WASHINGTON, June 27 (Reuters) – A senior Internal Revenue Service official says she’s already concerned about what next year’s tax filing season will look like, because of the mass of expiring provisions and possible tax changes that could occur near the end of this year and into next year.

Piling on an additional tax reform bill next year could lead to “meltdown” that could delay taxpayer refunds, Nina Olson, the IRS’s national taxpayer advocate, told Reuters reporters and editors during a wide ranging interview this week. She also sent a semi-annual report to Congress cataloging the same concerns.

At issue is the uncertain nature of many tax provisions. A so-called “patch” exempting more than 25-million mostly middle-income families from the alternative minimum tax expired at the beginning of this year. So did the deduction for state and local sales taxes and a variety of other provisions. Unless they are extended by August at the latest, the IRS would have trouble getting forms out on time for next filing season, she said.

Of course, it’s not all about the forms – it’s about the money. And there’s a lot of money at stake for most taxpayers over the next year. All of those George W. Bush-era tax rate cuts expire at the end of 2012, as does President Barack Obama’s temporary payroll tax cut and the provision which limits taxes on most dividends to the capital gains rate.

Republican legislators say they want to extend all the Bush-era breaks, and most Democrats say they don’t want to extend breaks for taxpayers earning more than $250,000 (or $500,000 or $1-million, depending on whom you ask) a year. Some politicos are talking about a scenario in which the AMT gets patched this year, but all of the Bush tax cuts are allowed to expire at year’s end. That would allow a new Congress (and a new president?)to come in next year, hand most people a big tax cut, and give Olson a big headache.

But what about your headache? Mid-year is usually a good time to lay tax plans for the rest of the year, but this year is more confusing than most. Here are a few strategies to employ:

- Save more money. Sure, every personal finance article tends to say that. But there are a few reasons why you may need more cash going forward. If, as many people expect, that payroll tax cut expires, your pay up to $110,000 a year will be cut by an additional 2 percentage points as Social Security taxes go back to their normal levels. That’s roughly $1,000 a year that the average wage earner won’t see in 2012.

WASHINGTON, June 20 (Reuters) – Within a week, the U.S. Supreme Court is likely to rule on the landmark 2010 health care law that President Obama – for better or worse – made the centerpiece of his initial time in office.

Conventional wisdom holds that the court will ‘vote’ mostly along party lines w ith a 50-50 chance of invalidating at least th e p art of the program that requires Americans to buy health insurance. But that means the high court is equally likely to uphold the law, much of which has not gone into effect yet.

What’s that to you?

The political consequences may be immediate and severe, but the personal ramifications will be less extreme. Nobody should expect to lose part or all of their coverage overnight, and health costs won’t immediately ratchet up or down in response.

“We’ve gotten assurances that insurers and employers won’t change anything mid-stream, and will hang on for a while,” said Jeff Munn, a benefits consultant with Fidelity Investments, who works with employers.

He suggests that the earliest consumers would see any impact from a decision would be at open-enrollment time, which usually comes in the fall.

But healthcare consumers – covered or not – should be ready for the decision, and for some of the l onger-range i mplications. Here are a few steps you may have to take after the Su premes we igh in.

WASHINGTON, June 13 (Reuters) – The variable annuity market has been sending some very mixed signals lately. Sales are down, several key players have exited the market, yet assets in the insurance products reached an all-time high of $1.61 trillion in the first quarter of the year.

What does that mean? One simple answer is that investors are holding a lot of money in older variable annuities that grew along with the stock market in the beginning of the year. Perhaps the policies are so old the holders may be free of the surrender charges faced by investors who dump annuities within the first few years of holding them.

That means that a lot of people may be wondering whether to stick with the plans they bought or shake things up a bit and trade for something newer. Or they may be getting pressure from an annuity salesperson to do that.

To refresh, variable annuities are a mash-up of life insurance, mutual funds, and tax-deferred retirement plans. A typical deferred variable annuity conveys a death benefit, allows the purchaser to invest in a variety of mutual fund-like sub accounts, get tax deferral on account income until the proceeds are cashed out, and then, via a policy rider, take a guaranteed monthly payment after retirement.

All of those benefits are wrapped up in a package that was typically so fee- and commission-laden that variable annuities became the subject of complaints from consumers and warnings from the securities industry self-regulator, the Financial Industry Regulatory Authority (FINRA). Some experts, like Mattawan, Michigan, fee-only insurance adviser Peter Katt, still claim they are mostly without value to investors.

