I see no great changes on the economic horizon coming our way.  What we have been experiencing the past six months will continue, at least for the near future.
The federal government has been very successful at keeping mortgage costs at record low rates.  I believe it would be in everyone’s best interest if the low rates were to continue into the next year or two.  The cost of maintaining the low rates will be considerable to taxpayers, as the government has been purchasing the mortgages as they are created to avoid a potential increase in rates, due to a shortage of mortgage buyers in the private sector.  For the near future, I expect that interest rates will continue to be at all-time lows with minimal changes.
Foreclosures are expected to continue at a steady rate for the next two years.  The peak in the number of new mortgages created was in 2007, and many of those mortgages were written with three to five year terms, with contracts calling for a rollover to adjustable rates at the end of the term. It will be difficult for residential real estate values to reach a consistent and predictable level until the foreclosures have left the market place.
I expect the volatility in the stock market to continue with no end in sight.  There are so many entities using computer programs to buy and sell securities that volatility is pre-programed into the current system.    If you are someone who likes to follow the value of stocks on a regular basis, you will feel like you are riding a roller coaster.
If you are considering the purchase of gold as a hedge against inflation and a safe place to put your money I recommend using caution. I have seen information that suggests that gold certificates are being sold to the public and the gold is not being purchased to support the certificate.
An interesting observation I have made during this difficult economic time is the number of people with significant amounts of cash to spend.  Real estate is changing hands without the benefit of financing, and property is selling in a matter of days or weeks if it is priced at today’s market values.  I have been involved in the real estate and financial services business since the early 1970s, and I have never seen such diversity in the market place.  Though there are many people losing their property to foreclosure, there are also many people willing to pay cash for real estate.
These are stirring times for those of us making our living operating a small business.  Going back to the basic principles of successful business operation, and then holding fast to those business principles on a daily basis, seems to be the only logical avenue to follow in order to both survive the difficult times we are faced with, and to be in a position to prosper when the economy begins to move forward again.
By: Jack Van Rossum

They’ll stick by your side through thick and thin, smother you with kisses and generally be your best friend…if you’ll let them. They are the cats and dogs that often get overlooked for their younger or livelier cage-mates, but still got a lot of love to give. Well, the Butte Humane Society is on a mission to adopt out as many of these passed-over pets to as many loving homes as possible by participating in Adopt-A-Less-Adoptable Pet Day.
A program of national awareness that was originally created by petfinders.com, it’s a campaign normally held on August 12th for the amazing “less adoptable” animals in shelters across the country. The idea is to help “less adoptable” pets to find a new home by offering special adoption rates to stir up interest. What makes these animals “less adoptable” you ask? Well in my book, absolutely nothing. But animals that seem to have the hardest time finding a home are those that are considered seniors, animals with special needs, black animals, animals that suffer from breed stereotypes and animals that can be the only pet in the household. Breed stereotypes refer to dogs such as Pitbulls, German Shepherds, or Rottweilers who often get stereotyped as more violent breeds, however if raised by a loving family and treated right, these breeds often become some of the most loyal pets. For instance, in the UK the Pitbull is often called the “nanny dog” because of how loyal and protective of children they are.
The Butte Humane Society has participated in the Adopt-A-Less-Adoptable Pet program for the past two years, but this year they decided that one day was not nearly enough to devote to these adorable critters. So, instead of just one day, BHS has extended the event into Adopt-A-Less-Adoptable Pet Weekend. From Aug. 12-15, prospective pet owners can head down to the Butte Humane Society at any point during their regularly scheduled hours and find their very own “less adoptable” pet to take home. To help with the adoption process, BHS plans to take $25 off the adoption fees for less adoptable dogs and puppies, $20 off less adoptable kittens and are offering FREE less adoptable cats to good homes.
They also plan to bring some of these furry friends to their “Mall Cats” location in the Chico Mall. Those of you who have been to the mall recently may have seen BHS’s room full of cats and kittens; well on Aug. 14-15 they will be showcasing a plethora of friendly felines and canines as part of the “less adoptable” program. BHS Event Coordinator Lori Wells says that this presents the perfect opportunity for the whole family (including any current pets you may have) to choose a new addition to the family. The Chico Mall “has lots of great grassy areas…if there is a pet that they like they can do the meet and greet then and there,” says Wells.
Want to take a sneak peek at some of the animals up for adoption? Check out their webpage: www.buttehumane.org/page/adopt-a-less-adoptable-pet-day.php to see some pet profiles. There are plenty of animals to choose from, but some of the pets up for adoption that really need the love are Hannah, Bear, Mystique, and Chica.
Hannah is a 3-legged Border Collie/Greyhound mix who is both black and a special needs pet. Poor Hannah is four and a half years old and is the Butte Humane Society’s longest resident. She is a loving and loyal girl who’s just waiting for the right home. Bear has only been with the BHS for about a month now, but this 11-year-old Husky/Malamute is desperate to find an understanding family that can keep him comfortable in his senior years as “He’s really sad here and howls” says Wells.
Mystique is an older cat, at 8-years-old, but she is such a lover that you never even know it. She is a brown, medium-haired cat who would do very well in a quiet home with older children who could devote as much love and attention as she would to them. And little miss Chica would love to be adopted into a family as well. She is a 4-year-old black cat with a bit of a squishy face and an itty bitty stature…but you know what they say, great things come in small packages!
The Butte Humane Society is located at 2579 Fair St. Their hours of operation are 12-6 p.m. every Tues, Wed, Fri, Sat & Sun and 12-7p.m. on Mon & Thurs.  So mark the dates on your calendar, because these lovable animals would make a great addition to any home. These poor pets have had some rough times lately, why not help them find their place in your family?
By: Jess Krager

