What You Should Know Now

Wells Fargo + AT = SB12: Protect and Serve

Community Bankers Association of Georgia Selected for Study on the Impact of the Dodd-Frank Act on Community Banks

The Community Bankers Association of Georgia (CBA) - One of Four State Associations Selected For Nationwide Study on the Impact of the Dodd-Frank Act (DFA) on Community Banks

The United States Government Accountability Office (GAO), an independent, legislative-branch agency, is examining the impact of the Dodd-Frank Wall Street Reform and Consumer Protections Act on community banks. The DFA is a massive bill which became law on July 21, 2010, and banking regulators have written or are currently writing regulations to implement the Act’s provisions, many of which will in the long run affect consumers. The GAO selected the CBA of Georgia as one of four state associations nationwide to participate in this community banking study.

Members of the CBA Executive Committee and staff provided input on a very detailed survey examining the potential benefits or challenges the DFA may directly or indirectly have on community banks and their ability to lend to small business. After the survey results were compiled by the CBA, representatives from the Association to include staff and bankers participated in a teleconference with four GAO analysts to provide additional feedback on various areas of the DFA. Several bankers on the teleconference were able to relate personal, individual bank experiences to illustrate issues they were having in their particular bank and their communities they serve.

The results of the study will be published by the GAO mid-September. CBA Executive Committee members are: Mark Stevens, State Bank and Trust, Macon; Dan Oliver, Vinings Bank, Smyrna; Charlie Curry, First State Bank of Randolph County, Cuthbert; Dales Morris, First National Bank of Coffee County, Douglas; Derek Williams, First Peoples Bank, Pine Mountain, and Ed Cooney, Affinity Bank, Atlanta.

Wells Fargo + AT= SB12: Atlanta Peach Movers

NEW POST! Wells Fargo + Atlanta Tribune = SB12: Maceo Brown and System 5 Electronics

Wells Fargo + AT= SB12: Corporate Temps

What Are Atlantans' Stances on Retirement, Healthcare, and the Possibility of Living to 100 years old?

The latest iteration of the Merrill Lynch Affluent Insights Survey (MLAIS), released today, reveals new insights about Atlantans’ perspectives on retirement, healthcare, and the possibility of living to 100 years old.

Atlanta residents continue to redefine retirement – the majority (78%) plan to work part or full time in retirement, and only 21 percent define retirement as “never working again.”

While many Atlanta individuals surveyed feel thankful (35%) or optimistic (25%) about the prospect of living to 100 years old, 77 percent admitted they would approach money management differently if they knew today that they were going to live that long.

According to the survey, Atlantans are concerned about outliving their assets (64%) and affording the lifestyle they want in retirement (56%), and the rising cost of healthcare continues to be their number one concern (77%). However, despite their continued concern, more than two-thirds (69%) have not estimated what their healthcare costs might be during retirement years.

Within the full survey findings below, you’ll see Atlanta residents offer solutions for fixing Social Security, disclose what’s top of mind for them heading into the Presidential election, and reveal what would encourage them to invest more for their retirement.    

Merrill Lynch Affluent Insights Survey™ – Atlanta

Atlanta investors plan to work part or full-time in retirement, and only “retire” when they feel they have saved enough to support their desired retirement lifestyle.

• As it stands today, 78 percent of local respondents see themselves working part or full-time in retirement. Only 21 percent define retirement as “never working again.”
• When asked what they expect most will lead them to retire, only ten percent of Atlanta non-retirees cited “hitting a certain age.” They believe the number one factor that will lead them into retirement is feeling their assets will allow them to live the lifestyle they want (33%) during their remaining years.
• The majority of local investors are concerned about whether their retirement assets will last throughout their entire lifetime (64%), and more than half (56%) are concerned they won’t be able to afford the lifestyle they want during retirement.
• If given the choice, nearly half of local respondents (49%) not yet retired would rather retire later than make trade-offs to their current lifestyle. On the other hand, 43 percent said they would make trade-offs today in order to retire when and how they’d like to. 
• One-third (36%) of all local respondents lack confidence that their current saving and investment strategy will support their desired lifestyle during their retirement years.  When asked about the reasons for their uncertainty, 50 percent said the recession took a toll on their finances, 34 percent cited uncertainty about whether programs such as Social Security and Medicare will be there when they need them, and 29 percent cited a lack of savings. These statistics are far higher than the national average and all other sampled markets (30%, 19%, and 18% nationally, accordingly).
• While it is commonly known that many Baby Boomers are struggling to save for and fund their retirement, Atlanta respondents believe investors under the age of 35 won’t have it any easier when it comes to saving for retirement (80%).

