especially if the investor has other significant tax liabilities. Therefore, when transferring assets to a new portfolio manager, the investor, in discussion with his/her new manager may decide that it is better to sell only a portion of the highly appreciated stock in the first year, using the proceeds to begin construction of the new portfolio, and then sell the remaining portion in the second tax year (or maybe even again in the third). While this is not optimal from the standpoint of initial portfolio diversification and volatility minimization, it will allow the investor to spread out his/her tax bill for the sale over the course of two or even three years. This technique is most useful if the new portfolio will be initially implemented at the end of the fiscal year, because by waiting only a few weeks until January for the second sale, the second tax bill will not be due until more than a year later, and the entire portfolio may be implemented very quickly.

For additional information contact our panel of experts or the author of this series.

Jesse Mackey is a partner and Investment Officer of 4Thought Financial Group Inc. 4Thought was created with the base vision of advancing individual freedoms and the human quality of life through economic means. This vision is pursued by applying the firm’s four specialties – Economic Theory and Research; Multi-Contingency Investment Management; Financial Planning for Business Owners and Individuals; and Support for Partner Firms and Advisors.

Contact:

Jesse Mackey

4Thought Financial Group Inc.

www.4TFG.com

jmackey@4TFG.com

Author: Jesse Mackey

This article represents part 2 of 3 in this series. Please see yesterday’s post as well as tomorrow’s for the full article.

In the event that assets cannot be invested in an account/plan that allows for tax deductions, tax deferral, or tax elimination, the following seven techniques are excellent ways to reduce the tax burdens associated with investing in currently taxable accounts, such as jointly titled, trust-owned or individual accounts, which may come in the form of brokerage accounts, fee-based managed advisory accounts, or direct subscription investment vehicles.

Municipal Fixed Income – Possibly the most traditional method of tax minimization for high income tax bracket investors is the use of bonds issued by government municipalities, which are typically free of income taxation if purchased by an investor that resides in the state in which the security is issued, even if purchased within a currently taxable account. Muni’s are useful both for tax minimization purposes and for portfolio diversification purposes, but may not be beneficial in large quantities for all investors.

Low Turnover Managers – When purchasing mutual funds or hiring individual security Separately Managed Account (SMA) managers, it is useful to consider the amount of active trading that will occur in the fund/account during the course of the year, as this will often be indicative of the amount of capital gains taxes (short term and long term) that will be realized in an up-market scenario. Lower portfolio turnover often indicates lower realized (as opposed to unrealized) capital gains, whereas higher turnover managers may indicate a higher propensity to generate tax liabilities for the investor.

Separately Managed Accounts (SMA) and Individual Stocks – It is often cited that the use of individual securities (stocks and bonds) in a brokerage account or SMA will, all things being equal, generate lower current tax liabilities for investors than the use of mutual funds. This is because mutual funds, as pooled investment company vehicles, may distribute capital gains and dividends to all investors regardless of whether the individual investor was able to participate in the full benefit of the appreciation in value of the underlying holdings of the portfolio (because the fund may have been purchased after the majority of the price appreciation, but before distribution of the full capital gain liability by the fund). SMAs are not pooled investment vehicles, and therefore holdings purchases/sales are specific to the individual investor, allowing managers to actively customize the transactions in the portfolio to the tax situation of the individual, thus reducing unwarranted tax liabilities.

Fund Dividend and Capital Gains Distribution Awareness- The flipside of the above argument regarding the tax-efficiency of individual securities is that a portfolio composed of mutual funds, if managed properly, may be just as tax efficient as an individual-securities-only portfolio while also providing the investor with the full investment diversification necessary to reduce long term portfolio volatility. If this is to be accomplished, the mutual fund portfolio manager must make purchases and sales of the component mutual funds with an awareness of any upcoming fund dividend or capital gains distributions in order to avoid these if unwarranted for the investor, and to avoid “selling dividends” which is a prohibited practice. The mutual funds may also be selected based on the manager’s professed tax-efficient style of investment, or based on a history of asset type tax efficiency.

The series concludes tomorrow…to be continued…

Jesse Mackey is a partner and Investment Officer of 4Thought Financial Group Inc. 4Thought was created with the base vision of advancing individual freedoms and the human quality of life through economic means. This vision is pursued by applying the firm’s four specialties – Economic Theory and Research; Multi-Contingency Investment Management; Financial Planning for Business Owners and Individuals; and Support for Partner Firms and Advisors.

Contact:

Jesse Mackey

4Thought Financial Group Inc.

www.4TFG.com

jmackey@4TFG.com

Why is this Topic Important to Wealth Managers? Today we discuss foreign investment in the U.S. both private and public. The data shows a growth in the U.S. investment sector. The evaluation provides wealth managers information regarding global economic investment in the U.S.