If you haven’t heard the buzz on Chico’s GRUB programs then you’re way past due for an introduction. GRUB (Growing Resourcefully Uniting Bellies) is a locally formed nonprofit organization established in 2007. Not only do they strive to minimize their ecological footprint by sustainable living practices, but they intend to nourish our community with knowledge and food and hope to deepen connections within the community. This group of individuals has been working hard to aid the community in sustainable development, and their latest project, the GRUB Community Gardens, invites the community to get in on the fun.

The Community Gardens first began with one garden back in September. This garden, located at 14th and Mulberry, was initially developed to help feed people at the Jesus Center and those who helped tend the garden. They have since expanded into a multiple-garden operation. Gardens have cropped up all over town, each with a different target demographic GRUB wants to help support. They have a garden off of West Lindo set up; most of the veggies grown here will be donated to a local food bank. They also hope to create a site off of East First Street that will become a training center for people with disabilities to learn the gardening process. The newest garden that they are currently working hard to get up and running is located in Walnut Grove Apartments off of Nord Ave. Here, they plan to take an old basketball court and turn it into a full-fledged garden, complete with raised beds, a sitting area and maybe even a small greenhouse.

Everything about these gardens is sustainable. Local businesses such as the Durham Worm Farm and Waste Management have donated compost, and Chico Food Network donates seeds. GRUB also tries to use all recycled materials to set up and maintain garden plots. For example, the garden off of 14th and Mulberry has an enclosed grow box that they threw together using leftover wood from a housing project and window panes collected by a GRUB member. They have also been able to use the blacktop from the basketball courts they dug up at the Walnut Grove Apartments.