Local respondents are more concerned than ever with the financial implications of healthcare costs in retirement, but few have begun to plan for it.

• Despite the rising cost of healthcare being their top financial concern in every MLAIS survey since 2009, more than two-thirds of local investors (69%) have not estimated what their healthcare costs will be during their retirement years. 
• When asked how they plan to fund their healthcare costs in retirement, local investors said some combination of Medicare (41%), healthcare benefits from their current/former employer (39%), private health insurance, (38%) and long-term care insurance (28%).
• One-third (36%) indicated that they are more concerned about the financial strain and costs associated with a significant, unexpected healthcare situation such as a chronic illness or disability  than their quality of life being comprised from such an event.

Atlanta investors would approach money management differently if they knew today that they were going to live to be 100.

• Many local individuals surveyed feel thankful (35%) or optimistic (25%) about the prospect of living to 100 years old. 
• However, 77% report they would approach money management differently if they knew today they were going to live to be 100. To financially accommodate a longer life, Atlanta investors would:

o   Work at least part-time during retirement (51%)

o   Pay off mortgage and other debt sooner (44%)

o   Work with a financial advisor to re-evaluate investments/savings (41%)

o   Adopt a more conservative investment approach (41%)

o   Purchase long-term care insurance (40%)

o   Contribute more to a 401(k), IRA or other retirement savings vehicle (39%)

o   Invest in a product that guarantees lifetime income, such as an annuity (38%)

Major issues to be debated by candidates among top concerns for local respondents

• Three out of four local investors (74%) are highly concerned about this year’s Presidential election. Among the major issues they find concerning today are also those likely to be heavily debated leading up to the election, including the rising cost of healthcare (77%), our nation’s budget deficit (75%), the lingering unemployment rate (72%), and the potential for rising tax rates (68%).
• Social Security reform is also a top concern in 2012, with 65 percent of those surveyed locally concerned about the program’s future. Additionally, the majority (53%) believe that the age at which Americans are eligible to collect Social Security benefits should be raised in light of longer life expectancies. 
• Following a year of global economic instability, Atlanta investors also cited the following among concerns in 2012:

o   Our nation’s political standing with the world (63%)

o   The possibility of a double dip recession (62%)

o   The European financial crisis (60%)

Atlanta investors resolve to improve their financial future in 2012, but are hoping the economic, market and political environment will lend a hand too

• When asked what would encourage them to start saving or investing more for their retirement, local respondents cited:

o   A less volatile stock market (48%)

o   Improvement in the job market (47%)

o   A change in U.S. political leadership (42%)

o   More international economic stability (38%)

o   Greater incentives from their employer, such as implementing/increasing a 401(k) match (38%)

o   Better incentives from the government, such as raising 401(k) contribution limits or offering greater tax incentives for long-term saving and investing (36%)

• Many are balancing competing goals in the current economic environment, trying to pay down debt, while saving for retirement. Thirty-seven percent of Atlanta investors believe that their current level of debt impedes them from saving as much as they’d like to for retirement, more than in any other market sampled.

