Tax revenue is on the upswing, are you paying more?

June 11th, 2013

One of the great things about a recovering economy is there is more consumption, more job growth and ultimately better business prospects. But unfortunately that can also mean higher taxes.

As part of the financial re-engineering of the economy, the Federal Government as well as many state governments raised tax rates in order to deal with burgeoning debts and painful cutbacks of services and public investments. What is particularly annoying is that these tax increases may be coming precisely at the time your own financials are rebounding, thus sucking much of the gain out of your hard work.

Fortunately, there are still a variety of ways to mitigate taxes for your long term benefit. Consider the following:

· Pension Plans – 401k plans have many limitations and often accrue very little for the owner. A Defined Benefit plan in conjunction with a 401k can often lead to better plan designs the allow for more of the overall contribution going to the owner.
· Section 79 Permanent Benefit Plan – this type of group life insurance plan may allow the owner to elect permanent insurance coverage that provides for a partial tax deduction of premium contributions to the plan. These plans may be particularly useful in situations where the traditional pension approach does not work for the company.
· Captive Insurance Programs – this program allows the company to make tax deductible premium payments to a privately held insurance company owned by the company. Not only can the company offset key business risks, but may lower premiums thereby increasing profitability.

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Daniel R. Bennett
Managing Director
Insurance & Financial Services
12100 Wilshire Blvd, Ste 800
Los Angeles, CA 90025
T. 310-496-8025
C. 310-968-3161
www.advancedpensions.com

Market Week: June 12, 2013

June 11th, 2013

The Markets

All’s well that ends well: After losing 217 points on Wednesday, the Dow came roaring back with a 207-point gain two days later. Despite all the volatility, domestic equities managed minimal gains for the week across all four indices. Investors seemed reassured that the unemployment rate showed continued stabilization of the economy but not enough progress to bring on a quick end to the Fed’s economic support.

Market/Index

2012 Close

Prior Week

As of 6/7

Week Change

YTD Change

DJIA

13104.14

15115.57

15248.12

.88%

16.36%

Nasdaq

3019.51

3455.91

3469.22

.39%

14.89%

S&P 500

1426.19

1630.74

1643.38

.78%

15.23%

Russell 2000

849.35

984.15

987.62

.35%

16.28%

Global Dow

1995.96

2185.46

2164.80

-..95%

8..46%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

1..78%

2..16%

2..17%

1 bps

39 bps

Equities data reflect price changes, not total return.

Last Week’s Headlines

· Steady as she goes: The unemployment rate nudged upward slightly to 7.6% in May as 175,000 jobs were added to the nation’s payrolls and more people sought work, expanding the potential labor force. The Bureau of Labor Statistics said the private sector added 178,000 jobs, while 3,000 government jobs were eliminated.

· For the first time since November, the Institute for Supply Management’s survey of manufacturing activity indicated contraction with a 49% reading in May (any number below 50% represents not just slower growth but contraction). The Commerce Department said factory orders for U.S. goods rebounded from a sharp decline in March, but April’s 1% increase was primarily the result of transportation-related orders. Aside from those, orders were down 0.1%.

· Growth in the U.S. services sector accelerated in May, according to the Institute for Supply Management’s survey. May’s 53.7% reading was 0.6% higher than April’s 53.1%, and was the 41st straight month of growth.

· The Federal Reserve’s “beige book” report continued to see “modest to moderate” economic activity. Manufacturing, tourism, residential real estate/construction, and bank lending saw fairly uniform gains in much of the country. Wage pressures remained contained, though some Fed districts reported difficulty finding qualified workers.

· Construction spending rose 0.4% in April; the Commerce Department said private construction was up 1%, though residential spending fell 0.1%. Public construction was down 1.2% for the month.

· To try to prevent the sort of massive redemptions that posed problems during the 2008 financial crisis, the Securities and Exchange Commission unveiled two proposals for changing how some money market funds operate. One proposal would require institutional money market funds to more accurately reflect changes in the fund’s net asset value (NAV) by trading at a floating NAV rather than a stable $1-per-share price.* (Retail money market fund–those that don’t permit a shareholder to redeem more than $1 million in a single day–and funds that hold mostly government securities would be exempt.) The second proposal would establish a liquidity fee if a fund’s weekly liquid assets fell below 15% of its total assets; in that case, the fund also could restrict redemptions for up to 30 days. The SEC also might combine the two proposals; the public will have 90 days to comment.

