Your Financial Advisor College Debt: How Much Is Too Much? Got Stock? The Long and Short of Capital Gains Can I buy gold and silver in my IRA?

1. April 2010
Angela Giboney, CFP®
Financial Advisor Your Financial Advisor
22108 1st Pl W
Bothell, WA 98021 You may personally handle many of your How a financial planner is compensated
425-415-6029 financial affairs, and sometimes you may need You may pay your financial planner a flat fee
800-499-2041
angela.giboney@hbwsecurities.com the services of a financial professional. or hourly rate for a financial plan. If the planner
www.hbwcoach.com Financial professionals include financial is managing your assets, they may charge an
planners/advisors, accountants, estate assets under management fee. Or your
planners, attorneys,insurance agents, financial planner may earn their living by
investment, securities brokers, and other receiving commissions from products they sell
Happy Spring Everyone,
specialists. Selecting the right financial you. Some planners use a combination
It's official I'm a CFP® professional means evaluating the services fee-and-commission structure whereby you pay
IRA contributions for 2009 are they can offer and their credentials, and finding a fee for development of a financial plan and
due by April 15, 2010. someone whom you can rely on to give you the planner also receives a commission from
Angela
good advice and/or service when you don't selling you products. You should ask the
have the time or expertise to completely handle planner you are considering about their fee
your financial affairs. structure and ask for an estimate of costs to
Advisory services offered through use their services.
HBW Advisory Services LLC, 3355
Cochran St, Suite 100, Simi Valley,
CA 93063, Angela Giboney is an What credentials to look for Many financial planners are also specialists in
Investment Advisor When choosing a financial planner/advisor, you certain fields or can refer you to a specialist
Representative. Securities offered should be aware that some financial you need.
through HBW Securities LLC,
Member FINRA/SIPC, 3355 professionals may not be qualified to give
Cochran St, Suite 100 Simi Valley, comprehensive financial planning advice. They Accountants--Accountants prepare financial
CA 93063 (800)473-3856. Angela
Giboney is a registered may be trained in only one area, or they may statements and tax returns and give tax advice.
Representative. HBW Insurance & be primarily salespeople marketing themselves Accountants are often Certified Public
Financial Services, Inc. is a
separate entity from HBW as planners. Make sure you understand what Accountants (CPAs).
Securities LLC and a separate services the planner will provide you and what Estate planners--Estate planners help you
entity form HBW Advisory Services his or her qualifications are. plan your estate and give advice on transferring
LLC. HBW Securities LLC does not
give legal or tax advice nor does and managing your assets before and after
HBW Advisory Services LLC. The most widely recognized credential for your death. If the estate planner is an attorney,
financial planers is the CERTIFIED they can give legal advice and prepare legal
FINANCIAL PLANNER™ professional. CFP® documents.
professionals must have a college Insurance specialists--Insurance agents sell
In this issue: undergraduate degree, have three years of insurance products.
related experience, and have completed a Investment advisors--Investment
Your Financial Advisor
course of study registered with and approved advisors provide advice on investments and
College Debt: How Much Is by the Certified Financial Planner Board of help you plan a strategy to manage your
Too Much? Standards, Inc. (CFP Board). They must pass a investments. They are not primarily
two-day 10-hour exam that covers all aspects salespeople. They cannot sell securities
Got Stock? The Long and
Short of Capital Gains of financial planning. In addition, they must without a license. They must be registered with
adhere to a professional code of ethics and either the Securities and Exchange
Can I buy gold and silver in my fulfill 30 hours of continuing education every Commission or a state securities agency. They
IRA? two years. You can confirm that a planner is are often Registered Investment Advisors
a CFP® certificant, by calling (888) CFP-MARK (RIAs) or Investment Advisor Representatives
to check. (IARs).
Securities brokers--Stockbrokers are
salespeople who buy and sell stocks, bonds,
How to find a financial planner and mutual funds. They must be licensed by
Ask friends, relatives, business associates, the state and registered with a company that is
your attorney, your pastor or other a member of the Financial Industry Regulatory
professionals who share your financial values Authority (FINRA).
to recommend a financial planner.

2. Page 2
College Debt: How Much Is Too Much?
