Accounting education

I’ve heard it repeated time and time again that the Baby Boomers are heading for the proverbial fiscal train wreck because they are simply under funded, notwithstanding repeated warnings all over the landscape about the need to save money.

Thomson RIA, part of Thomson Corp., and software provider Paisley Consulting, announced that they have formed a strategic marketing relationship.

The Internal Revenue Service announced adjustments to the dollar limitations set for pension plans in the 2007 tax year.

AMERITAS DIRECT ROLLS OUT NO-LOAD ANNUITY: Ameritas Life Insurance Corp. has unveiled its Genesis No-Load Variable Annuity, distributed via its Ameritas Direct unit, which markets the No-Load series of insurance and annuity products to self-directed consumers.Ameritas Direct designed the Genesis Variable Annuity, which features no commission, no sales charge, no withdrawal charge and no policy fee. (Gains are taxed as ordinary income and additional penalties may apply to withdrawals made prior to age 59-1/2.)

Do you have clients who complain that their life insurance was supposed to be paid up by now, but it isn't? Notices from their insurance companies may even indicate that their suggested premium payment has increased, or that their policies are about to lapse.Do you have clients whose investment-type life insurance policy is not performing as projected? Ever have clients cancel their life insurance and get a taxable statement of gain? This can even happen if their policy lapses and they get nothing back (they had a paper gain).

"The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase."These are the words of Benjamin Graham, a stock market investor and economist who was famous for remarkable returns from investing in stocks, value investing and influencing Warren Buffet.

By 2009, the market for legal, tax and regulatory information will grow to $18.3 billion, according to Outsell Inc.

Merrill Lynch, considered the world's largest employer of brokers, is now undergoing a change on what it is teaching its trainees. Instead of instructing them on how to make cold calls, they are putting those new employees in classrooms that emphasize statistical analysis, financial planning, and wealth management. Merrill’s new training program specifically covers the Monte Carlo analysis and they also have psychology classes such as behavioral finance.

The Tax Foundation has cross-tabulated state demographics with tax data from the Internal Revenue Service to take a look at which states benefited the most from the tax cuts enacted under the Bush administration in 2001 and 2003.

It’s no secret that more and more people are turning to professionals for help in preparing their financial future. The problem becomes a question of who do you actually turn to for such advice. Manarin Investment Counsel based in Omaha, Nebraska, is an independent investment advisory firm offering professional financial planning and investment management services to small businesses, families, and individuals. Founded in 1983 by Roland Manarin, who immigrated to Omaha from northern Italy at the age of 10, it is an independent, fee-based investment advisor registered with the SEC. Manarin has some 30 years of experience working as a professional in investment management. He says that he educates the public in a variety of ways including a Wealth-Building Seminar Series, which he has presented since 1977 teaching investors to ignore conventional wisdom and practice true wealth-building strategies,a weekly radio talk show, "It’s Your Money," that he hosts, and a quarterly newsletter -- not to mention numerous lectures around the country. In 2004, he was named one of "America's Best Wealth Advisors" by Barron's and in 2005 was selected as a keynote speaker for the "Excellence in Financial Planning Conference." Manarin feels there is a basic question the vast majority of Americans face: Do you ‘go it alone’ when it comes to planning your financial future, investments, and savings plans; or do you get the help of an ‘expert’ to guide you through the process and ensure you get the most bang for your buck? “Increasingly, most of us choose to seek professional help. But to whom do you turn to and trust? There are five essential facts one needs to know before hiring a financial professional.”

Loretta Doon was named chief executive of the California CPA Society and the CalCPA Education Foundation this May, after serving for just over a year as the chief operating officer for both groups.

Less than six months after announcing a plan to revamp its test for enrolled agents, the Internal Revenue Service said that the new version of the examination is ready. The first testing window opens today and runs through Dec. 1. The IRS contracted Thomson Prometric to redesign the test and stressed that experts within the Enrolled Agent community had played a role in shaping the new content that is included in the special enrollment examination. The exam has been reformatted from four sections, to three sections, in order to more accurately reflect the current state of taxpayer representation. Each of the three new sections -- individuals, businesses and representation, practice and procedures -- will contain about 100 questions. There are currently about 40,000 active enrolled agents, many of whom are attorneys and CPAs, and represent taxpayers in both examinations and collection matters. Other changes include that:

In July, the Financial Accounting Standards Board announced that its agenda now includes a major project on lease accounting. As justification, the board cited encouragement from its own advisory councils and the Securities and Exchange Commission staff, all of which apparently concurred that "current lease standards fail to provide complete and transparent information."The announcement also stated that "lease arrangements have evolved considerably over the past 30 years and the standards are outdated." We're tempted to say, "Well, duh!" but we won't because of our great satisfaction that the board is preparing to throw out this example of WYWAP (Whatever You Want Accounting Principles) and POOP (Pitifully Old and Obsolete Principles).