· After a sharp decline in March, the U.S. trade deficit widened 8.6% in April, according to the Commerce Department. Exports rose more than 1%, but a 21% increase in imports from China pushed imports up 2.4% overall.

· The European Central Bank kept its key interest rate unchanged at a record low of 0.5% despite the ECB’s forecast of a 0.6% contraction in the European economy in 2013. The estimate was more pessimistic than the previous estimate of a 0.5% contraction, but the 2014 forecast was revised upward to 1.1% growth rather than 1%.

Eye on the Week Ahead

U..S. economic data will be skimpy, though retail sales numbers could suggest the state of the consumer’s pocketbook. The Bank of Japan’s announcement on monetary policy might be of interest, since it could mean additional economic stimulus there. Investors will watch to see if domestic equities head back toward May’s record highs or continue to see volatility.

Key dates and data releases: retail sales, business inventories, 30-year Treasury bond auction (6/13); wholesale prices, industrial production (6/14).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

*Though money market funds attempt to maintain a stable $1-per-share price, there is no guarantee they will always do so, and it is possible to lose money investing in a money market fund. A money market fund is not insured or guaranteed by the FDIC or any other government agency.

Market Week: June 4, 2013

June 4th, 2013

The Markets

Whether it was “sell in May, go away” sentiment finally showing up or concern that the Fed might be closer to winding down economic support, investors decided to take profits last week, especially in the large, dividend-paying stocks of the Dow and S&P 500. As anxiety about potential future Fed action continued to build, the 10-year Treasury yield saw gains for the fifth straight week, hampering bond prices.

Market/Index

2012 Close

Prior Week

As of 5/31

Week Change

YTD Change

DJIA

13104.14

15303.10

15115.57

-1.23%

15.35%

Nasdaq

3019.51

3459.14

3455.91

-..09%

14.45%

S&P 500

1426.19

1649.60

1630.74

-1.14%

14.34%

Russell 2000

849.35

984.28

984.15

-..01%

15.87%

Global Dow

1995.96

2208.01

2185.46

-1.02%

9..49%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

1..78%

2..01%

2..16%

15 bps

38 bps

Equities data reflect price changes, not total return.

Last Week’s Headlines

· The U.S. economy grew 2.4% during the first quarter of 2013–a fraction less than the Bureau of Economic Analysis’s 2.5% initial estimate but still an improvement from the previous quarter’s 0.4%. Increases in business inventories and exports were slightly less than anticipated.

· Home prices in the 20 cities measured by the S&P/Case-Shiller Index were up 10.9% from a year earlier. That was the strongest annual growth since 2006, and it put prices back at late 2003 levels. March was the third straight month in which all 20 cities saw gains, and 12 of the cities saw double-digit growth, with Phoenix, San Francisco, and Las Vegas all above 20%.

· American spending declined 0.2% in April, in part because of lower car-related purchases and energy costs, according to the Bureau of Economic Analysis. Lower rents and farm earnings cut personal incomes 0.1% during the month, though wages were up slightly, and the savings rate remained at 2.5%.

· Federal prosecutors charged a Costa Rican digital currency exchange with enabling global cybercriminals to use its system to launder the proceeds of a variety of illegal activities. The charges allege that more than a million anonymous customers used Liberty Reserve’s virtual exchange to transfer more than $6 billion internationally since 2006.

· Freddie Mac said the interest rate on a 30-year fixed-rate mortgage hit 3.81%, its highest level in a year, while the 15-year rate rose to 2.98%.

· Unemployment in the 17-nation eurozone hit a new record of 12.2% in April, according to the European Union’s statistical office. Inflation, while up slightly at 1.4%, remained well within the European Central Bank’s 2% target.

Eye on the Week Ahead

Jobs and central bankers are expected to be the focus of the week. Given the unemployment rate’s importance to future Fed actions, Friday’s release will be of more than usual interest if there are any substantial changes. And given Europe’s unemployment situation, investors will watch to see if the European Central Bank cuts interest rates on Thursday.

Key dates and data releases: U.S. manufacturing, construction spending (6/3); auto sales, balance of trade (6/4); U.S. services sector, business productivity/costs, factory orders, Fed “beige book” report (6/5); unemployment/payrolls (6/7).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.