Currently they have 14 members who live out at the “GRUB house” (a co-op located off Dayton Rd.) and seven people who keep the nonprofit programs running. Besides living by example, they have done a lot to spread awareness about sustainable practices and developed programs such as the gardens to aid the community. They want to see as much food grown in the community as possible and have been more than willing to share what they know to help that become a reality, but at the heart of things, these are community gardens that need to be worked on by the community at large, not just those who were good enough to get things started. Active member, Stephanie Elliot says, “If it is a need of the community to grow food, then we hope the community can support that need.” Anybody is welcome to take part in this amazing project. Help can come in a variety of ways; donate supplies, volunteer time during workdays out at one of their garden plots, or if you’re extra ambitious take on the garden coordinator position at a site. On Sundays, the GRUB house off Dayton welcomes community members to drop by and lend a hand, or even just to take a peek at what they are trying to do. There are plenty of ways to help out, and you can check out their web site grubchico.com for more information. The weather has been getting better everyday, and what better way to celebrate the rebirth of spring, than to get out in a garden and get your hands dirty to support the community, and of course, yourself.

By Jess krager

Catalyst has been making plans to build a new shelter for over four years and the hard work paid off as they celebrated the completion of the project at the grand opening of their state-of-the-art facility.

“We are so excited to be celebrating this point in our agency’s history,” said Anastacia Snyder, executive director for Catalyst Domestic Violence Services.
The community gathered for the grand opening on Feb 25 where Catalyst had a ribbon cutting ceremony, thanked their sponsors and gave tours of the shelter. Although Catalyst is normally closed to the public, they wanted to make sure the locals got a chance to tour the shelter since it is a big part of the community.

Catalyst is the only domestic violence shelter in Butte and Glenn County. The organization is committed to serving the needs of domestic violence victims and reducing the incidence of domestic violence.

Catalyst is seeing an increase in the number of requests for safe shelter, so having more space was important when planning for the shelter, Snyder said.
This facility will allow the amount of people they are able to serve in the emergency housing program to grow enormously. The old shelter had room for about 15 people, but now there are 28 twin beds and 7 crib/toddler beds for their clients.

The building was also designed with safety and comfort in mind. Catalyst had a security expert from the Chico Police Department help with the project in order to create the safest atmosphere possible. Strategically placed windows and camera surveillance allow staff to watch for people approaching, while a lighted landscape and open spaces help with visibility.

The shelter has a warm, welcoming vibe that makes people feel safe, Snyder said. From the soft paint colors to the light woods to the craftsman style design the building creates a peaceful environment.

The outside atmosphere is just as serene with secluded porches for outdoor living, a barbeque space and a grassy backyard.

“Just having good open, warm and welcoming communal living is important,” she said. “People come to our shelter because they are escaping violence or are afraid of violence.”

Having this updated shelter will not only allow the organization to have space and be more efficient, but will give clients a safe, secure place to stay for longer periods of time.

“We’re slowly transitioning into a longer length of time because we know it takes people longer than 60 days to even be able to get to a place where they’re feeling comfortable, confident and safe,” Snyder said.

With the help of CSU, Chico Catalyst was able to give their clients even more time by building two cottages on site for transitional housing. Catalyst had heard that CSU, Chico’s College of Engineering, Computer Science and Construction Management wanted to bring its Winter Community Service Project closer to home this year, after spending previous winters in New Orleans and Concow, so they applied.

The organizations well thought out plan and commitment from the City of Chico to provide fiscal support helped them get the grant, but nothing could prepare them for the intensity of the “Winter Blitz Build.”

In just nine days, from Jan. 16–24, they built two 840-square-foot homes. As if that isn’t hard enough, they happened to be building during the worst weather Chico has seen all year. Next winter CSU, Chico will be working with Catalyst again to build two or three more cottages for transitional housing.
“We’re adding 18 months of transitional housing, and when all the houses are built there will be housing for five families, which is just incredible,” Snyder said, “It’s another part of the growth of our agency.”

With a bigger facility come more responsibilities, so there are plenty opportunities to become involved in the project. Anyone interested in volunteering can call Victoria at 530-343-7798. Catalyst will also be looking for businesses to partner with to promote self sufficiency skills, such as resume building and budgeting, to their clients.

To learn more about Catalyst, visit their Web site at www.catalystdvservices.org.

By Kayla Cook

On Jan. 28, Tri Counties Bank celebrated the grand opening of its new location. This branch is the first to open with the new architecture and design package that the bank is rolling out throughout its network.

