You don’t need to wait until the end of the year to look for ways to minimize your tax liability. Tax planning should take place throughout the year to have you prepared well ahead of tax season. Here are six ways to minimize your tax liability that you can implement any time before the end of this year: Update your payroll deductions– double check that you are claiming the correct deductions and taking advantage of pre-tax benefits that can help lower your taxable income, such as: Flexible spending accounts (FSAs)- a health savings account (HSA), healthcare insurance, a flexible spending account (FSA), commuter benefits, and childcare expenses. Maximize pre-tax retirement savings contributions– In 2022, you can contribute $20,500 to your employer’s retirement savings plan. If you are aged 50 or older, you can contribute an additional $6,500 to help lower your taxable income. Other Tax-liability Reduction Strategies Whether you’re an individual or a married couple, you can lower your taxable income while doing good for others by donating to an IRS-qualified charity. To take advantage of charitable tax deductions this year, you must make your donation before December 31st. Here are some common charitable donation strategies to consider: Qualified Charitable Distributions (QCDs) – If you’re age 72 or older, you can use a QCD to donate to an IRS-qualified charity of your choice directly from your IRA. The gift won’t qualify for a charitable deduction but will allow you to deduct the amount transferred to the charity from your taxable income. A QCD may be helpful if you won’t reach a level of itemized deductions to exceed the standard deduction amount on your taxes.   The maximum amount you may

Almost half of all adults are part of the “sandwich generation.” These are adults in their 40s and 50s who are helping support or care for a parent while also supporting or caring for a child.1 Being caught between two generations of loved ones who require care can be both financially and emotionally draining, but there are ways to reduce the pressure. Here are three financial planning challenges the sandwich generation is likely to face—and some strategies to address them. Challenge: Having to provide daily care for a parent while working full-time. Strategy: Research care options and alternatives. There is often a lot of gray area between needing some help with daily activities and requiring round-the-clock care. If you find yourself visiting your parent one or more times each day to provide assistance, it is worth looking into home care options that can relieve some of this burden. From aides to home health nurses to companions, there are many providers who may be able to share some of the responsibilities you are shouldering. What’s more, these services are often available at low or no cost if your parent has Medicare, Medicaid, or VA insurance. Challenge: Saving for retirement while having to step back from work to care for a parent. Strategy: Meet with a financial professional. Many members of the sandwich generation find themselves dropping out of the workforce so that they no longer have to schedule their caregiving duties around a full-time job. Unfortunately, this can sometimes come at the expense of their own retirement funds. By meeting with a financial professional, they can work with you to help develop financial goals, make any investment changes you need to,

Five easy pointers to help you plan during all of your retirement years   If you’re retired, there’s good news in that you’ll probably live longer and perhaps better than your parents and grandparents did. The bad news: You’ll live a longer and perhaps more expensive life, too. You face decisions your parents or grandparents likely didn’t face before you. This means every year you need to realistically estimate your life-expectancy to manage the foundation for your retirement (which might include years of less-than-great-health). Let’s say you are 58 – you need to plan for the next 37 years – more than a third of your life. Pointers to Help Plan During Retirement Here are five easy pointers, in ascending order of importance: 5. Costs of advice. You probably have a lot of questions. How much do you pay someone now to help you coordinate your investments? How much do your investments cost? Is your portfolio sufficiently diversified? Did you buy annuity policies that you don’t really understand and that may become expensive for you to own? Do you need someone to only manage your investments or to also provide financial planning advice? The average American spends more time analyzing the cost of a new TV than the costs and qualities of a financial professional. 4. Social Security. Don’t decide about benefits and lump-sum pension choices without discussing your options with a financial planner – or you may leave significant money behind. Remember too that the Social Security Administration won’t necessarily provide advice on your best strategies. 3. Your home and future health. Consider the final 15-plus years of your life. Where will you live when you’re 80? In a