This Treasury and Federal Reserve recently presented data and analysis regarding the latest annual survey of foreign portfolio holdings of U.S. securities. The survey measured positions as of June 30, 2010.

The annual survey measured foreign holdings of U.S. securities as of June 2010 at $10,691 billion. Of the over $10 trillion of foreign holdings $9,736 billion were holdings of U.S. long-term securities (original term-to-maturity greater than one year) and $956 billion were holdings of U.S. short-term securities.

In the previous survey as of June 30, 2009, total foreign holdings amounted to $9,641 billion.  The increase over the 12-month period from June 2009 to June 2010 – $1,050 billion – more than reversed the decline in total foreign holdings of U.S. securities in the 2009 survey.  Foreign holdings of equity rose $562 billion to $2,814 billion.  The increase in part reflected the rebound in stock prices between the 2009 and 2010 survey dates, but even so, foreign holdings of U.S. equity remained below the level recorded in 2008 (value of holdings is determined at fair market).  Foreign holdings of U.S. long-term debt securities rose $681 billion over the same period.  This increase was more than accounted for by a record increase in holdings of long-term Treasury securities, which rose $739 billion to reach a level just above $3.3 trillion.

In contrast, foreign holdings of long-term agency securities decreased further from the peak recorded in June 2008.  Foreign holdings of long-term corporate securities edged up slightly over the 12-month period.  Foreign holdings of U.S. short-term securities decreased $193 billion to $956 billion.  Foreign holdings of U.S. Treasury bills and certificates, short-term U.S. agency securities and short-term corporate debt securities all declined.

At $9,736 billion, foreign holdings of U.S. long-term securities continue to be considerably larger than U.S. holdings of foreign securities, estimated at $5,175 billion as of end-June 2010.  Moreover, foreign holdings of U.S. long-term securities increased $1,244 billion during the 12-month interval between the 2009 and 2010 surveys, more than the $560 billion that U.S. holdings.

Foreign securities are estimated to have increased over the same period.  As a result, the ratio of U.S. holdings to foreign holdings decreased to 0.53 and the net position in long-term securities holdings widened further to -$4.6 trillion.  In June 2010, foreign holdings of U.S. long-term securities exceeded the previous peak recorded in June 2008, but U.S. holdings of foreign securities were estimated to be still below the peak recorded in June 2007.

The data show that at $1,611 billion, total holdings attributed to mainland China exceeded those attributed to any other country, surpassing holdings by Japan ($1,393 billion) for a second year.  Holdings attributed to residents of the United Kingdom were third at $798 billion.  The United Kingdom had been one of the top two investing countries in U.S. securities since country-level data became available (1978), but the United Kingdom fell into the third position behind the rapidly growing stock of holdings of China in the 2006 survey.  The United Kingdom remained the largest holder of U.S. equity in 2010, while China remained the largest holder of debt securities.

Long-term U.S. Treasury securities held by China amounted to $1,108 billion, up from $757 billion a year ago.  In addition, $4 billion of the $5 billion in short-term securities held by China were U.S. Treasury bills and certificates, bringing China’s total holdings of U.S. Treasury securities to $1,112 billion.  Notably, China has reduced its holdings of short-term debt since June 2009 by $155 billion but has increased its holdings of long-term Treasuries.  Japan was the second largest holder of U.S. Treasury securities, with total holdings of $799 billion, of which $737 billion were long-term Treasury securities and $62 billion were short-term securities.

Since the 2004 survey, China’s holdings of U.S. securities have more than quadrupled.

Tomorrow’s blogticle will continue to discuss tax and market issues relating to wealth management.

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

In a low interest rate world, high-yield investments offering principal protection are enticing to investors. But the complexity of some high-end investment products has the Financial Industry Regulatory Authority (FINRA) and Securities and Exchange Commission’s (SEC) warning investors to look before they leap.

In an alert titled Structured Notes with Principal Protection: Note the Terms of Your Investment, the regulators warn investors that these structured products may not be what they seem. Although they are marketed under a variety of names with a “principal protection” component—e.g. “absolute return” and “minimum return”—the true extent of their safety is never obvious at first glance. Investors need to read the fine print to determine whether they are suitable for their investing needs and risk tolerance.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

Why is this Topic Important to Wealth Managers? Today we continue our series on “Wealth Management in Today’s Economic Environment”. The series is designed to address the specific question many wealth managers are currently asking: “what are the best investment, retirement and financial planning tools given the current global financial position?” We explore alternatives from “safe” to “risky” from “traditional” to “emerging” to discover and discuss the most relevant wealth management tools and techniques available today. We look forward to presenting this discussion and think you will find the information quite valuable. Please note that this series is presented in continuation. That being said each blogticle resumes discussion from the previous day.