“As our brand continues to evolve and respond to the needs of today’s consumer and business owner, our investment in updating our branch technology makes us more relevant to how people do their banking and live their life,” said Dan Bailey, executive vice president of Retail Banking for Tri Counties Bank. “We welcome the Chico community to come by and see our new branch.”

Visible from the street is outside signage with the updated Tri Counties Bank logo and colors. Inside is a four screen digital display that shows 1,300 unique images illustrating A Day in the Life of Tri Counties Bank. The wall features California landscapes, community involvement activities, quotes from California notables and personal profiles of bankers. The new branch architecture and design is centered on the concept of the digital wall.

In honor of the branch opening and the 2010 Winter Olympic Games, Tri Counties Bank celebrated its grand opening by making a $5 donation to Disabled Sports USA for every Perfect Choice Checking account opened in the month of February.

“Disabled Sports USA is fortunate to be able to partner with Tri Counties Bank to make the world a better place for people with disabilities. Together, we will have a powerful and positive impact on the lives of children and adults with disabilities and soldiers disabled in Iraq and Afghanistan,” said Doug Pringle, president of Disabled Sports USA, Far West chapter.

Chico-based Tri Counties Bank is a wholly-owned subsidiary of TriCo Bancshares (NASDAQ: TCBK) and has been serving customers in Chico since it opened its first branch on Pillsbury Rd. in 1975. The FDIC ranks Tri Counties Bank as the largest bank in Butte County.

The branch is located at 2483 Notre Dame Blvd., Ste. 100 in the Skypark Plaza shopping center and will be open Monday through Thursday from 9 a.m. to 5 p.m., Friday from 9 a.m. to 6 p.m. and Saturday from 9 a.m. to 1 p.m.

On June 26, Sierra Nevada Brewery’s Big Room played host to CEPCO’s 23rd Annual Dinner and Excellence in Business Awards. Amongst the chatter of various Hawaiian shirt-clad business owners and enthusiasts, hors d’oeuvres and wine were served by Long Creek Winery, Quilici Vineyards, La Rocca Vineyards, New Clairvaux Vineyards, Pedrozo Dairy and Cheese, Sierra Nevada Cheese Company, Apollo Olive Oil, Butte View Olive Oil and Pacific Sun Olive Oil.
At 6:15 on the dot, Master of Ceremonies, Dick Stein took the stage. He wasted little time introducing the first award. The Community Service Award, sponsored by Butte Community Bank, went to Larry Juanarena. Howard Isom took home the Morgan Stanley sponsored Lifetime Achievement Award, stating, “I guess you’ve got to be mature to win this award!” Chico Mayor’s Award for Excellence in Renewable Energy, sponsored by PG&E, went to Chico Electric, while NorCal Waste System’s Butte County Job Creation Award went to Aero Union. Slater and Son presented SUNGARD Bi-Tech, Inc. with the Excellence in Technology and Innovation Award. Friends of the Arts were then presented with the Excellence in Arts and Entertainment Award, sponsored by Linscheid Company, Inc. The Excellence in Healthcare Award, sponsored by Enloe Medical Center, went to North Valley MRI & CT Center. CSU, Chico’s College of Agriculture won the award for Excellence in Agri-Business, sponsored by Chico Electric. 2008’s Entrepreneur of the Year Award when to Dan Gonzales, owner of Fifth Sun, who described the experience as “recapping 15 years of struggle and competition.” Wells Fargo Bank sponsored the Excellence in Real Estate Development Award, which went to Conroy Construction.
Next, four companies were honored as Businesses to Watch, an award given to those who are innovative and display a great opportunity for growth. Chico Bag, Klean Kanteen, Landacorp and Organic Chico Wash were all presented with the award. Representatives from each company were given the chance to speak. CSU, Chico’s Elevator Pitch Award was handed to Slandee Erole and Gloria Zarate, two students whose idea to create a Web site that allowed students to trade and sell textbooks beat out competition from their peers. CEPCO’s Chairman’s Award was given to Dr. Ken Derucher.
The highlight of the evening, CEPCO’s Venture Island competition, then took center stage. Venture Island is a three-month business plan competition that, after several rounds of elimination and much development and hard work, would finally have a winner. Competitor Robert Strazzarino, a recent CSU graduate whose class scheduling software company, Wildcat Scheduler, is used by several universities around the nation and is in the position to grow rapidly in the next few years. Former RN, Steve Culton’s “nurse alert connector” is a vital product that has the potential to save thousands of lives, all while making a nurse’s job that much easier. The prize, however, went to Crystal Martin. Martin is in the process of creating schools for nursing students, a position that is in high demand. Because most Californian nursing schools are so impacted, very few students are admitted, and as a result, there just aren’t enough nurses in the hospitals.