According to a recent survey by the nonprofit And this doesn't include private student loan
College Savings Foundation, the confidence of debt, which has exploded in recent years due to
parents in their ability to save for college the inability of federal loan borrowing limits to
dropped significantly over the past year (go to keep pace with skyrocketing college costs.
www.collegesavingsfoundation.orgto read the
The result is a new paradigm for millions of
survey). That's not entirely surprising,
young adults--a crushing amount of student
considering the economic climate. But what is
loan debt that stretches from early to middle
surprising is that, of parents surveyed, a
adulthood and can affect all major life
whopping 41% reported having saved nothing
decisions, from what career path to choose, to
at all, and 28% reported having saved less than
where to live, whether to go to graduate school,
$5,000 per child.
when to marry, have children, buy a home,
The loan factor begin saving for retirement, and so on.
The trend of not saving enough makes families And it doesn't end there. Parents who engage
heavily dependent on borrowing to fund in "extreme borrowing"--routinely taking out
college. In the survey above, 47% of parents large home equity loans, federal PLUS Loans,
said they expected to utilize student loans to or other private loans to fully fund the gap
pay for college. And parents seem inclined to without regard for the consequences--can
borrow whatever it takes: 76% don't expect to hamper themselves financially for years.
narrow their children's college choices.
How much is too much? Obviously, the answer
The cost factor is different for every family. But waiting until
spring of your child's senior year--as you review
Loans matter when you consider the cost of
individual financial aid awards--to think about
college. According to the College Board's
college affordability can be a mistake. To avoid
Trends in College Pricing 2009 report, even
falling into the "I guess we'll just borrow
"The trend of not though the Consumer Price Index declined
whatever it takes" trap, families should start
saving enough makes 2.1% between July 2008 and July 2009, college
thinking about costs much earlier.
families heavily costs rose across the board--a disturbing but
dependent on familiar pattern (to read the report, go to Before filling out a college application.
borrowing to fund www.trends-collegeboard.com).
• Get an idea of how much federal aid your
college....The result is a
For the 2009/10 school year, the average cost family can expect by using the calculator at
new paradigm for
of a public college increased 5.9% to $19,388, www.fafsa4caster.ed.gov.
millions of young
while the average cost of a private college • For each college, research the total cost of
adults--a crushing
increased 4.3% to $39,028, with elite private attendance and the average merit aid award
amount of student loan
colleges topping out at over $50,000 per year. given to students with similar academic
debt that stretches from
early to middle The College Board also noted that about credentials as your child.
adulthood and can two-thirds of students receive grants, with the • Know what a particular loan amount today will
affect all major life average private college student receiving end up costing tomorrow (e.g., $40,000 in
decisions." $14,400 in total grant aid and federal tax PLUS Loans at 8.5% with a 10-year
benefits for 2009/10, and the average public repayment term will cost you $496 per month;
college student receiving $5,400. But this still $27,000 in Stafford Loans at 6.8% and a
leaves approximately $25,000 for private 10-year term equals $311 each month for
undergraduates and $14,000 for public your child).
undergraduates to fund. Absent additional
college merit aid and/or outside scholarships to • Consider your child's career aspirations,
make up the difference, parents and/or their earning potential, and job prospects after
children must fill the gap. graduation. Will this school be a good return
on your investment? Also, is graduate school
How much borrowing is too much? likely?
The gap is where families can get in over their • Talk to your child about how any debt taken
heads. Is there such a thing as borrowing too on might impact your or your child's future
much for college? In the iconic words of the goals and dreams.
Magic 8 Ball®, "signs point to yes."
The average student now leaves school with
$23,186 in federal student loans (Source:
National Postsecondary Student Aid Study).