As was discussed yesterday, one option investors may currently consider seeking is U.S. government debt. However, ten-year note yields bottomed out at 3.05 percent last week.[1] Clients are being advised that they “should think twice” about treasures, that’s because consumer inflation continues to outpace those yield figures.” [2] Treasury yields are stupidly low,” says Robert Auwaerter, head of the fixed-income group at Vanguard Group. [3]

Are there any other U.S. government options that provide reasonable rates of return? Given the national debt issues and current low Fed rate will inflation play a part? Presented below is one option that may help clients hedge against inflation.

Treasury Inflation-Protection Securities

Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, clients are paid the adjusted principal or original principal, whichever is greater. This provision protects clients against deflation.

TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.

TIPS are marketable securities whose principal is adjusted by changes in the Consumer Price Index. With inflation (a rise in the index), the principal increases. With a deflation (a drop in the index), the principal decreases.

The relationship between TIPS and the Consumer Price Index affects both the sum clients are paid when the TIPS matures and the amount of interest that a TIPS pays every six months. As stated above, TIPS pay interest at a fixed rate. Because the rate is applied to the adjusted principal, however, interest payments can vary in amount from one period to the next. Thus otherwise stated, if inflation occurs, the interest payment increases. In the event of deflation, the interest payment decreases.

But according to the returns on TIPS they may not offer investors growth relative to the security they desire. For example the TIPS due February 2041 are currently yielding only 1.774%. [4] Moreover, interest on tips is generally subject to federal tax unlike some other government issued debt.

For more in-depth discussion on treasuries, see AdvisorFX: U.S. Treasury and Government Agency Securities.

Our series continues next week with a discussion of municipal bonds, cash accounts, commodities, international investment and more.

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

Series Author: Benjamin Terner

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[1] Reuters. “Treasuries-Gov debt prices fall on profit taking”. May 27, 2011.  http://www.reuters.com/article/2011/05/27/markets-bonds-idUSN274758020110527. Last Accessed 5/30/2011.

[2] Chris Farrell. Safe Investing in a Troubled Economy. Bloomberg Businessweek. September 25, 2008.

[3] Id.

[4] Wall Street Journal. Friday, May 27, 2011. Market Data Center- Treasury Inflation-Protected Securities. http://online.wsj.com/mdc/public/page/2_3020-tips.html.

Why is this Topic Important to Wealth Managers? Today we continue our series on “Wealth Management in Today’s Economic Environment”. The series is designed to address the specific question many wealth managers are currently asking: “what are the best investment, retirement and financial planning tools given the current global financial position?” We explore alternatives from “safe” to “risky” from “traditional” to “emerging” to discover and discuss the most relevant wealth management tools and techniques available today. We look forward to presenting this discussion and think you will find the information quite valuable. Please note that this series is presented in continuation. That being said each blogticle resumes discussion from the previous day.

As was briefly mentioned yesterday with regards to stock equity positions, one analyst recently compared the returns of the S&P 500 against hard assets such as gold and silver (discussed later in this series). His research strategy was to model an investment starting in 1981 where the client would invest $1,000 each year in either the S&P 500, silver or gold at the average price for that year. The returns from the stock portfolio would be reinvested each year in the model. Additionally, the model showed a $1,000 contribution was made each year. [1]

The analysis provided the conclusions that investing in “stocks had been much more profitable in the first 20 years.” For example in the year 2000 the equity index holdings illustrated in the model provided for a 879% greater asset worth as compared to the price of gold and a 774%  increase over the price of silver.

However, since 2004, “precious metals have begun to quickly make up ground and, helped by S&P 500′s 57% crash during the last recession, silver managed to slightly surpass stocks in 2010”.  Interestingly, on “April 28, 2011, when the price of silver was near its peak, silver was a clear winner with a value of $233,917 and a compounded annual return of 11.8% compared to S&P 500′s $173,400 and 10.3%, and gold’s $115,889 and 8.12%.” [2]

The race is tight however, the silver market in particular is known for its volatility which was is still an ever present consideration. The conclusions drawn by the study include, in part, that “the magnitude of compounded rates of return depends a lot on the window of time” that the investor selects.[3] This conclusion is similar to those presented by other investment strategy such as those presented by Sethi (see previous section).

As the S&P 500 strategy may very well reflect, some investment commentators are questioning old models that may no longer be the right path for many investors.

