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Resources

Splurge or Save? Making the Most of Your Income Tax Refund

The IRS issued more than 128 million income tax refunds for the 2020 filing season, putting $355.3 billion into the hands of U.S. consumers.1 For most recipients, such a sudden influx of cash prompts an important question: What’s the best way to use the money? Last year, 27% of consumers said they planned to spend their refund on everyday expenses, whereas equal numbers (8%) planned to either “splurge” or take a vacation.2 But what about your other options? Debt…

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Key Retirement and Tax Numbers for 2022

Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2022. Estate, Gift, and Generation-Skipping Transfer Tax The annual gift tax exclusion (and annual generation-skipping transfer tax exclusion) for 2022 is $16,000, up from $15,000 in 2021. The gift and estate tax basic exclusion amount (and generation-skipping transfer tax exemption) for 2022 is $12,060,000, up…

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ETFs Are Gaining on Mutual Funds: Here’s Why

Investor demand for exchange-traded funds (ETFs) has increased over the last decade due to some attractive features that set them apart from mutual funds. In December 2021, almost $7.2 trillion was invested in more than 2,500 ETFs. This is equivalent to 27% of the assets invested in mutual funds, up from just 9% in 2011.1 Fund Meets Stock Like a mutual fund, an ETF is a portfolio of securities assembled by an investment company. Mutual fund shares are typically…

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The Auditors Are Coming — Are You Ready?

No one wants to be caught flat-footed when the auditors come calling. And with a new standard issued by the American Institute of Certified Public Accountants (AICPA), both the auditors and plan sponsors will be subject to new responsibilities. The AICPA’s Statement on Auditing Standards (SAS) No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, raises the bar on benefit plan audits. Issued in 2019, the standard was originally scheduled to…

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Financial Wellness Needs a Long and Short Game to Work for Both Participants and Organizations

In the retirement plan industry, all too often we tend to conflate financial wellness with retirement readiness — whether that means confidence in obtaining retirement goals or being on track to reach post-employment financial targets. However, that limited view may fail to paint a complete picture for many participants. For example, the New York Life Wealth Watch survey, released in July, highlights generational differences with respect to near- and long-term financial concerns and points to areas of disconnect among…

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When Does a Participant Loan Become a Deemed Distribution?

A recent IRS Issue Snapshot (link below) affirms that a participant loan is a legally enforceable agreement and terms of the loan agreement must comply with Internal Revenue Code (IRC Section 72(p)(2) and Treasury Regulation Section 1.72(p)-1). The terms of the loan agreement must be explicit in writing or deliverable electronically. A loan in default is considered to be a deemed distribution. But plans may offer a cure period during the quarter following the quarter in which the missed…

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Plan Ahead to Help Ease the Burden of Tax Season

Most U.S. taxpayers “completely agree” (68%) or “mostly agree” (26%) that paying their fair share of taxes is a civic duty.1 However, no one wants to pay more than his or her fair share. To help avoid doing so, consider addressing some important priorities before you begin filling out your tax forms. Here are some steps that might help reduce stress when preparing your return. Create an online account with the IRS. In addition to making it easier to…

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Going Public: How Are Direct Listings Different from IPOs?

An initial public offering (IPO) is the first public sale of stock shares by a private company. IPOs are important to the financial markets because they help fuel the growth of innovative young companies and add new stocks to the pool of potential investment opportunities. When a company files for an IPO, new shares are created, underwritten by a bank, and sold to the public. But that’s not the only way for a company’s stock to become publicly traded….

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When Two Goals Collide: Balancing College and Retirement Preparations

You’ve been doing the right thing financially for many years, saving for your child’s education and your own retirement. Yet now, as both goals loom in the years ahead, you may wonder what else you can do to help your child (or children) receive a quality education without compromising your own retirement goals. Knowledge Is Power Start by reviewing the financial aid process and understanding how financial need is calculated. Colleges and the federal government use different formulas to…

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New Businesses May Be Good News for the Economy

IMPORTANT DISCLOSURES Wellspring Financial Partners, LLC does not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances….

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