Reasons to be Thankful with Your Financial Plans

A&I Wealth Management > Periscope Newsletter > Reasons to be Thankful with Your Financial Plans

Roth IRA and Roth 401k
If you are going to be in a lower income this year than in years past or years future, this may be a year for you to contribute more to your Roth 401k or Roth IRA than you might otherwise. Why? Because your Roth IRA and Roth 401k contributions are after-tax—and you’re in a lower tax bracket—you’ll spend less on taxes than usual.

100% Deductible Charitable Contributions
If you itemize deductions on your tax return, consider using cash to make a year-end gift or pay off a pledge. As part of the CARES Act, you may deduct gifts of cash up to 100 percent of your adjusted gross income (AGI) for this calendar year only. The CARES Act includes several additional provisions that impact charitable giving, such as a $300 universal charitable deduction for those who use the standard deduction.

December 5th Colorado Gives Day
If you are age 70½ or older, consider making a qualified charitable distribution (QCD) from your IRA. Two new laws took effect this year that may impact your decision to give through a QCD: The SECURE Act adjusted the minimum age for taking a required minimum distribution (RMD) from 70½ to 72, and the CARES Act waived the RMD altogether for 2020. These changes do not affect your ability to make a tax-advantaged QCD starting at age 70½. Please consult your tax adviser about these changes and their impact on your giving strategy.

Equities are UP!
If you have experienced gains in the financial markets this year, consider donating appreciated securities to charity to avoid paying capital gains taxes.

Interest rates are down
If you own a mortgage, your mortgage interest rate may have never been lower.

Inflation is down
Even though it doesn’t feel like it sometimes, when we shop, the price of many of the goods we purchase is low. I believe both inflation and interest rates are likely to stay down even though we have massive inflationary pressures from the Federal Reserve.

Financial plans didn’t change
By and large, this year didn’t affect financial plans after all. Had we changed everything in the middle of the pandemic crisis—then perhaps we would feel horrible right now. But the advantages of having a financial plan include the hard work we put into the “stress test” for times like we faced this year. By a large margin, the best course of action in 2020 was not to change your financial plans even though the world changed dramatically!

Look less, feel happier
And the last reason to feel thankful in 2020 that I will list in this Periscope is not the last reason you have on your list. However, it is worth mentioning that the less you look at your account, the happier you are. If you knew nothing about what was going on in the world and you looked at your account 12 months ago, and then again today, you would likely feel pretty good. By and large, this year looks average. All of us know for countless reasons why it is exceptional—but the less we look at our portfolios, the happier we feel. That rule of thumb is a good one for 2020.

About the author

Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.