Paying for the Infrastructure Bill

Paying for the Infrastructure Bill

President Joe Biden introduced the much-anticipated American Jobs Plan, which outlines an approach to spend roughly $2.2 trillion on the nation’s infrastructure and other projects.

As part of the legislative process, the Biden administration also laid out a proposal for paying for the domestic investment. The plan includes raising the corporate tax rate to 28% from 21%, cracking down on companies that use overseas operations to manage profits, and eliminating tax breaks for some industries.1

Right now, the proposal does not include any new taxes on individuals. It’s only targeting corporations expecting that the 8-year plan would pay for itself in 15 years.2

But some believe that in the coming weeks, the Biden administration intends to put forward additional tax initiatives that target high-earning Americans.

One proposal that may get introduced would raise taxes on families who earn more than $400,000 a year. There also has been discussion about a higher capital gains tax rate for individuals earning at least $1 million a year and adjustments to the estate tax exemption.3

At this point, it’s uncertain what—if any—tax changes for individuals will be taken up by Congress. The initiatives that will take priority may become more clear in the weeks ahead.

Challenge yourself to be patient during this period of debate over tax proposals. If they introduce changes, a sound analysis should drive portfolio decisions, not knee-jerk reactions to current events. Remember, this letter is for informational purposes only. It is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your tax strategy.

If you are concerned about one or more of these proposals, please give us a call. We’d welcome the chance to hear your perspective, and hopefully, we can provide some guidance.

1. CNBC.com, March 31, 2021
2. USAToday.com, March 31, 2021
3. Bloomberg.com, March 14, 2021
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

A Bucket Plan to Go with Your Bucket List

A Bucket Plan to Go with Your Bucket List

John and Mary are nearing retirement and they have a lot of items on their bucket list. Longer life expectancies mean John and Mary may need to prepare for two or even three decades of retirement. How should they position their money?1

One approach is to segment your expenses into three buckets:

  • Basic Living Expenses— Food, Rent, Utilities, etc.
  • Discretionary Spending — Vacations, Dining Out, etc.
  • Legacy Assets — for heirs and charities

Next, pair appropriate investments to each bucket. For instance, Social Security might be assigned to the Basic Living Expenses bucket.2

For the discretionary spending bucket, you might consider investments that pay a steady dividend and that also offer the potential for growth.3

Finally, list the Legacy assets that you expect to pass on to your heirs and charities.

A bucket plan can help you be better prepared for a comfortable retirement.

Call today and we can develop a strategy that may help you put enough money in your buckets to complete all the items on your bucket list.

  1. John and Mary are a hypothetical couple used for illustrative purposes only. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.
  2. Social Security benefits may play a more limited role in the future and some financial professional recommend creating a retirement income strategy that excludes Social Security payments.
  3. A company’s board of directors can stop, decrease or increase the dividend payout at any time. Investments offering a higher dividend may involve a higher degree of risk. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.

Your Must Know Guide to Current & Future Tax Changes

Your Must-Know Guide to Current & Future Tax Changes

AQuest Webinar 2/11/21

Dr. Jason Van Duyn discusses the current and future changes for your 2021 Taxes as well as a review of the proposed tax changes by the Biden Administration and how they may affect your portfolio. Understand the newest changes to the tax code, CARES Act, etc. Review the Biden Tax Proposals and how you might make them work for you

Volatility can test your mettle

Volatility Can Test Your Mettle

Most people understand that stock prices don’t go straight up. But when
market volatility increases, the price action can test the mettle of even the
most seasoned investor.

In recent weeks, stock prices have trended lower with a few eye-popping,
one-day rallies as the financial markets appear to adjust to higher interest
rates on long-term Treasuries. Since the beginning of the year, we’ve seen
a jump in the yield of the 10-year treasury.1

While investors recognize that economic strength may lead to higher bond
yields, it’s the speed at which bond yields increased that proven unsetting.
Generally speaking, when yields rise, bond prices tend to fall.