By Andrew Bonnenfant

Approximately 30 percent of my time involves working directly with government agencies, and another 40 percent of my work is significantly influenced by reporting requirements tied to government. Here are some observations about the information systems needs that are shared amongst government agencies and private enterprises.

1. Reporting requirements. A business manager recently told me she spends five days per month preparing reports for government agencies. Health care, waste management, insurance, real estate and senior care all have obligations to create reports for government agencies. All employers are required to file reports that originate from payroll systems. The challenge is making the business processes properly collect the information that flows into the reports.

2. Fragmented processes. Oftentimes organizational units are in separate buildings, almost separate worlds. However, hiring, budgeting and procurement are closely tied to all of these departments. Additionally, the budget process and the actual spending process can be fragmented, thus requiring extra handling of accounting entries and report compiling at the end of the fiscal year.

3. Information system compatibility. Frequently, days and even weeks are spent manually capturing and re-organizing data for the purpose of providing reports. I had a situation last year involving a government agency where we invested two weeks into automating an electronic report that yielded $250,000 in grant money. The data that verified the qualification had to be pulled together electronically into a format that complied with a strict standard. We then were able to take that report and create several others that replaced manual processes. We found that even if the grant money was not awarded, the value of creating the data in a well-organized report yielded many other benefits that made the exercise worth the time and money spent.

4. Exposure to crime. Government agencies are not immune to cyber-crime and internal theft. To help minimize, exposure agencies must have internal audit teams and compliance assurance practices. The effect of these processes is one of slowing progress down when implementing new ideas. However, being aware of how an agency needs to receive data can help smooth out the process.

Keith McElroy is an independent software consultant specializing in development of software for a broad range of businesses and government agencies. Keith may be reached by e-mail at keith@mcelroy-tech.com or by phone at 530-591-3052.