If you’re avoiding looking at your 401(k) balance during periods of market volatility, you’re not alone. While the S&P 500 has historically produced an average annual return of 11%, recent market downturns may be impacting your portfolio, especially if you are drawing down assets. If you are a retiree or nearing retirement, managing the sequence of return risk in your portfolio during a declining market is essential since it is a significant risk to your assets lasting through retirement. The sequence of returns impacts investors when they are either adding to or withdrawing money from their investments, which can create risk depending the market conditions at the time. If an investor is not doing either, there is no sequence of returns risk. However, suppose an investor is drawing down their portfolio and not contributing new capital, for example, when they’re retired. In that case, there is the risk that the timing of withdrawals will negatively impact the portfolio’s overall rate of return. The sequence of the withdraws is critical to the retirement portfolio lasting the investor’s lifetime: Timing is everything- the timing of the withdrawals can damage the overall return and the portfolio that may not be recoverable. Withdrawals during a bear market are more damaging than during a bull market. If a bear market lasts more than a few months, each withdrawal is not being offset by contributions, leaving the portfolio unable to recover what was withdrawn despite future gains. The sequence of return risk can impact market-sensitive investments. Diversified portfolios are less likely to be impacted by the sequence of return risk. When is the optimal time to review your portfolio? When the amount of risk you’re comfortable with

A Roth IRA conversion involves repositioning traditional IRA or qualified employer-sponsored retirement plan assets into a Roth IRA. One reason people convert traditional IRAs or other retirement accounts into Roth IRAs is so they can enjoy tax-free income in retirement. Another reason is the Roth IRA’s flexibility not to make withdrawals if the money isn’t needed since there is no Required Minimum Distribution (RMD). Or, they may use a Roth IRA conversion as part of estate planning to lessen the impact of estate taxes on their estate. Whatever the reason for the Roth IRA conversion, investors often consider this a suitable time to do a Roth IRA conversion whenever the stock market is down. However, there are many questions to answer before putting this strategy into action: Does your qualified retirement plan allow Roth IRA conversions? If you have your monies inside your employer’s retirement savings plan, check the plan’s documents to see if a Roth IRA conversion is allowed. If not allowed and you initiate the conversion, the conversion may not occur, or a penalty will be applied when the conversion happens. Consult your employee handbook, contact your HR, or contact your employer-sponsored retirement plan’s custodian for answers about your situation. Can you pay the taxes? Since traditional IRAs and other qualified retirement plans are tax-deferred plans, upon converting assets into a Roth IRA, the account owner must pay income tax on the amount they convert. Also, the taxes are due upfront when the conversion occurs. Are you comfortable with your Adjusted Gross Income (AGI) increasing? A Roth IRA conversion will increase your income in the year that the conversion occurs. If you are retired, be mindful that Medicare Part

If you have always thought estate planning was just for those nearing retirement or already retired, think again. If you own a home, it is important to have a plan in place. Without a will or other arrangements that allow your home to pass to your closest loved ones, it is subject to your state’s intestacy laws and probate, which may not result in the outcome you want. Here are five different ways your estate plan can pass your home on to your loved ones. Give Your Home as a Bequest One of the most common ways to pass a home along to heirs is by specifically naming a beneficiary in your will. When you leave your home in a will, the beneficiary receives a stepped-up cost basis. This provision means that if they later sell the house, they may only pay taxes on the difference in the value when they inherited it and the sale price. Before choosing someone to inherit your home, be sure they are up to the task. For some, the idea of taxes, insurance, and maintenance expenses may feel like anything but a gift. And if the beneficiary is receiving public benefits, like Medicaid, inheriting a home or another item of value may make them ineligible for future benefits until these assets have been sold or spent. Sell Your Home If you would rather not leave your home as a bequest to your beneficiaries, another option is to sell it. With the $250,000 capital gains tax exclusion (or up to $500,000 for married couples filing jointly), you may sell your home for a tidy profit, deposit or invest the tax-free gains, and pass these funds

In late 2019, SECURE Act was passed as a way to help Americans save more for their retirement. In March 2022, the SECURE Act 2.0 has passed in the U.S. House of Representatives and aims to improve the goals of the original SECURE Act. The Senate proposed a similar bill in May 2021, and as the House’s version moves forward, the two bills will likely combine before the final Senate vote. Here are what investors should know if the SECURE Act 2.0 passes as proposed: #1- Required Minimum Distribution (RMD) age will increase from age 72 to age 75 with this RMD schedule: Age 73 starting in 2023 (for individuals who reach age 72 after Dec. 31, 2022, and age 73 before Jan. 1, 2030). Age 74 starting in 2030 (for individuals who reach age 73 after Dec. 31, 2029, and age 74 before Jan. 1, 2033). Age 75 starting in 2033 (for individuals who reach age 74 after Dec. 31, 2032). #2- RMD penalties would decrease. Currently, for investors who forget to take their total RMD, there is a 50% penalty on the RMD amount missed. The SECURE Act 2.0 would decrease the liability to 25%, and if the mistake is promptly corrected, it drops to 15%. #3- Qualified Charitable Distributions (QCDs) would be enhanced. People aged 70½ and older can transfer up to $100,000 tax-free each year from their traditional IRAs directly to the charity. The SECURE Act 2.0 would index the cap each year for inflation. It would also allow a one-time transfer of $50,000 through a charitable remainder trust or charitable annuity. #4- Catch up provisions for 401(k) and 403(b) plan participants ages 62, 63, or 64 would