It’s uncertain what’s next for stock prices, but it’s possible the current
downtrend could take certain market indexes into a correction, meaning a
decline of 10% or greater from a recent high. The Nasdaq market has
flirted with correction territory as the rising bond yields have upended
some high valuation growth stocks.2

But by comparison, the Standard & Poor’s 500 index has seen a modest
pullback from its closing high set on February 11, 2021. The Dow Jones
Industrial Average set an intraday record high in recent trading.2
What matters is what you do next. Right now, it may be best to ignore
some of the short-term price swings. Remember, you craft your
investment strategy to help pursue your long-term goals, regardless of
what the markets do from day-to-day.

You’re always welcome to give me a call with your questions. Rest
assured, we’re keeping a close eye on the financial markets, and most
importantly, watching for any new long-term trends that may emerge on
your behalf.

1. CNBC.com, March 8, 2021
2. CNBC.com, March 5, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The market value of a bond will fluctuate with changes in interest rates. As rates rise, the value of existing bonds typically falls. If an investor sells a bond before maturity, it may be worth more or less than the initial purchase price. By holding a bond to maturity, an investor will receive the interest payments due plus your original principal, barring default by the issuer. Investments seeking to achieve higher yields also involve a higher degree of risk. The Dow Jones Industrial Average is an unmanaged index generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market. The Nasdaq Composite Index is an unmanaged index that is considered representative of small-capitalization companies. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

 

Planning for College

Planning for College

The cost of college continues to escalate. If you have children or teens, develop a savings plan to help support their education. For most Americans, college is expensive (so much so that for those with young children, imagining the day when they enter college and reach out to you for their quarterly tuition check is terrifying, to say the least). Have you begun saving for the big day?

There are a number of savings options to address your children’s or grandchildren’s college costs. They vary in terms of contribution limits, tax benefits, and even college choice. Understanding what’s available may help lessen the anxiety — and financial sting — for when the school bell rings.

Roth IRA

Roth IRAs (Individual Retirement Account) feature enhanced flexibility that allow you to make after-tax contributions and even tax-free withdrawals. Interest that accrues is tax deferred, and you can make taxfree withdrawals from your earnings if you comply with the rules. Consult your financial professional to determine current law and its impact on the benefits of Roth IRAs.

Early withdrawals that you use to pay for qualified education expenses avoid penalties that would otherwise be assessed for non-educational purposes. You are limited to $6,000 per year in contributions — or $7,000 if you’re 50 years of age or older — though high-income earners have other restrictions that limit their contributions.

Finally, a Roth IRA value isn’t included on the Free Application for Federal Student Aid (FAFSA)®, though any withdrawals you make are counted as base year income.

U.S. Savings Bonds

You can purchase up to $10,000 per year (per-owner, per-bond type) in qualified U.S. savings bonds, redeeming them tax-free (of federal taxes) when you apply them to college expenses. The bonds earn modest interest, though an interest exclusion is phased out for those in the higher-income bond category.

529 Plan

A 529 plan provides generous benefits, allowing couples to contribute up to $30,000 a year without triggering the gift tax (you can even increase this amount if you take the money from your lifetime gift tax exemption). Money that you put into a 529 plan earns tax-deferred interest, while withdrawals you make for qualified college expenses are tax-free and exempt from reporting on the FAFSA.

Contributions to 529 plans can be made regardless of your income, and 529 plans are available to pay for college in all 50 U.S. States. Before investing in a plan, consult your financial professional to determine whether your state offers state tax benefits.
NOTE: Non-educational withdrawals from a 529 Plan are subject to taxes and penalties.

UGMA and UTMA Accounts

You can also make contributions pursuant to the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA), adding up to $15,000 ($30,000 for couples) in a child’s name free of the gift tax. If you use some of your lifetime gift tax exemption, you can contribute even more.

Keep in mind, any interest, dividends, or capital gains income in excess of $2,100 may be subject to a tax. However, if this is the child’s only income and it is less than $10,500, you can report the income on your own tax return.