Atlanta respondents cite financial advisors as the person they trust most to provide advice on retirement investments and their overall financial future – more so than their spouse/partner, family members or business colleagues

• When asked what retirement-focused topics they would like to discuss more with their financial advisor, they cited:

o   Managing cash flow and liquidity in retirement (37%)

o   How they hope to live their life during retirement years (37%)

o   The impact of rising healthcare costs on their retirement income (34%)

o   How to financially plan for the possibility of living to be 100 years old (30%)

o   Balancing/managing competing near- and long-term financial demands (27%)

o   Making better lifestyle choices today to benefit their long-term financial picture (27%)

o   Choosing the right Medicare coverage and other healthcare decisions (24%)

• Local investors said the best piece of advice they received from their financial advisor in 2011 was to “stay the course” with their long-term investment strategy (43%).
• When asked about qualities their financial advisor possesses that keeps them loyal to the relationship, local respondents said their advisor:

o   Understands and respects their preferred methods of communication, e.g. face-to-face, email, phone, social media (65%)

o   Understands their current financial situation (64%)

o   Provides relevant research and market insights to help them feel informed and in control (63%)

o   Holds industry certification or designations (61%)

o   Understands their goals, dreams, and personal values (58%)

 

About Merrill Lynch Affluent Insights Survey™

Merrill Lynch Affluent Insights Survey™ is a report examining the values, financial priorities and concerns of affluent Americans. The survey was conducted by Ketchum Global Research & Analytics and Braun Research over the phone between December 14 and December 29, 2011 on behalf of Merrill Lynch Global Wealth Management. The nationally representative sample consisted of 1,001 affluent Americans (ages 18+) with investable assets in excess of $250,000. At least 300 affluent Americans were oversampled in each of the 5 target markets including Atlanta (303); Chicago (308); Dallas (308); Detroit (308) and San Francisco (300). The margin of error is +/- 3.1 percent for the national sample and +/- 5.7 percent for the oversample markets, with both reported at a 95 percent confidence level.

Where You Should Be: TODAY! Creating Wealth Presentation @ Clark Atlanta University

The 411:

WHO: Dr. Dennis Kimbro, nationally acclaimed author, faculty member in the School of Business at Clark Atlanta University (CAU), and head of CAU’s CEO Academy

WHAT: Will present “Banking on Black Power,” a challenge toward wealth creation in the African-American community, as a part of the university’s observance of Black History Month, this year themed “Black Power Now.”

WHEN: Wednesday, Feb. 22, at 3 p.m.

WHERE: The Thomas W. Cole Jr. Research Center for Science and Technology, 223 James P.
Brawley Drive, S.W.

BACKGROUND: Kimbro’s first four books were best-sellers. His next book, “Have vs. Have Not: What Black Millionaires Know That Others Do Not,” is due out this fall.

Mark Your Calendars: LEAD Week @ Clark Atlanta University

The Clark Atlanta University (CAU) School of Business will present its 17th annual LEAD Week Feb. 13-17 on campus, 223 James P. Brawley Drive, S.W. This year’s theme,“Transformational Leadership: Global Investment, Innovation and Impact,” focuses on such topics including: leadership, networking, entrepreneurship and personal finance.

Highlights of the week will include the Chevron Women’s Leadership Breakfast and the Men in Business Luncheon, sponsored by PNC Bank. The week will begin with a presentation by Barb Schaefer, senior vice president of Union Pacific, and a networking reception sponsored by Turner Broadcasting System, Inc. Participating business leaders will include Kathy Daly-Jennings, head of Industry, Retail at Google; Ken Bentley, vice president of Nestle USA, Inc.; and Vernon Baker, senior vice president and general counsel of Meritor, Inc.

Maggie Anderson, CEO and founder of The Empowerment Experience, will conduct a workshop and book-signing. Chaired by CAU graduate student Tafadzwa Sithole, LEAD Week will conclude with a black-tie gala and silent auction at the Omni Hotel Feb. 17.

School of Business Dean Lydia McKinley-Floyd said, “Our economy is demanding even more for today’s business students to be prepared and positioned for success, given an aggressive and global environment. We must stress entrepreneurial thinking to help further empower students in our program, sharing with them some of the best practices and presenters throughout this week.”

