Tony & Susan Mascioli welcomed a new member to their family, Jared Christian Mascioli. He was born on May 17, 2001, with a lot of dark brown hair, at 7 lbs 4 oz.

Kathrin Gschwend has officially received her designation as Certified Divorce Planner (CDP).

LWA graduated six employees in May and June. Kendra J. Pawlik graduated from NYU Stern with a Bachelor’s degree in Finance & Marketing. Zuzana Harvisova received a Bachelor’s degree in Management Science & Information Systems from Rutgers University. Jaime Szewczuk received her Bachelor’s degree in Business Administration from the College of St. Elizabeth. Kevin McCormick, Charlie Pawlik and Roman Kardashinetz all received high school diplomas. Kevin will be attending Stevens Institute of Technology, while Charlie and Roman will be studying at Penn State this fall.

Suzanne C. Low of our Naples, FL office, was elected President-Elect of the Financial Planning Association of Southwest Florida.

Diahann’s last CNBC appearance on 7/3 covered early retirement and 401(k) choices. She is scheduled to appear on CNBC’s Power Lunch at 12:50 in the afternoon on: 7/30, 8/14 & 8/29.

We are going to leave investment volatility as a topic for this month’s newsletters to provide a few highlights on current tax changes.

By Alan P. Lo, CPA, CFP^®

As you are aware, Congress recently passed, and President Bush signed into law, the largest tax cut legislation since 1981. Here, we will discuss a few of the provisions that have short-term impact and some opportunities that they may provide.

What’s new? The new law makes extensive changes in this area. For the first time in many years, contribution limits for IRA’s (both traditional and Roth) will rise, from the current $2,000 to $5,000 in 2008, with subsequent annual inflation adjustments. Moreover, a new "catch-up" provision allows taxpayers age 50 and over to contribute an additional $500 per year from 2002-2005, $1,000 thereafter.

Similarly, allowable contributions to other qualified retirement plans will gradually increase. For plans such as the 401(k), 403(b) and 457, maximum allowed contribution will rise from the current $10,500 to $11,000 in 2002 and $15,000 in 2006, indexed thereafter. For taxpayers 50 or older, "catch-up" contributions will be allowed, from $1,000 in 2002 to $5,000 in 2008 and thereafter.

What can this do for me? For taxpayers who qualify, there are good opportunities to increase or maximize their contributions to IRA’s and retirement plans, providing more funds for the future as well as current tax savings. For those who had not taken advantage of (maximum) contribution opportunities in the past, this also offers a chance to catch up. This may be particularly useful for taxpayers (often women) who return to work after staying away for a period of time (to raise their children, take care of their parents, etc).

The increased portability among qualified plans creates greater flexibility: beginning in 2002, after-tax employee contributions could be rolled over to other plans and IRA’s; contributory IRA amounts could be rolled over to a 401(k), 403(b) or 457(b) plan. This will enable plan participants to have greater control over where they want their retirement funds invested, for example, rolling over assets from plans with poor investment performance.

What’s new? Education is a winner in this new tax bill, with increased limits, new deductions and other goodies.

Education IRA: Starting in 2002, distributions are free from Federal taxation if used to pay for qualified education expenses which, for the first time, besides higher education costs, also cover elementary and secondary school tuition – as well as the costs of tutoring, computer equipment, room and board, uniforms and extended day program costs. In 2002, the contribution limit is increased from the current $500 to $2,000. It will also be available to more people – phase-out range for joint filers increases from the current $150,000-$160,000 to $190,000-$220,000 of modified adjusted gross income. In addition, contributions can be made by entities beside individuals (such as corporations and tax exempt organizations). During the same tax year, qualified taxpayers can contribute to both a qualified State tuition program and an education IRA on behalf of the same beneficiary. One additional benefit is that contributions can be made up to the more reasonable date of April 15 of the following year instead of December 31 of the current year.

Qualified Tuition Plans: The new law expands the scope of "Qualified Tuition Program" to allow sponsorship by educational institutions (including private colleges) that satisfy the requirements under section 529, in addition to the current state-sponsored programs. Beginning in 2002, distributions from state qualified tuition programs will be excludable from gross income (instead of being taxed at the student’s rate), 2004 for non-state programs. The fact that there is no limit to who can establish and contribute to savings plans, and that they are not subject to phase-outs due to income, makes these both available and attractive for higher income taxpayers.

By Gigi Collins, CFA

This quarter we want to spotlight a fund that has a unique role in a portfolio – the Cohen & Steers Realty Shares. The Fund invests in equity securities of real estate companies or better known as Real Estate Investment Trusts (REITs).

What exactly is a REIT? A REIT is essentially a corporation or business trust that combines the capital of many investors to acquire or provide financing for all forms of real estate. A REIT serves much like a mutual fund for real estate in that retail investors obtain the benefit of a diversified portfolio under professional management. Its shares are freely traded. Because of this, a REIT combines the best features of real estate and stocks. It gives an investor a practical and efficient means to include professionally managed real estate in an investment portfolio. There are over 300 REITs today, and more that 70% of them are traded on one of the stock exchanges. You can invest in a REIT directly, or for diversification you can invest in a mutual fund that in turn invests in REITs, like the Cohen & Steers Realty Shares.

The Cohen & Steers Realty Shares is on our recommended list because of its focus on total return – both current income and capital appreciation – and its excellent long-term performance. It is managed by Marty Cohen and Bob Steers – their firm, Cohen & Steers is a leading firm dedicated to managing real estate securities portfolios. For the past three years their portfolio has emphasized large cap real estate stocks that have served them well. However, smaller stocks have done better recently. But Cohen & Steers do not change their strategy with the wind and they feel that the large cap stocks will be able to weather a tougher economic environment for now. What we like about this fund is the expertise of the managers and the solid long-term track record.