3. Page 3
Got Stock? The Long and Short of Capital Gains
If you buy or sell shares of stock, you need to maximum tax rate generally applies to
be familiar with the rules that govern the way long-term capital gains. There are limited
capital gains are taxed. That's because the cases, however, when individuals in the higher
amount you owe in tax can depend on a tax brackets can still benefit from the 0% tax
number of factors, including the length of time rate.
you hold the shares and the federal income tax
For example, a retired couple with taxable
bracket you're in. Here are the basics.
income of $60,000 would be in the 15%
Basis and holding period marginal income tax bracket in 2010 if they file
jointly (the bracket covers married couples with
"Basis" refers to your investment in the shares
taxable income less than or equal to $68,000).
of stock you hold. Generally, your basis is the
The couple sells stock, resulting in a long-term
amount you paid for the stock, plus any
capital gain of $40,000. This increases their
commissions you paid to purchase the shares.
taxable income to $100,000, placing them in
(Note, however, that special rules apply if you
the 25% marginal income tax bracket. In this
received the stock as a gift or as part of an
situation, they would pay no federal tax on the
inheritance.) If you sell a share of stock and the
first $8,000 of long-term capital gain, and the
sales price--less any commission--is more than
maximum 15% rate would apply to the
your basis, you have a gain; if the amount you
remaining $32,000 in gain.
receive is less than your basis, you have a loss.
Offsetting gains with losses
Your holding period is generally the length of
time that you hold a share of stock before you Any capital losses that you may have realized
sell or exchange it. If you hold a share of stock during the year can offset some or all of your
for a year or less before selling it, any gain you capital gain. If your losses offset all capital
have is short-term capital gain. If you sell a gains, any excess capital loss can be applied
share of stock after holding it for more than a against up to $3,000 of ordinary income
year, any gain is long-term capital gain. Your ($1,500 for married individuals who file
holding period typically starts on the trade date separately), and any unused capital loss can be
the share is purchased, and ends on the trade carried forward to future years.
date it's sold.
Big exception: retirement plans, IRAs
Short-term capital gain
All of this assumes your stock is not being held
Short-term capital gain is treated as ordinary in a tax-advantaged retirement account like a
income, just like interest on your savings 401(k) plan or IRA. Special tax rules apply to Small business stock
account or wages from your employer. It's investments, including stock, held within these Special rules apply to
added in with all of your other income, and the plans. If you sell shares of stock within one of qualified small business
amount of federal income tax you owe depends these plans, there's no immediate tax stock. Generally, a
on the federal marginal income tax bracket consequence. Instead, you'll generally pay portion of any gain
you're in. For example, if you're in the top tax federal income tax when you take withdrawals realized upon the sale of
bracket in 2010, you'll pay tax on ordinary from the plan, and any income will be qualified small business
income at a maximum rate of 35%. considered ordinary income--even if the stock held for more than
earnings are attributable to capital gains. 5 years can be excluded
Long-term capital gain
(Certain Roth retirement plans and Roth IRAs from income. The
If you sell shares of stock that you've held for provide for tax-free treatment of qualified portion of the gain that is
more than a year, any gain is long-term capital withdrawals.) not excluded from
gain, and special maximum tax rates apply. If income is generally
Uncertainty in 2011
you're in the 10% or the 15% marginal income taxed at a maximum rate
tax bracket in 2010, you'll pay no federal The special federal income tax rates that of 28%. For additional
income tax on long-term capital gains (a "0% currently apply to long-term capital gains expire information, see IRS
tax rate" applies). So, for single individuals with at the end of 2010. Absent new legislation, in Publication 550.
taxable income of $34,000 or less ($68,000 for 2011, individuals in the 15% tax bracket (under
married individuals filing jointly), long-term current law the 10% bracket disappears in
capital gains are federal income tax-free in 2011) will pay tax on long-term capital gain at a
2010. rate of 10%. For everyone else, a 20% rate will
generally apply. Special rules (and slightly
For those who aren't in the lowest two federal
lower rates) will apply for qualifying property
income tax brackets (i.e., those in the 25%,
held five years or more.
28%, 33%, and 35% brackets), a 15%

4. Ask the Experts
Can I buy gold and silver in my IRA?
Yes, but you'll need to • American Eagle gold, silver, and platinum
establish a self-directed IRA bullion coins
with a trustee/custodian who • Coins issued by any state
has experience with
precious metals and is able Also allowed is any gold, silver, platinum, or
to take physical possession palladium bullion, in coin form or otherwise, that
of the assets. The company you purchase the meets certain purity requirements (for example,
metals from will generally have a relationship gold coins and bars must be at least 99.5%
Angela Giboney, CFP® with a trustee/custodian who can set up a pure). Currently this includes:
Financial Advisor precious metals IRA for you.