“In a good world, variable annuities wouldn’t be allowed,” he says. “People don’t understand them.” Katt says that variable annuities are too expensive, carry risks of the underwriting insurer not being stable, and – in a low-tax environment - create a tax burden by subjecting withdrawals to income taxes instead of allowing investors to take capital losses and low-tax capital gains during their investing years.

“The only time they make sense is if you are a very active trader and you want to do market timing in an account that won’t produce short-term taxable gains,” he says.

WASHINGTON (Reuters) – How cheap can investing get? We’re about to find out.

A new brokerage site will allow individual investors to build big research-driven stock portfolios for pennies. And a new investment advice site is providing tailored portfolio guidance for free.

While Motif Investing (which sells complete portfolios of 20 or 30 stocks for $9.50) and FutureAdvisor (which aggregates retirement account and investment portfolio information and tells users what securities to buy and sell) both portray themselves as “disruptive” to the traditional money management business, they are part of a trend that began several years ago.

“This is the direction the industry is going,” says John Ritter, a Cincinnati financial adviser and money manager. “Investment management is becoming commoditized.”

That trend has been built on two key technology developments: Internet access and algorithms that can drive automated investing advice and portfolio construction. The start of that movement may date to 1975, the year Charles Schwab launched his discount brokerage. Before then, stock commissions could reach hundreds of dollars and the typical mutual fund sold with an 8.5 percent up-front sales charge that went into the brokers’ pockets.

Now, online brokers routinely charge less than $10 to do a stock trade, exchange traded funds offer large portfolios with annual expenses as low as 0.05 percent a year, and the act of trading is increasingly separated from the act of giving advice.

Motif opened its doors to the public on Monday, June 4, and FutureAdvisor launched in March, but the two join a solid list of competitors. For example:

WASHINGTON (Reuters) – Over the next few weeks some 42,000 white-collar General Motors retirees will take a crash course in actuarial math.

The company is ending their pension plan, forcing a decision on whether to take a lump sum or accept a private group annuity from Prudential that would replace GM’s monthly pension benefits dollar for dollar.

With that, they are facing the same question that retirees and near-retirees encounter every day: Do I want an annuity?

There are a few special wrinkles to the GM plan, and talk that other companies could follow this precedent; the market for pension transfers from employers to insurance companies could increase in the next few years.

Worker advocates don’t like it.

“We would not want to see this become a routine practice,” said Nancy Hwa of the Pension Rights Center, a Washington advocacy group. “The retirement security of GM retirees will suffer.”

On the other hand, those retirees now get a second chance to decide how they want to take their retirement benefits. Here are some questions they – and anyone weighing a lump sum buyout or a private annuity – should ask:

WASHINGTON, May 30 (Reuters) – Amid all the gloom and doom about forced retirement, skyrocketing healthcare costs and nest egg-cracking financial markets, there’s another threat facing baby boomers: future tax liabilities.

The generation that has depended solely on 401(k)s and tax-deferred individual retirement accounts may not realize how much of a tax hit it will take when it starts withdrawing the money and living on it.

With the prospect of rising tax rates after the Bush tax cuts expire, some retirees could find themselves paying even more in taxes than they did when they were working. “It continues to surprise our clients that taxes are that big of an expense in retirement,” says Mark Davis of SunTrust Investment Services, Inc.

He estimates that clients who optimize retirement withdrawals to minimize their taxes can end up with as much as 33 percent more to spend in retirement years than they would if they ignored the impact of taxes.

How to do that? Here are a few options.

– Build a tax-diversified portfolio going in. If all your savings are locked away in a 401(k) or tax-deferred IRA, you will end up paying income taxes on all your withdrawals. It’s better to have other accounts to pull money out of.

To really optimize your post-retirement withdrawals to minimize taxes, it would be good to have a tax-deferred account, a tax-free account (such as a Roth IRA or a healthcare savings account) and a regular taxable investment account. You can use the taxable account to take capital losses as they occur, and to keep income taxed at lower capital gains and dividend rates.

WASHINGTON, May 23 (Reuters) – If you work with an investment adviser, there’s a decent chance that sometime during the last year, you’ve had a conversation about alternative investments.

There’s also a decent chance you emerged from that conversation without understanding exactly what your adviser was talking about. Don’t feel bad – there’s a lot of jargon surrounding what Robert Maloney, a Holderness, New Hampshire, financial adviser, calls “the flavor of the day.”