by Keith McElroy

Any good psychologist or coach will tell you to focus on what you want. Acknowledge the so-called negative dynamics you’re experiencing, and then focus on what you want because that’s how you attract more of it. If you’re broke, getting a clear picture of how much money you want and exactly how you’re going to make it is much more likely to bring greater abundance to you than focusing on being broke.
When it comes to creating a healthy economic culture, this principle certainly still applies. So let’s take a few minutes to consider the kind of economy we want to create. What are the elements of such an economy, and how might we get from our current state of economic stress to one of greater flow? Furthermore, to acknowledge what’s working well, what elements of a healthy economy are already in place here in the Northstate?
The Business Alliance for Local Living Economies (BALLE) identifies six core building blocks that comprise a local “living” economy: sustainable agriculture, renewable energy, zero-waste manufacturing, independent retail, community capital and green building.
Independent retail is one of the Northstate’s most well-rooted local economy building blocks. Examples abound, including The Fly Shop in Redding which employs local fishing guides on its world-famous fishing expeditions, infusing the local economy with outside money when those guides come back home and spend their income at neighborhood restaurants, their kids’ schools and on services like tax preparation and gym memberships.
Due to climate, water and soil in the Northstate, when it comes to the highest potential for a sustainable agriculture wonderland. Land-honoring—or sustainable—agriculture is set in motion in the great northern Sacramento Valley thanks to places like CSUC’s University Farm and its organic beef operations, Red Bluff’s Big Bluff Ranch and its grass-fed cattle and Lundberg Family Farms in Richvale. Lundberg enhances our local economy by selling rice far beyond the Shasta-Butte borders, thereby beneficially pumping outside money into our local economy.
Living economies don’t create themselves. They start—and yes, everything we need to know we learned in kindergarten—with you and me. By purchasing goods and services based on our values, we create the kind of economic culture we want.
A values-based way of life is one of the characteristics that give our region its one-of-a-kind character. Especially when this spirit is embodied by community leaders, the future looks bright.
Judy Sitton and her husband could have opened SunGard, one of the world’s leading software and IT service companies, anywhere. But after extensive world travels, they chose Chico.
“Values grow deep in this community,” Sitton said. “SunGard chose to be here because of these values…recreational access, safety measures, beauty, relationships.”
A healthy economy is inseparable from the notion of sustainability. If it can’t be sustained, how worthwhile is it? Sustainability efforts are well underway in the region thanks to the efforts of thousands of citizens and organizations like the McConnell Foundation, Sierra Nevada Brewing Company and CSU, Chico’s Institute for Sustainable Development.
Examples of Northstate’s progress toward growing community capital, renewable energy, zero-waste manufacturing and green building are among us as well. The more we focus on growing these essential building blocks of our local economies, the more we will thrive as a region. And the wiser our forethought as a thriving economic region, the more resilient we will be in times of economic crisis.

Jessica Rios is an independent leadership consultant, co-founder of Think Local, Chico! (www.thinklocalchico.org) and a fan of creeks, sycamores and her Queensland heeler companion Lusa. She writes this Values-Based Business column for us and lives in Chico. Jessica can be reached at loverios@gmail.com.

by Jessica Rios

Logo

For the last two years Catalyst has been planning the construction of their new shelter. This spring their hard work will pay off as building begins.
The shelter will be a 28-bed facility for domestic violence victims to escape to, which will be an upgrade from their current 17-bed emergency shelter.
“When we’re full and someone calls our hotline needing shelter we have to brainstorm with them other places they can go to be safe,” said Molly Heck, the shelter director for Catalyst.
Catalyst is the only domestic violence shelter in Butte County, so more space would reduce the problem of having to find other safe places, such as a hotel or an out-of-town shelter, for victims to go.
“Not only is the space going to be great because it’s more beds, we designed it based on our programs and what we need in a shelter,” Heck said.
The shelter will have a playroom for children, as well as a jungle gym and basketball court for outdoor fun. There will also be a large kitchen for cooking and quiet, peaceful areas outside.
Catalyst moved into its current location in 1985 and the house is fairly old, which can often create problems.
Having a new shelter will give the staff more time to work with the victims, rather than have to worry about plumbing or electricity trouble, Heck said. It also will create a better environment for the families.
“Victims of domestic violence need to go to a place that’s warm and welcoming and feels safe,” she said. “There are a lot of things about our current shelter that don’t feel that way.”
Catalyst has partnered with the city of Chico to help fund the project and has created programs to get the community involved.
The Adopt-a-Room Campaign focuses on local organizations or businesses that want to contribute to the long-term structure of the building, Heck said. They can adopt a room in the house and help paint and furnish the area.
Catalyst also has the Leaf of Legacy program, which allows people to donate to the organization. At the new facility this philanthropy will be honored through a piece of art that will recognize the donors.
Another way for community members to get involved is by volunteering at Catalyst.
The organization has a huge volunteer pool, Heck said. At any given time they have 20 to 50 volunteers.
Besides their shelter program, Catalyst provides a 24-hour hotline where people can call and speak with a crisis intervention counselor.
People don’t always call seeking shelter, she said. They call for other supportive services as well.
Catalyst offers legal advocacy, counseling, programs for children and community education.
“Community education is a big part of what we do,” Heck said. “We’re really committed to making sure we’re out in the community and talking to people about intimate partner violence and how to be healthy in a relationship.”
Catalyst is the only agency in Butte County that focuses specifically on domestic violence.
“We serve 130 to 150 people a year and we get around 5,000 crisis calls a year,” Heck said.
The groundbreaking ceremony for the shelter will be this spring, and the public will be invited to enjoy the festivities. Catalyst plans to move into their new home in early 2010.

