Wealth Management
Think Advisor has put out a piece outlining pending changes to IRAs that are making their way through the legislative process. Importantly, some of these have bipartisan support and seem likely to make it into law. The biggest changes in the cards have to do with Roth IRA conversions. A lot has been made in the press about the mega rich doing massive IRA to Roth IRA conversions and thus congress is set to take action. Conversion between the two would be banned for those with incomes over $400,000.
FINSUM: Advisors should start helping clients plan for this change. However, there is a massive caveat here: the current congressional plan calls for this loophole to close, but only starting ten years from now!
Crypto went on a wild ride this year as regulators from the globe sent the price in terms of dollars on a rollercoaster. However, some individuals might need to minimize their tax burden and crypto could provide some outs. If not all of your coins took off or better yet if you jumped in on Doge coin at the wrong time now is the time to sell off some coin and realize the gain for some optimal tax loss harvesting. Investors can also take advantage of the fact that wash rules don’t apply to Crypto until 2023, which means you can buy and sell your coins within a 30 day period to help minimize your tax contribution. Finally, investors can utilize a donation of cryptos above their fair market value to write off a charitable donation from your final tax bill.
FINSUM: Cryptos up and down roller coaster ride gives investors holding it an advantage in tax loss harvesting, and particularly when it comes to capitalizing on the Wash rules applicability.
Inflation is a concern for retirees, but they should be more concerned than ever becauseSocial Security is tracking the wrong index. Currently Social Security bases its cost of living adjustments on the consumer price index for Urban Wage Earners and Clerical Workers (CPI-W). However, the CPI-W doesn’t fully account for the costs of healthcare and housing that burden retirees more than other groups. Instead social security should track the Consumer Price Index for Elderly (CPI-E) because this is the demographic they are targeting. Research shows that the average social security account since 1983 is in a 0.2% compounded deficit. The rate of inflation for healthcare is slowing which could end up benefiting retirees moving forward but that's just a prediction.
FINSUM: Social security won’t be keeping up with your healthcare costs and investors should augment their portfolios to compensate.
More...
Given their widespread popularity lawmakers have scrambled to put together a series of changes to a popular retirement product in the last year and it looks like more are coming. There appears to be bi-partisan support for the additions building on the 2019 Secure act which tried to increase retirement security. The House and Senate bills both include changes that would remove the maximum amount on the Qualified Longevity Annuity Contract. Previously it was capped at the minimum of $135,000 or 25% of your retirement accounts. The Senate provision also bumps the minimum up to $200,000. The new provisions also include auto enrollment in 401(k) plans and a student loan exchange in existing 401(k) plans. The final piece to the provisions is an increase in catch-up contributions for existing 401(k) plans that could further bolster retirement savings.
FINSUM: One of the underappreciated aspects of the Biden administration is the expansion of savings vehicles for retirees across many income earners.
The cloud has been the latest computing craze financial firms have been chasing but it was mobile control that just got the latest expansion in portfolio management software. Enfusion Inc. is a leading provider of cloud based financial software and they are pushing through several new alterations to their mobile platforms. Mobile users will have personalized reports and real-time access to their market exposures. Additionally, they will have a variety of compliance management features including monitoring and overriding exceptions. Finally, a variety of managed services like secure document sharing and profit and loss statements optimized for mobile platforms will be available.
FINSUM: Companies with an advantage in cloud computing will make the quickest transition to mobile products because of the large data they can provide at the snap of their fingers.
The Security and Exchange Commission just issued a slew of new regulatory changes that would impact current trading standards. New changes could come into vote if they have majority support among the five commissioners and two others. Chairman Gensler stated he wants the public and markets to have fair material information. Essentially there is no public disclosure form when a plan to schedule share purchases takes place which can ultimately give insiders an advantage on the trading block. The research in academia has confirmed these trades are more beneficial in the ability to avoid losses inside a 60-day window.
FINSUM: These changes could lead to substantially less stock buyback plans in the coming years as insiders could face more symmetric returns.