Dear Friends and Family,

Spring arrives March 20th, and personally, I cannot wait for a little sunshine, flowers, renewal, and rejuvenation in so many ways. The news has been dominated by the stimulus package and the administration’s plans to rework the mortgage crisis. What’s in it for me? Here are some bullet points that have been announced since the last cover letter. Let’s take a closer look at the $787 billion American Recovery and Reinvestment Act:

• First-time home buyers – First-time home buyers are eligible for an $8,000 tax credit, and this one does not have to be repaid unless you sell your home within 3 years.
• New car buyers – Purchasers of new cars and trucks will be allowed to deduct sales or excise taxes. This is an above-the-line deduction, so you don’t have to itemize to claim it.
• Parents of college-bound students – The bill contains a more generous tax credit for higher education than the existing Hope College Credit. Parents will be allowed to claim a tax credit of up to $2,500 a year to cover higher education expenses.
• Unemployed workers – The stimulus package excludes the first $2,400 in unemployment benefits from taxes in 2009. It could also make it easier for some unemployed Americans to continue their former employer’s health insurance coverage. It allows laid-off employees to continue their former employer’s coverage for up to 18 months, and the bill will subsidize 65% of COBRA premiums for up to nine months. The subsidy is limited to workers who were laid off between September 1, 2008, and the end of this year.

The Obama Administration also announced a $75 billion plan aimed at shoring up the flagging housing market. The plan involves:

• Refinancing help – Homeowners who took out loans owned or guaranteed by Fannie Mae or Freddie Mac will be able to refinance through those institutions.
• Housing stability – The plan earmarks $75 billion to help homeowners stay in their properties. To reduce monthly payments, lenders would be responsible for lowering interest rates so the borrower’s monthly payment is no more than 38% of income.
• Incentives – As an incentive, companies that service home loans will receive $1,000 for each eligible modification they make.
• Money to avoid defaults – The plan includes an incentive of $500 to lenders and $1,500 to homeowners if loans are modified before mortgage holders fall behind.

We would like to remind our friends and family that if you have not contributed to your Traditional IRA or to your Roth IRA for 2008, you have until April 15th, 2009, to do so. We also suggest, as always, making your current year 2009 contributions as early in the year as possible. If you have any questions regarding whether or not you have contributed, please call any of us—we are here to help.

We would also like to remind you that we stopped mailing fee letters at the end of 2007. The information is duplicated on the Fidelity statements each month. Your total 2008 fees are listed on your 2008 Year-End statements, titled “Transaction costs, loads and fees.” If you did not receive your Year-End statement or need another copy, please call Vicki at 425-657-2208 or email vicki@katzfamilyfinancial.com for another one.

Sincerely,

Katz Family Financial