For more information on Catalyst visit their website www.catalystdvservices.org or contact them at 530-343-7711.

By Kayla Cook

A Roth individual retirement account (IRA) is a personal savings plan that offers tax benefits to encourage retirement savings. You can contribute up to the less of $5,000 in 2009, or 100 percent of your taxable compensation into a Roth IRA. In addition, individuals age 50 or older can make an extra “catch-up” contribution of up to $1,000 in 2009. Contributions to a Roth IRA are not tax deductible, but the funds grow tax deferred and distributions are tax free under certain conditions.

Prerequisites

• You have taxable compensation (i.e., wages, self-employment income) during the year of the contribution.
• Your modified adjusted gross income (MAGI) for 2009 must be:

nest egg

1. $105,000 or less for a full contribution if your tax filing status is single or head of household (partial contribution allowed, up to a MAGI of $120,000)
2. $166,000 or less for a full contribution if your tax filing status is married filing jointly or qualifying widow(er) (partial contribution allowed, up to a MAGI of $176,000)
3.$10,000 or less for a partial contribution if your tax filing status is married filing separately and you lived with your spouse at any time during the year (full contribution not allowed)

Note: these income ranges are for the 2009 tax year and are indexed for inflation.

Had you considered making contributions to a Roth IRA in hopes of creating tax-free distribution upon retirement, only to discover that as a high-income earner you were not able to make contributions? If so the following is going to be of great interest to you!

There are two methods of funding a Roth IRA; contributions which are generally limited to $5,000 ($6,000 for 50 and older), or you can convert all or a portion of your traditional IRA to a Roth. Currently if you are married filing separately or your adjusted MAGI exceeds $100,000 you are not allowed to convert a traditional IRA to a Roth IRA.

What’s Changing?

In 2006 President Bush signed the Tax Increase Prevention and Reconciliation Act (TIPRA) into law. TIPRA goes into effect in 2010 and repeals the $100,000 income limit for conversion and also allows conversions for taxpayers who are married filing separately.

Why concern yourself with this now?
Even though the new rules don’t take effect until 2010, there are steps you can take now if you want to maximize the amount you can convert at that time. If you aren’t doing so already, you can simply start making the maximum annual contribution to a traditional IRA, and then convert the traditional IRA to a Roth in 2010. And don’t forget that SEP and SIMPLE IRA’s can also be converted to Roth IRAs. You should consider maximizing your contributions to these IRAs now and then converting them into Roth in 2010.

Don’t forget to consider the tax implications

If you have only nondeductible contributions to your traditional IRA, then only the earnings will be subject to tax at the time you convert the IRA to a Roth. But if you have made fully deductable contributions to your traditional IRA, the entire amount will be subject to tax when you convert to a Roth. You should consider the tax implications very carefully and consult your tax advisor prior to conversation.

Dan L Bay is a vice president with Tri Counties Bank and branch manager with Raymond James Financial Services located at 780 Mangrove Ave., Chico.
Dan can be contacted at 530-898-0415 or toll free 1-866-822-4753. Tri Counties Bank Investment services is a department of Tri Counties Bank. Securities are offered exclusively through Raymond James Financial Service, Inc. Member FINRA/SIPC, and independent broker/dealer, and are -NOT A DEPOSIT-NOT GUARANTEED by Tri Counties Bank-subject to risk and may lose value.
The above information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.
Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as financial advisor of RJFS we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

By Dan L. Bay