22108 1st Pl W • Canadian gold, silver, and platinum Maple
Bothell, WA 98021 Under IRS rules, holding certain collectibles, Leaf coins
425-415-6029 including metals, gems, or coins, in your IRA • Australian Philharmonic, Kangaroo/Nuggets,
800-499-2041 can result in a prohibited transaction. That Kookaburras, and Koala coins
angela.giboney@hbwsecurities.com
www.hbwcoach.com doesn't mean you can't do it. But if you do,
there can be serious tax consequences--the • Mexican Silver Libertads
value of the collectible will be treated as a • Isle of Man Noble platinum coins
Advisory services offered through HBW Advisory
Services LLC, 3355 Cochran St., Suite 100, Simi distribution to you, and will be subject to income • Gold, silver, platinum, and palladium bars and
Valley, CA 93063, Angela Giboney is an
Investment Advisor Representative. tax and a 10% penalty (unless you're 59½ or rounds of specific purity
Securities offered through HBW Securities LLC,
another exception applies).
Member FINRA/SIPC, 3355 Cochran St., Suite Of course, you can also buy mining stocks, as
100 Simi Valley, CA 93063 (800)473-3856.
Angela Giboney is a registered Representative.
However, certain precious metals are well as gold and silver ETFs, in your IRA. For
specifically excluded from the definition of some, this is a more convenient way of adding
HBW Insurance & Financial Services, Inc. is a
separate entity from HBW Securities LLC and a "collectible." The following are currently this asset class to an IRA portfolio.
separate entity form HBW Advisory Services
LLC. HBW Securities LLC does not give legal or permitted as IRA investments:
tax advice nor does HBW Advisory Services
LLC.
This advertisement is not intended as legal or tax
advice and may not be relied on for purposes of
avoiding federal tax penalties. All individuals,
including those involved in the estate planning
process, are advised
to meet with their tax and legal professionals.
The individual sponsoring this newsletter will
work with your tax and legal advisors to help
Frequently asked questions about 2010 Roth IRA
select appropriate product solutions. We do not
endorse or guarantee the content or services of conversions
any website mentioned in this newsletter. We
encourage you to review the privacy policy of 1. How does the special those funds into a Roth IRA, the taxation is
each website you visit. Limitations, restrictions
and other rules and regulations apply to many of
the financial and insurance products and
deferral rule for 2010 similar to a conversion of a traditional IRA to a
concepts presented in this newsletter, and they conversions work? I've Roth IRA. You can report all of the resulting
may differ according to individual situations.
heard that I calculate the income on your 2010 tax return, or half on your
conversion tax in 2010, but can pay half in 2011 2011 return and half on your 2012 return.
and half in 2012.
3. Is it true that anyone can make annual
No, this is a common misconception. If you contributions to a Roth IRA beginning in 2010,
make a conversion in 2010, you will calculate regardless of how much they earn?
the amount of taxable income in 2010. But then
No. You can contribute to a Roth IRA only if
you have a choice: you can either report all of
your income is within prescribed limits. These
the taxable income on your 2010 tax return, or
limits have not been repealed. What has been
instead report half of the income on your 2011
repealed are the income limits that used to
return and half on your 2012 return. So, your
apply to Roth conversions, beginning in 2010.
tax liability will depend on your marginal tax
But even if you can't contribute to a Roth IRA
rates in 2010, 2011, and 2012. (Note that tax
directly in 2010 because of the income limits,
rates will increase in 2011 if the Bush tax cuts
there's an easy workaround: you can make
are allowed to expire.)
your annual contribution first to a traditional IRA
2. Does the special deferral rule for 2010 apply (virtually anyone under age 70½ can make
to distributions I roll over from my 401(k) plan to nondeductible contributions to a traditional
a Roth IRA in 2010? IRA), and then convert that IRA to a Roth.
Remember, though, that when you calculate
Prepared by Forefield Inc, Yes. If you receive a distribution of non-Roth
the taxable amount due as a result of the
Copyright 2010 funds from your 401(k) plan in 2010 and roll
conversion, you need to aggregate all of your
traditional IRAs. See IRS Form 8606 for
additional details.