Strictly speaking, an alternative investment can mean anything that isn’t a plain vanilla stock or bond, but now it represents a trendy grab-bag category that can include everything from gold or currency to mutual funds that employ hedges, leverage, options, short-selling, derivatives and more.

This entire category is being heavily promoted to financial advisers, who are in turn pitching it to their clients, as a way of limiting portfolio risk — and justifying the adviser’s fees.

“Alternative investing today is a dominant theme at all the conferences I go to,” said David Wright, a managing director at Sierra Investment Management, in Santa Monica, a firm that advocates and employs alternative strategies. “A whole lot of it is market hype.”

Money has been flowing into these funds, even as it flows out of traditional stock funds. In 2008, alternative funds held $78 billion in assets; that number almost tripled in three years to $218,700 in 2011, according to Cerulli Associates, a research firm that sees the market continuing to expand.

A majority of advisers — 66 percent of a mix of commissioned brokers and fee-only advisers — are inclined to employ alternative investment strategies, even for middle market clients, according to a study released earlier this month by Natixis Global Asset Management.

WASHINGTON (Reuters) – The Securities and Exchange Commission is taking its own sweet time coming up with a rule that would make all investment advisers put their clients’ interest first.

Almost a year and a half after saying it was going to pursue this so-called “fiduciary standard,” the agency seems stuck. That’s because it is trying to contort the standard in such a way that brokers who are paid commissions to sell products could fit under that definition.

For many individual investors seeking guidance, that defies logic. How can an adviser put my needs first, if he is paid to sell only one shelf-full of products? And paid more to sell some than others?

It’s no wonder that the financial services industry remains among the least trusted the United States, according to an annual survey by public relations firm Edelman. Fewer than half of consumers said they trusted financial services firms, and more than half of them said they think financial companies need more government regulation.

In the meantime, the financial advice industry is moving on without the SEC. Traditional brokers are leaving the field and instead becoming independent registered investment advisers who must adhere to a traditional fiduciary standard.

“The wirehouses (big brokerage companies)are losing their grip on high net worth investors,” Tom Nally, a senior executive at TD Ameritrade, recently told a meeting of independent advisers. TD Ameritrade is a brokerage company that holds assets and does trades for clients of many independent advisers.

Nally told members of the National Association of Personal Financial Advisers, or NAPFA, meeting in Chicago that his firm has seen an 11 percent increase in the number of ‘breakaway brokers’ since last year.

WASHINGTON (Reuters) – It wasn’t that long ago that high school seniors and their parents met astronomical college loans with a shrug and a signature: Whatever it took to send junior to his “first choice” school was a small price to pay.

Now, opinion seems to have moved 180 degrees in the opposite direction. With total student loan indebtedness topping $1 trillion and outpacing total credit card or auto loan debt, many are talking about the “bubble” in college financing. Any loan is a bad loan and students who take them out will soon be trapped in interest-impoverished lifestyles, goes the new argument.

Neither view is completely correct.

Borrowing crazy amounts of cash at high interest rates to fund a low-earning career may be questionable. But borrowing a reasonable amount to get a college degree – still an appreciating asset and a great investment – is a much better use of credit than many things you can borrow money to buy.

There are good and bad ways to borrow money for college. Of course, one family’s ‘crazy’ is another’s ‘reasonable.’

Opinions about student borrowing vary wildly. These are mine.

GOOD LOANS – FEDERAL STAFFORD

WASHINGTON, May 9 (Reuters) – It wasn’t that long ago that high school seniors and their parents met astronomical college loans with a shrug and a signature: Whatever it took to send junior to his “first choice” school was a small price to pay.

Now, opinion seems to have moved 180 degrees in the opposite direction. With total student loan indebtedness topping $1 trillion and outpacing total credit card or auto loan debt, many are talking about the “bubble” in college financing. Any loan is a bad loan and students who take them out will soon be trapped in interest-impoverished lifestyles, goes the new argument.

Neither view is completely correct.

Borrowing crazy amounts of cash at high interest rates to fund a low-earning career may be questionable. But borrowing a reasonable amount to get a college degree – still an appreciating asset and a great investment – is a much better use of credit than many things you can borrow money to buy.

There are good and bad ways to borrow money for college. Of course, one family’s ‘crazy’ is another’s ‘reasonable.’

Opinions about student borrowing vary wildly. These are mine.

GOOD LOANS – FEDERAL STAFFORD