 

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Tax treatment at the state level may vary. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

The Importance of Your Credit Score

The Importance of Your Credit Score

Understanding the value of your credit score is an important first step to improving your financial health.

Anyone who has ever applied for a loan to purchase a car or house has encountered their credit score. This elusive figure can be perplexing, a three-digit assessment of your credit worthiness that has the potential to impact your financial health. We offer insights into understanding your credit score and taking steps to improve it.

What’s In a Number?

Your credit score most commonly used by lenders is FICO, a three-digit number from 300 to 850. It fluctuates continually, reflecting the interest rate of your credit cards, outstanding loans, and even a lack of credit.

Aim for at least a score of 700, a good figure by many lending standards. You can request a copy of your credit report (there is a small fee) from the three major credit reporting companies, Experian, Equifax, and TransUnion.

Credit Worthiness

Check your credit report periodically, making sure that there are no errors, while using it as a tool to make sure that you’re paying your bills on time and staying within your established credit limits. Such actions have the potential to increase your credit score. You can request free copies of your Experian, Equifax, and TransUnion credit reports from AnnualCreditReport.com.

If you spot any errors, report the discrepancies to the appropriate credit bureaus (the report may differ among the three). They are required to take reasonable steps to correct any errors.

Establishing Credit

If you are a first-time credit seeker — applying for a credit card or loan, for instance — you may have to establish your credit score, which you can do in several ways, including by getting a secured credit card or becoming an authorized user of someone else’s card.

Improve Your Score

Not satisfied with your credit score and want to increase it? There are a number of steps you can take, like paying your bills on time, decreasing the amount of debt you carry, and staying within your established credit limits.

By taking control of your credit score, you are taking prudent steps to improve your overall financial health.

 

Save the Dates: America Saves Week is February 22-26, 2021

Save the Dates: America Saves Week is February 22-26, 2021
Holiday raises awareness of the importance of establishing responsible saving behaviors.

Underscoring the importance of saving successfully to achieve financial stability, the non-profit America Saves, an initiative of the Consumer Federation of America (CFA), is holding its 15th annual America Saves Week (ASW) event, February 22-26, 2021.

Comprised of more than 270 consumer education, advocacy, and cooperative members, the CFA is dedicated to educating consumers. ASW is the organization’s annual high-profile event, where they recommend that consumers perform a careful assessment of their finances and saving behaviors. “The America Saves pledge is the framework that allows savers to set a goal,” America Saves writes on its website, “and make a plan to achieve better financial stability.”

“Americans are in the midst of a savings crisis with more than 50% of us living paycheck to paycheck,” said George Barany, Director of America Saves, in a lead up to last year’s event. “Having some emergency savings can make a significant difference in one’s quality of life. Unfortunately, many people are not told about the most effective way to save, and that’s making saving automatic.”

Organizations can support ASW by becoming a participating organization, cross-marketing ASW to spread awareness of the event. “Once you’re a participating organization, it’s time to plan how your organization will show up for the week,” America Saves says. “The America Saves Week Digital Toolkit will provide done-for-you social media graphics, resources and tools, sample emails, press releases, and more. Many participating organizations choose to create their own aligned content for the week, host events (both virtually and on location), and more.”

Last year, dozens of organizations made public commitments to the event, including: BlackRock, USAA,
Zeiders Enterprises, JP Morgan & Chase, FDIC, National Disability Institute (NDI), Navy Federal Credit Union, National Association of Federally Insured Credit Unions (NAFCU), Funding our Future, Association for Financial Counseling and Planning Education (AFCPE), and National Foundation for Credit Counseling (NFCC).
This year’s ASW event is organized around the following daily themes:

  • Save Automatically (February 22): A day to encourage Americans to save automatically through direct deposit of a portion of their income into a savings account.
  • Save for the Unexpected (February 23): Emphasizes the importance of creating an emergency fund to support unexpected expenses, like a car repair or medical bill.
  • Save to Retire (February 24): Addresses the importance of establishing a retirement fund that has the potential to help you support your lifestyle expectations when you retire.