Articles on Wealth Management Topics

Large tax-advantaged account balances have now been caught up in the political tug of war that is the debate over the Build Back Better Act.

In the last two installments of the Five Seasons Financial Planning blog, Articles on Wealth Management Topics, we spent a fair amount of time discussing inflation and the risk it poses to retirees' finances. If anything, inflation has become even more of a concern since then.

Retirees in particular tend to be exposed to purchasing power risk, the risk that their sources of income don't keep pace with the inflation of their living expenses.

Several recent surveys indicate that inflation has now overtaken the pandemic as the primary concern among investors and retirees. Allianz's 2020 Retirement Risk Readiness Study concluded that 57% of Americans are worried that inflation will make basic retirement expenses unaffordable. If in fact inflation does re-emerge after decades of benign behavior, it will be particularly damaging for those close to, or in, retirement.

2019's SECURE Act contains two provisions that make converting IRAs and retirement plan accounts to Roths more attractive:

The Setting Every Community Up for Retirement Enhancement Act also contained provisions affecting 529 plans, tax planning, and employee benefits. Let's take a look at some of these other new rules:

Since March, COVID stories have dominated the headlines, and unprecedented financial market volatility has grabbed the attention of investors. As a result, it's been easy to forget that one of the most far-reaching pieces of legislation to affect the financial planning landscape in more than a decade was passed just before the pandemic struck. The SECURE Act, or Setting Every Community Up for Retirement Enhancement Act, contains provisions that impact saving for retirement, estate planning, retirement distribution strategies, tax planning, debt management, and retirement plan administration.

The Coronavirus Aid, Relief and Economic Security Act contains one-time provisions that apply to the taking of required minimum distributions (RMD's) in 2020. The CARES Act also makes temporary modifications to some of the tax rules surrounding this year's charitable giving. With just a couple of months left to take advantage of them, let's explore these changes and their implications.

It's sometimes said that sound portfolio management is simple, but not easy. In other words, the concepts behind successful portfolio management are reasonably easy to grasp in theory, but are counterintuitive and emotionally difficult to implement consistently in practice.

There's no doubt that lower fund management expenses and lower transaction fees are beneficial to investors - all other things being equal. But that's the rub. There are several other cost considerations in choosing which ETF to buy, and when to buy it, that can easily outweigh whether you pay or receive 50 cents per $1,000 invested per year, or whether you pay your broker nothing or $7 per trade.