I know it’s one of the busiest times of the year and we have discussed year-end planning in prior conversations, but let’s concentrate on taxes before the new year begins.
Many questions about the new administration have come my way, including questions about new tax proposals. Joe Biden’s proposed plan looks aggressive, but it may not get out of the starting gate if the Republicans continue to hold the Senate. As you may know, two early January runoff elections in Georgia will determine the fate of the upper chamber. However, there is bipartisan support for what might be called The SECURE ACT 2.0. Recall that The SECURE Act, which passed Congress a year ago, updated rules and regulations governing retirement accounts.
There are plenty of tweaks that we might see. For example, might RMDs for IRAs rise to 75? Could we see bigger catch-up provisions? Or greater flexibility for individuals 60 and older who are attempting to save for retirement? Maybe, but let’s not jump too far into hypotheticals. Any possible changes are in the planning stage and Congress is more likely to focus on Covid relief early next year. Besides, comprehensive bills take time to wind through Congress. Instead, let’s focus on tying up loose ends as the year comes to a close.
Before we jump into year-end planning, I want to stress to you that it’s my job to partner with you. I can’t overemphasize this, and I would be happy to review your options. As with any tax matters, we like to coordinate with your tax advisor.
9 Tax Facts and Tips to Save You Money
The points above are simply a summary. You may see provisions that will benefit you. You may also see potential pitfalls. If you have any questions or concerns, let’s have a conversation.
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Investment and Financial Planning
Please feel free to reach out if you have any questions and check in with your tax advisor to see if you meet eligibility thresholds.
November was a standout month for stocks, as illustrated by Table 2. The major U.S. stock market indexes recorded new highs, including the smaller-company Russell 2000 Index, which had a stellar month. In particular, the better-known Dow Jones Industrial Average eclipsed 30,000 for the first time ever. It has been an impressive rally from March’s low when unemployment soared, and the economy was contracting at its fastest rate in history due to lockdown measures
Refer to Table 2 at the end.
Catalysts During November
A bitter election is over and we have a new President. Whether you are jubilant, bitterly disappointed, or somewhere in between, a big unknown has been erased. Talk of civil strife pre-election didn’t materialize and we have a degree of certainty where uncertainty once existed. The election removed a hurdle for investors, and investors seem excited about the prospect of having a divided government.
In addition, the announcement of at least two vaccines for Covid-19 received a very warm welcome from investors and the public. So far, the economic recovery has been far more robust than nearly every economist has anticipated.
With new vaccines, beaten-down sectors such as leisure, hospitality, travel, and the broad-based service sector have a fighting chance to recover next year. But success is dependent on approval of the vaccines, and acceptance and a quick rollout to the public. Though we may see more volatility, the straightest line to your financial goals hasn’t changed. The financial plan is still your roadmap forward.
I hope you’ve found this review to be educational and helpful. Once again, before making any decisions that may impact your taxes, please consult with us or your tax advisor. Let me once again emphasize that it is our job to assist you. If you have any questions or would like to discuss any matters, please feel free to give me or any of my team members a call.
As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor.
Table 1: Tax Brackets For 2020