Visit http://www.sbus.cau.edu/ for the complete LEAD Week schedule.

About Clark Atlanta University’s School of Business

The School of Business at CAU awarded its first bachelor’s degree in 1931. Its graduate program was founded in 1946. The School was one of the first Historically Black Colleges and Universities (HBCUs) in the nation to have its undergraduate and graduate business programs accredited by the Association to Advance Collegiate schools of Business International (AACSB). It continues to produce one of the largest classes of African-American MBAs in the world, while its undergraduate program is one of the top 10 percent producers of African-American business professionals in the nation.

IRS and your Travel Miles: Are Taxable Frequent Flyer Miles in Your Future???

You probably never paid a penny in taxes for the frequent flyer miles you've earned. I certainly haven't.

There's only one exception to the no-tax-on-miles rule, as it's been generally understood. If you win frequent flyer miles in a contest or sweepstakes, the sweepstakes host publishes an estimated retail value of the miles in the terms and conditions, and sends a 1099 form to the winner and to the IRS, which considers the prize's value to be tantamount to extra income and taxable as such.

On the other hand, there are no tax consequences for earning frequent flyer miles for day-to-day transactions, such as shopping, traveling, and so on.

But what about the miles that banks award as incentives to open checking and savings accounts? Or the miles that credit card issuers routinely give to consumers as an incentive to apply for new cards?

Until recently the prevailing assumption on the part of both mileage-earners and tax experts was that such sign-up bonuses were not taxable.

This year, however, as reported by the Los Angeles Times, Citibank began sending 1099s to customers who had received mileage bonuses for opening savings or checking accounts. And of course, copies of those 1099s were also sent to the IRS.

Citi's move—which it claims is in response to IRS guidelines—raises a host of questions and concerns.

Among them:

•Citi valued the AAdvantage miles awarded for opening checking and savings accounts at 2.5 cents each. While it's possible to get that much value for the miles when redeeming them, my estimate of the average value of a mile is around 1.2 cents. And certainly Citi paid American much less than 2.5 cents apiece for the miles. In fact, the vagaries of valuation are one of the issues that the IRS has historically cited as an insuperable barrier to taxing miles.

•What's the difference between earning miles for opening a bank account and miles earned for signing up for a credit card? If the former incentive is taxable, why isn't the latter? With the marketplace awash in lucrative credit card sign-up bonuses, this question is hardly academic—hundreds of thousands of consumers would be affected if credit card bonuses were treated like bank account bonuses.

•And if bonuses for financial services transactions are taxable, wouldn't that suggest that miles earned for other transactions were taxable as well?

According to David Lazarus, who wrote the L.A. Times story, the IRS considers the bank account bonuses to be "income miles," while other bonuses are "rebate miles." The logic of that distinction eludes me.

So, what to do? This is what Eva Rosenberg, my tax advisor and publisher of TaxMama.com, advises: "ANYTIME you get a 1099 form of any kind, report it on your tax return wherever the IRS computer expects to see the income. In this case, on Line 21, Other Income. Then, if the income is not taxable, deduct it back out, and include a statement explaining why it's not taxable." [emphasis added]

I'm sure that's solid advice. But I'm equally sure that any policy that causes so much confusion, and that requires taxpayers to report, back out, and then explain themselves, is a policy that needs to be rescinded.

Apparently Senator Sherrod Brown (D-Ohio), chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, agrees. He appealed directly to Citi chief Vikram Pandit to "end this gratuitous practice. The Internal Revenue Service (IRS) clearly stated that frequent-flier miles are not subject to income tax."

Since there's obviously disagreement as to the interpretation of the IRS' rules, frequent flyers can only hope that he and like-minded politicians will take the no-tax case to the IRS as well.

Reader Reality Check

Did you earn miles for opening a new savings or checking account in 2011? Did the bank send you a 1099 for the miles?

This article originally appeared on FrequentFlier.com.

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