ExecPlan Express Financial Planning Software's Newest Release Prepares Financial Advisors and Consumers for the Tax Law Changes in the Recently Passed Health Care and Education Reconciliation Act

    PRINCETON, NJ, June 25, 2010 /24-7PressRelease/ -- Financial and retirement planning has always been more an art than a science, because it is based on setting a financial path to a future goal rather than predicting a future outcome. Since no one knows the future, financial advisors generally will create a financial plan designed around the idea that there will be adjustments in the future. Adjusting a financial plan to a future unknown is essential to laying out a financial path for a pre retiree or retiree to follow in order to reach their personal financial goals. Personal financial planning software like ExecPlan Express are designed to evaluate and adjust to future unknowns and the Health Care and Education Reconciliation Act of 2010 is one of those future unknowns that is now known. Individuals and financial advisors alike who do not react and make adjustments to their investment, income and tax planning strategies, may impair their ability to maintain financial independence throughout their retirement.

The major financial planning impact is the new Medicare Supplemental tax that begins in 2013. This new tax will hit both retirees and pre-retirees, and even though the tax applies to investment income for filers with a modified adjusted gross income over $250,000, it could have an indirect impact for all investors. The tax of 3.8% is on only the investment income that exceeds the $250,000 modified adjusted gross income threshold. This investment income includes, interest income, dividends, capital gains, rents, royalties, taxable annuity distributions and any other passive investment income. This will incentivize pre retirees to fund even more income into their qualified plans. Even non deductible IRAs will now become more attractive since, unlike annuities, their distributions will not face this new tax. Retirees will now focus on moving taxable income forward, by capturing capital gains and annuity distributions before 2013.

For post 2013 planning the focus will also be on moving income forward, however only up to the modified $250,000 limit ($200,000 for single filers). For both pre and post retirees, there should be a move out of rental property as well as annuities since there is little flexibility on the income from these assets and now there will be a tax premium on the income from these assets. Though capital gains face this tax, they are essentially tax deferred until liquidation. This provides the flexibility to "capture" the income by "turning over" the asset in years where your income may be lower enough to avoid the Medicare tax. So there should be a shift in equity portfolios away from income generating equities to growth oriented assets. Building your own Excel spreadsheets to evaluate any of these investment and tax planning strategies is difficult and thus not practical, and simple retirement planning calculators do not have the ability to model more complex cash from and income tax calculations.

For most people seeking out a professional financial advisor or for those who like to manage their own finance, obtaining financial planning software like ExecPlan Express, www.execplanexpress.com, may be the way to go. Most professional financial planning software, including ExecPlan, have free unrestricted trial versions that provide you a period of time to evaluate the software and determine if it can help improve your financial position. One of the most crucial functions that any professional retirement planning software tool should incorporate, is an actual federal income tax calculation including the impact of the alternate minimum tax (AMT). This is the only way to accurately create the most efficient cash flow and investment strategy to meet your personal financial objectives.

"I have not seen any change in the tax law over the past 15 years that has spawned so much interest and concern on how it will impact an individual's long term financial outlook," says Robert Fourman director of Marketing and Sales for Sawhney Systems the makers of ExecPlan Financial Planning software, "and the cost and ease of use has moved in a direction where today's financial planning software is a practical tool for a broader range of professional financial service providers as well as consumers who want to get more involved in managing their own personal finances."

Even people who do not reach the $250,000 income level may still want to seek a financial advisor or obtain a financial software package to see how their current financial position could be exposed to the new tax in the event that they might face a sudden jump in income such as from an inheritance. They also may want to look at the impact from passing to heirs assets that could push their income over the $250,000 thresh hold, even if it for a short period of time, thus exposing loved ones to unnecessary future income taxes.

Sawhney Systems is a provided of comprehensive financial planning software for the professional financial advisor. For information on our products ExecPlan and ExecPlan Express please contact us at (800)850-8444 or http://execplanexpress.com.

# # #