This is an unusual year-end tax planning season. The pace of federal tax law reform has increased in the four decades and accelerated since the pandemic.
It’s only mid-September, but please begin to think about year-end tax planning. This is an unusual year for tax planning. Not only has the stock market been volatile but new rules about distributions from IRAs and federally qualified retirement plans (QRPs) – such as 401(k), 403(b) and defined benefit plans –became effective this year, and the newly-enacted Inflation Reduction Act also adds some planning opportunities.
In case you missed it, sweeping new rules on distributions from IRA And Qualified Retirement Plans (QRPs) went into effect at the beginning of 2022.
This is a heads up for anyone deciding on how to designate beneficiaries of an IRA based on advice from an IRA custodian call-center employee.
The unusual financial economic events of the last couple of years have caused great financial disappointment for some Americans.
The extreme financial effects of the COVID-19 pandemic seemed unprecedented to most investors. Over the past two years, Americans witnessed a sudden stop financial crisis in March 2020, the injection of nearly $10 trillion of monetary and fiscal stimulus within a matter of months, and an unanticipated burst of inflation that caught even the Federal Reserve off guard. The truth, however, is that these events seem anomalous only because many historical parallels have disappeared from our collective memory. In fact, there are no living Americans who recall the two most relevant events — the onset of World War I in July 1914 and the post-World War I/Great Influenza inflation of 1919-1920.
Inflation cooled in June, according to Labor Department data. Compared to the +9.1% inflation rate in the 12 months through June 30, the consumer price index (CPI) in the 12 months through July 31 increased by +8.5%. The Standard Poor's 500 rallied +2.1%.
In the three tumultuous months of the second quarter, the Federal Reserve of Atlanta’s algorithm for estimating quarterly economic growth was far more accurate than consensus forecasts by leading economists. That’s unusual.
Volatility in the stock market has increased. Recently we actually hit some down days of -3.6% and -4% in the stock market. That shakes people up. But remember why you bought stocks.
By our count, the bear market of 2022 is the latest of more than 20 market crises that came and went since 1957.
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Estate Planning For The 99.5% Of Americans
Published Thursday, July 14, 2022 at: 8:16 AM EDT
In 2017, the Tax Cuts & Jobs Act of 2018 (TCJA) effectively repealed estate tax by doubling the amount of wealth that could be transferred tax exempt from $5.5 to $11.2 million.
In 2022, lifetime and post-mortem gifts of $12.06 million are exempt from taxation. Allowing joint filers (read: couples) to pass $25 million to their heirs tax-free redefined the rules of estate planning not only for the top one-half of 1% of taxpayers, it also rewrote the rules for how the other 99.5% pass their assets to their spouse, children, grandchildren, charities, and create a lasting legacy.
Beneficiary forms and titling of your assets are crucial estate planning decisions for 99.5% of Americans who do not have taxable estates. This is a financial planning issue not reported on in the major financial media outlets because it’s not breaking news. However, it is strategic planning for a legacy, that could keep your spirit and values alive for generations to come.
How you title securities accounts held in IRAs, 401(k) and other federally qualified retirement accounts as well as real estate and other assets, is estate planning for 99.5% of Americans. Estate planning was once only for the richest Americans. Now, even if you’re not among the top one-half of 1% of American taxpayers, creating a legacy by designating who will inherit your qualified retirement accounts can change the future for your children, grandchildren, and support charitable causes you care about.
Because of changes in state property laws and the increase in the estate and gift tax exemption, creating a legacy – once the province of legal professionals only -- is a topic to talk with us about.
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