2022 has been a challenging year for investors so far. The S&P 500 Index just had one of its worst Aprils in decades, and May is off to a rocky start. Bond investors have not fared much better as rising interest rates have pushed down bond prices. Bond losses have made the stock market volatility feel even worse than usual. Markets don’t like uncertainty but it’s getting a healthy dose of it this year, dealing with high inflation, tighter Federal Reserve monetary policy, COVID-19 shutdowns in China, and snarling global supply chains, all while the war in Ukraine continues. Investing mistakes often take place during periods of elevated volatility. One of the most frequent is trying to time the market by jumping in and out. Market timers must be right twice, and timing the return to the market can be extremely difficult to pull off. Markets can turn quickly, and missing even just one big up day can significantly reduce returns over time. The biggest daily gains tend to come in down markets, making them especially difficult to predict. Time in the market, not timing the market, may be more beneficial to long term investors. When markets are shaky, it can be helpful to look to long-term fundamentals that have provided the foundation of positive returns for stocks and bonds over the long run. For stocks, gains depend on the ability of corporations to grow earnings, which they have continued to do during first quarter earnings season—S&P 500 Index earnings per share are on track to increase 10% year over year. For bonds, the key fundamental has simply been the ability of borrowers to make required payments. Corporations and consumers

Market Volatility and the Importance of Staying the Course at Different Ages When you invest in the stock market, you want to see growth, but unfortunately, in most cases, investments do not grow all the time. Inevitably, the market goes up and down, and to safeguard your potential for long-term growth, you need to understand the importance of staying the course through market volatility. However, you also need to adjust your approach to investing at different ages. Staying the course through market volatility has different implications at ages 20, 30, 40, 50, and into retirement. Check out these tips. 20s to 30s At these ages, you should be actively saving for retirement. By investing early, you have the opportunity to amass more wealth than you do if you wait until you are older. When choosing your investments, keep your personal risk tolerance in mind, but don’t necessarily sell funds that drop in value. At these ages, you don’t need the funds for another 30 to 40 years, and as a result, you have the ability to ride through market volatility. Typically, at these ages, the best course of action when investments drop is to just do nothing. 40s to 50s At these ages, retirement is looming on the horizon, and ideally, you should be investing as much as you can. Even at these ages if your investments drop in value, you shouldn’t necessarily sell. But you should consult with a financial professional and make slight changes as needed. Keep in mind that while the market grows at an average of 7.2% per year, research indicates that the average investor only sees 5.3% growth per year — analysts speculate that this

Whether your child was just born or is heading toward high school graduation, a 529 savings plan may help you put aside funds to pay for college expenses without paying taxes (federal and some states) on any dividends and gains.1 However, 529 plans have some specific rules, regulations, and restrictions that parents must know before college begins. Here are the answers to some of the most commonly-asked questions about 529 college savings plans. What Are Qualified Expenses? Generally, 529 funds are tax-free when spent on qualified expenses, such as tuition, books, fees, and room and board. However, understanding what constitutes an eligible expense is sometimes challenging. Here are some things to know about qualified expenses: Books, supplies, and equipment are qualified; however, laptops and other tech devices are qualified expenses only if required for enrollment or attendance at a school. Airfare or driving expenses to and from college are not qualified expenses. Health insurance is not a qualified expense. Room and board, including off-campus housing, is a qualified expense. However, it is capped at the room and board amount your college estimates in its total cost of attendance. This rule means that if your college publishes its cost of attendance as including $10,000 in room and board, but you have an off-campus apartment that costs $2,000 per month, you may only be able to use your 529 withdrawal to pay for $10,000 of your rent. What Happens if Your Child Gets a Scholarship? Getting a full-tuition scholarship may create a challenge. You may need to change what to do with the 529 funds earmarked to pay for college tuition. Fortunately, several options allow a 529 custodian to avoid paying penalty