I speak at numerous conventions and conferences, and attendees sometimes contact me for additional information about abusive tax shelters and Circular 230.Among other things, Circular 230 sets forth the requirements for disclosure of certain tax shelter transactions by tax professionals. Regulations also impose new obligations on tax professionals, and on taxpayers engaged in any kind of tax-avoidance transaction.

A surviving spouse who is the sole beneficiary of the balance remaining in their deceased spouse's traditional IRA may leave the account as it is, or roll over the decedent's IRA into their own IRA, or elect to treat the IRA as their own for all purposes, including the rules of IRC §72(t) as to the imposition of a 10 percent penalty tax if the amount in the IRA is withdrawn before age 59-1/2.Whether a rollover to the surviving spouse's own IRA or an election to treat the deceased spouse's IRA as their own should be made depends mainly on the surviving spouse's age.

After nine years, a federal report says that college tuition tax credits aren't necessarily providing the boon for poorer families that legislators originally intended.The report, from the Education Department's National Center for Education Statistics, examined two programs enacted in 1997 - the Hope Scholarship, which allows a tax credit of up to $1,500 during a student's first two years in college, and the Lifetime Learning Tax Credit, which allows a tax credit of up to $2,000 for lower- and middle-income students after the first two years.

Alan Haft is the president of 5th Avenue Financial, a financial planning firm based in Boca Raton, Florida. He is a pretty savvy guy when it comes to financial planning and recently set forth what he considers the five biggest financial retirement planning mistakes that Baby Boomers make. At the outset, he says that most Baby Boomers, and even retirees, realize rather quickly that their so-called bulletproof retirement savings plan is actually riddled with bullet holes. To Haft, living longer could mean outliving nest eggs that were intended to secure that financial comfort zone. Haft is well known in helping the wealthy become even wealthier and the not-so-wealthy achieve financial security. “Most of what I’ve seen in the industry in terms of poor retirement planning,” he says, “involves improper guidance or self-guidance, and a lack of foresight.” Here are what he considers the five biggest mistakes in such planning: 1) It’s Too Late to Start Planning. Once you reach your 50s or 60s, many people think that the parade has passed them by. But Half points to the power of compounding, boosted by the tax-deferred growth offered by IRAs, 401(k) plans, and the like. So, building up that nest egg may not be too late. 2) Underestimating Life Expectancy. He says studies show that some 20 percent of workers expect their retirement to last 10 years or less but according to the 2000 Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI), half of the men reaching age 65 have an additional life expectancy of some 17 years while half of the women reaching that age are spun out 21 years. 3) Miscalculating Needs. Most financial planners say that you must plan on needing 60-85 percent of your pre-retirement income in your retirement years. According to that EBRI survey, only 53 percent of workers have tried to determine how much money they’ll need in retirement. 4) Looking at Inflation. Many investors, Haft says, particularly older ones, are uncomfortable with market volatility. They invest solely in Treasury bills, fixed-rate CDs, and savings accounts. He feels it is important to consider keeping some money in growth investments such as stocks and stock mutual funds. 5) Putting Other Financial Goals First. Haft points out that to many people, retirement probably isn’t the only financial goal--not when you may be saving for a child’s college education or for a down payment on a second home. But he cautions not to place them ahead of a financially secure retirement. Of course, easier said than done.

A sampling of tax returns filed by fishermen in 2004 revealed that thousands of workers had overpaid an average of $530, after failing to take advantage of the averaging provision in calculating their income tax liability. According to the report from the Treasury Inspector General for Tax Administration, more than 4,600 taxpayers -- about 90 percent of the fishermen who could have benefited from the averaging provision -- didn't take advantage of the provision included the American Jobs Creation Act of 2004. TIGTA said that the overpaid taxes for the individual returns filed during the 2004 tax year totaled more than $2.4 million; and a startling 90 percent of the fishermen’s returns were prepared by paid tax preparers. The 2004 law allows fishermen to elect to compute their tax liabilities by averaging all, or a portion, of their taxable fishing income from the prior three years. The measure was designed to help fishermen recover from low-income years by keeping more of their income in successful years and offsetting potentially high tax burdens in isolated years. At the time of its enactment, the Joint Committee on Taxation estimated the provision could save fishermen up to $61 million in taxes over the next decade -- between $3 million and $10 million annually. During a prior audit, TIGTA noted that less than one half of taxpayers who could benefit from a similar provision for farmers, had actually taken advantage of the measure. The inspector general recommended to a variety of federal offices that a better and broader effort be made to educate both fishermen and tax preparers about the averaging provision. The full report is available at www.treas.gov/tigta/auditreports/2006reports/200630158fr.pdf.

The Internal Revenue Service has issued details on the process for military reservists called to active duty to receive payments from individual retirement accounts, 401(k) plans and 403(b) tax-sheltered annuities, without penalities.

On the heels of the new risk assessment standards rolled out by the American Institute of CPAs, Thomson Tax & Accounting and the PPC brand are offering two new audit tools. PPC’s Smart e-Practice Aids focused on risk assessment, allows users to automatically generate customized audit programs based on risk assessments. Specifically, the aid will: