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5 Steps to an A+ College Plan

By Jeremy Lawton, Financial Advisor, MBA

We know parenting is a full-time job that keeps you busy 24/7. Whether you’re navigating the terrible twos or the terrible teens, your plate is pretty full. You have bills to pay and a retirement to save for. You think about college for your children, but it seems so far away. Ask anyone with grown children and they will tell you that the days are long but the years are short, and before you know it, you too will be planning college visits and filling out applications. 

Your child’s education is one of the most important investments you can make, and with today’s costs, it pays to plan ahead. Have you started saving for your child’s college fund? If not, here are 5 steps to get started.

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How Will the New Student Loan Forgiveness Plan Affect You?

By Patrick Diamond, CFP® and Jeremy Lawton, MBA

On August 24, 2022, the Biden Administration announced a student loan debt relief plan. Jeremy and I have our own experience with student loans from undergraduate and graduate studies. We know firsthand how confusing the different (and moving) parts to the student loan repayment process can be to everyone. We’ve put together the following article to summarize the recent announcement and highlight where questions still exist.

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The Business Owner Exit–Succession Process

By Scott Everly

It has taken years to get your business where it is today. Although it may seem premature to discuss an exit strategy, it is an equally important element of your business plan. The business owner’s exit plan can affect many decisions related to the business, since the exit plan could be one of many options, including initial public offerings (IPO), strategic acquisitions, or management buyouts (MBO). (1)

All business owners must one day transition the business, which means advanced planning is critical to achieving their goals—both for their business and family. Nearly 48% of business owners who want to sell their business someday have no formal exit plan. (2) What is the advantage of creating an exit strategy? For many business owners, it could put them in a tax-favored position once they are ready to make a move.

Let’s take a look at what Wealth Management Resources covers in our strategic exit-planning process. 

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Is a Recession On the Horizon? How We Watch Over Your Money

By Alexander M. Medici, MBA, CIMA®

It’s no secret our world is a bit uncertain these days. It feels like we’re constantly waiting for the other shoe to drop. If you’re like most people, living with this level of uncertainty day in and day out can be stressful. As much as we may not like living with instability, the market likes it even less. 

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Why I Became a Financial Advisor

By Scott Everly

Most of us can point to specific people or events that have influenced our choices and made an impact on how we live our lives. For me, it was the inspiration and example of my father that led me to where I am today. I grew up surrounded by the world of finance and learned early on about the positive effect a solid financial plan can have on one’s future. My father, Arthur Everly, co-founded Wealth Management Resources, Inc., a company that has been a part of my life for as long as I can remember. Seeing how my father helped people achieve financial success and the appreciation they have shown him in return has made a lasting impression. Ultimately, I want to provide value in others’ lives by helping them build a solid financial foundation. It was my father’s example, and the realization of how I could also impact people’s lives for the better, that led me to choose to continue in my father’s footsteps and pursue a career as a financial advisor. 

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Note to our clients regarding our Operations and the Covid-19 Virus Situation

At Wealth Management Resources, our concern and focus are on the health and safety of all our clients, their families and employees. We want to share with you the steps we are taking as a firm as part of our Business Continuity Plan in response to the current Covid-19 virus situation:

Steps we have implemented at the Firm:

  1. In addition to monitoring the status of the COVID-19 on a daily basis, please be assured that we have a formal plan to ensure the continuity of our business and operations:
    • We have implemented necessary steps to manage the prevention of the virus in our office.
    • Our staff have been advised to take necessary precautions to protect themselves and their families from contracting the virus in line with CDC and local government recommendations including hand-washing and other applicable hygiene practices.All necessary steps are being taken at our office to keep it clean and virus-free.
  2. We have provided guidelines to our employees to follow to help lessen the spread of illness:
    • Employees have been directed to stay home from work and seek immediate medical attention if they should exhibit symptoms or become ill.
    • We have secure systems in place to allow all employees to work from home as needed.As part of our BCP, we are fully prepared to continue all operations for events like this.

If you have any questions or concerns regarding our ability to continue to service you and your accounts through our Firm, please contact me directly. Thank you for your continued trust and confidence in our Firm.

Sincerely,Kevin R. Worthley, EVP & Co-Principal

Chief Compliance Officer

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Big Changes to Retirement Planning with the SECURE Act

With the busy-ness of the holidays, you might not be aware of recent legislation that just passed both chambers of Congress and was signed into law by the President last month. The “Setting Every Community Up for Retirement Enhancement (SECURE)” Act was part of the annual US spending bill to keep the country funded for the next fiscal year to September.

The SECURE Act contains provisions that could affect retirement and tax planning for many people. Here are some details about major provisions;

  1. For non-spouse beneficiaries of IRA’s whose owners pass away after January 1, 2020, the ability to “stretch” required minimum distributions (RMD’s) within an inherited IRA, over the life of the beneficiary recipient, will no longer be an option. (In other words, no more Stretch IRA’s.) Instead, the beneficiary will be required to completely empty the inherited IRA within 10 years after the original owner’s death. There appear to be no specific distribution requirements within the 10-year window, only that by the end of that window, all assets in the account must be distributed. Therefore, a beneficiary can take one lump-sum now/soon/years later, or periodic distributions, etc.

    Note however, that the new rule does NOT apply to beneficiaries currently taking inherited RMD’s before 01/01/2020: those currently taking required distributions are grandfathered under the prior inherited RMD law. This change could have income tax implications. Discussing strategic distributions of inherited IRA’s under this new law could be a beneficial idea. Finally, there are qualified exceptions to this new provision; the new law does not apply (but the old rules still do apply) to beneficiaries who are:

    1. Spouses of the original owners
    2. Disabled
    3. Chronically ill
    4. Less than 10 years younger than the decedent
    5. Minor children of the decedent, but ONLY until the minor reaches age of majority, (then the 10-year window starts).
  2. For those who turn 70 ½ AFTER January 1, 2020, their first RMD’s are postponed until age 72. Thereafter, the same rules apply regarding distributions the first time (can defer until April 1 of the following year, then 12/31 for the second year and thereafter), as well as the annual RMD divisor calculation based upon age. Therefore, under this new rule, the first RMD calculation will be based upon the prior-year-end aggregate IRS value(s) and the divisor at age 72.
  3. The SECURE Act allows an individual to withdraw up to $5000 penalty-free from their IRA within one year after either the birth of their child or date of adoption of a child. This applies to either/both parent(s) and is allowed “per child”. For Traditional IRA’s, applicable taxes would still apply to the distribution. This provision was established as a “financial assistance” idea in the Act to help new parents with added expenses of childbirth.
  4. The Act eliminates the rule that prevents IRA owners from contributing to a Traditional IRA after age 70 ½. Now anyone with earned income of any age can make a tax-deductible contribution to a Traditional IRA (good for those over 70 ½ who still work P/T).
  5. The Act allows for annuity options within qualified Employer-Sponsored Retirement Plans (such as 401k plans). There is also a “portability” provision for annuities within a 401k plan if that plan discontinues the annuity feature.The Act also contains changes regarding who provides fiduciary oversight of annuities within employer-sponsored retirement plans.
  6. There are also many new provisions and incentives for small employer retirement plans, including larger tax credits for establishing plans (including SEP’s/SIMPLEs), including 401k plan auto-enrollment, higher auto-enrollment employee contribution limits and allowances for part-time workers to also enroll.
  7. 529 plans – the Act will allow 529 college savings account owners to take qualified distributions for “qualified education loan repayments” up to $10K lifetime cap for the beneficiary of the 529 account. This limit is per person, so it’s possible an account owner (parent) may use the same account to help more than one of their children pay back student loans, (up to $10,000 per student). Apprenticeship programs are now also qualified expenses.
  8. Kiddie Tax is back! The SECURE Act (Section 501) reverses the two-year-old rule (from December 2017) that made unearned income of a child taxable at Trust rates, rather than parents’ marginal rates. To further complicate things, taxpayers have the option of using either rule for tax year 2019 and 2018. For those who have children with significant unearned income, consulting with your tax advisor regarding the “kiddie tax” would be wise tax-planning.

If you have questions regarding how this new legislation may affect your financial plan or future objectives, give our office a call – we’d be glad to help.

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Negative Interest Rates are Not Positive

If you’ve followed the financial news over the past year, you may have run across a curious term – negative interest rates. It denotes the situation where one lends money to another entity, does not earn interest and eventually may receive back less than what they loaned.At first blush, negative interest rates seem strange – why would you lend money, not charge interest, and /or be agreeable to accept less than your original loan amount? Yet this phenomenon is prevalent in global government debt markets today. Due to an inability to otherwise juice economic growth, countries like Japan and many in Europe have indeed driven down the cost of their sovereign debt to such a degree. In fact, so much so that in August 2019, Deutsche Bank estimated there was over $15 trillion of global government bonds with negative rates in circulation. Due to a worsening economy, Germany is on the cusp of issuing negative rate bonds too. The purpose of this policy is apparently to force cash into the respective economy and spur spending and investment by consumers and businesses.While zero or negative rates may sound great for borrowers, there are plenty of downsides that proponents of the strategy (such as our President) should consider. First of course, is the point of view of those on the other side of the transaction; namely savers and lenders. Those who deposit their money with lending institutions (such as banks and finance companies) should and do expect some kind of return for their monetary commitment. You have likely winced at the paltry interest paid over the past decade on your bank savings accounts and certificates of deposit. As we’ve seen in the investment world, negligible earnings from savings/CD’s are causing some consumers to turn instead to more risky investments than they otherwise would be comfortable with, such as the stock market. Even large investors such as pensions and insurance companies, who invest heavily in government bonds and other income securities, also expect (and need!) a return on their money. The potential demand for negative-rate US Treasuries may be far less than proponents might hope for.Negative rates turn the normal functioning of capital flows and economic finance upside down. They also hurt lenders – rather than earn the spread between what interest they pay depositors and what they earn by lending, banks are forced to pay central banks to hold their cash or push it out into the economic system. Bank profit margins are also squeezed, forcing banks into more risky lending and to seek profits through more services fees; something consumers have complained about for some time.Negative rates also have the potential of triggering inflationary pressures by pushing up values of financial assets and real estate, sometimes beyond what is reasonable in a normal environment. Critics point to recent equity prices and values of real estate in high-end parts of the country as potential examples of this consequence.Lowering rates too far to zero or negative also remove a potent tool from central banks, such as the Federal Reserve, to stimulate their economies by lowering rates. Once rates go negative, pushing them further down may be ineffective in motivating spending to invigorate the economy. In sum, the advent of negative rate bonds is truly uncharted territory. While the consequences over time are not known, the best defense for consumers and investors may be to suffer with lower savings yields for now, remain diversified, and manage risk even more diligently than before.