Moreover, as one commentator notes, the traditional approach of selling stocks as retirement age approaches may not necessarily provide the best wealth management solutions. The traditional approach is to “typically tell those near retirement to move to safer asset classes. But stocks are not risky so long as they are selling at reasonable prices, according to [some] research.” [4] The commentator notes what wealth managers should be advising clients to look to valuations and timing to dictate asset class allocations.  In addition, the commentator suggests that “young investors can afford the risk of stocks because they have time to recover from price crashes.” [5] However, it may also be contended that a loss in value of assets caused by price devaluations in the market have a significant negative affect on long-term earnings given time value of money calculations. In other words, “this loss is greater for young investors than it is for any others (because young investors have more time ahead of them in which the compounding returns).” [6]

Nevertheless, as Warren Buffett notes, his investment strategy has never changed, it has always consisted of the motto—investment in companies that are undervalued is a large consideration to successful financial growth.[7]

Finally, there may be tax advantages to using the equity index model over the purchase of precious metals. Generally dividends are subject to special tax treatment and thus provide additional benefit. For detailed tax treatment of dividends see TaxFacts: Dividends.

Tomorrow we continue our series with Corporate Debt and U.S. government investment.

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

Series Author: Benjamin Terner

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[1] See Sergei Barna. The Best Long-Term Investment: Gold vs. Silver vs. S&P 500. Seeking Alpha. May 20, 2011. http://seekingalpha.com/article/271054-the-best-long-term-investment-gold-vs-silver-vs-s-p-500. Last Accessed 5/29/2011.

[2] Id.

[3] Id.

[4] Rob Bennett. “The Bull Market Caused the Economic Crisis.” http://knol.google.com/k/the-bull-market-caused-the-economic-crisis#. Version: 26, Last edited: Apr 22, 2010. Last Accessed 5/29/2011/

[5] Id.

[6] Id.

[7] See generally, “Understanding Financial Statements with Warren Buffett”. Advisorfyi.com. Posted December 1st, 2010. http://www.advisorfyi.com/2010/12/understanding-financial-statements-with-warren-buffett/. Last Accessed 5/30/2011.

A recent Businessweek article highlighting what it calls the “drawbacks” of annuities is the latest in a long line of articles panning the financial products. But do annuities—especially variable annuities—deserve their bad reputation, or are annuities just an easy target of the mainstream media? And, where annuities are the right choice for your clients, how can you counter the negative press to help them make the right investing decision? Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of annuities in Advisor’s Journal, see Women Are Leading Purchasers of Immediate Annuity Customers (CC 10-107), Medicaid Compliant Annuities (CC 10-78), & Indexed Annuities: Still Insurance (CC 10-42).

For in-depth analysis of variable annuities, see Advisor’s Main Library: Section 19.2 A—Amounts Received As An Annuity.

Sales of variable annuities (VA) with guaranteed living benefit (GLB) riders continue to grow exponentially, according to LIMRA’s Variable Annuity Guaranteed Living Benefit Election Tracking Survey. The Survey showed a 78 percent increase in assets of VAs with GLB riders, from $292 billion in the fourth quarter of 2008 to $521 billion in the fourth quarter of 2010.

Advisors are likely to find that the protection offered by GLB elections will remain a popular option until consumers regain confidence in other investing prospects. But with unemployment still around 9%, it could be a while before we reach that turning point. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of guaranteed living benefit sales in Advisor’s Journal, see More Consumers Buy Guaranteed Living Benefits Riders (CC 10-70)

For in-depth analysis of the topic of the taxation of annuities, see Advisor’s Main Library: A—Amounts Received As An Annuity & B—Amounts NOT Received As Annuities

National Underwriter Offers Tax Advisors Expert Analysis of the Impact of the Recently Passed Tax Relief Act of 2010 on Their Clients

The proprietary analysis is the only practitioners’ guide in Q&A format that answers the most critical questions asked by clients on insurance, estate and gift tax law changes.  National Underwriter’s wealth management experts and report authors, Professor William H. Byrnes, Esq., LL.M, CWM and Robert Bloink, Esq., LL.M., noted, “While most media attention has focused on the Act’s retention of existing tax rates on the highest-earning Americans, tax, insurance and investment advisors are finding that the most important changes, from their perspective, are likely to be found in insurance, estate and gift tax provisions that will drive client decisions on investment strategy and wealth management priorities in 2011 and beyond.”

“This is the only guide available on the market today that gives financial planners and producers issue-specific, time-critical information in Q&A format that addresses their most important technical questions with content that can also be used directly in client presentations,” Prof. Byrnes added.