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Retirement Legislation Awaits Further Action

Oct 21, 2022 3:05:03 PM
written by The Retirement Group

Legislation that could benefit Fortune 500 employees and retirees with individual retirement accounts (IRAs) and retirement plans such as employees in Fortune 500 companies, is currently moving through Congress. The Securing a Strong Retirement Act of 2022 has passed almost unanimously in the House. A similar bill (with some differences), the Enhancing American Retirement Now Act, has been drafted in the Senate but will have to wait until Congress is back in session in November for further consideration. If the Senate passes its bill, the House and the Senate would need to reconcile the two bills, and then each would vote on the reconciled bill.

Some significant provisions in the proposed legislation that may aid in your Fortune 500 retirement planning are summarized below.

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posted in Financial Planning, Retirement, 2023, Legislation

Quarterly Market Review: July-September 2022

Oct 4, 2022 11:03:32 AM
written by The Retirement Group

The Markets (third quarter through September 30, 2022)
The ramifications of stamping down rising inflation dominated the markets in the third quarter. Investors weighed the balance between an aggressive government policy aimed at curbing price pressures against the possibility of those very policies leading to an economic recession. That dichotomy was not lost on Federal Reserve officials, who stoically made clear that "a sustained period of below trend growth" may be a necessary byproduct as part of the effort to bring down inflation. Ultimately, investors moved away from risk, sending stocks lower for the third straight quarter of 2022, while putting an exclamation point on the worst decline in the first nine months of a year in 20 years. By the end of the quarter, the Dow, the S&P 500, and the Nasdaq had entered into bear market territory. All three benchmark indexes are down at least 21.0% on the year. Crude oil prices declined sharply in the quarter for several reasons, including waning fuel demand, China's ongoing COVID lockdown policy, the unexpectedly benign impact of sanctions against Russian oil exports, rising inflation, and the strength of the U.S. dollar. The strength of the dollar often weighs on oil and other commodities that are priced in that currency, making them more expensive to purchasers using other currencies. Bond prices declined during the quarter, pushing yields up. The 10-year Treasury yield jumped 83 basis points since the end of June and nearly 230 basis points on the year. Gold prices struggled to maintain any momentum, ultimately falling more than 7.50% in the quarter.

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posted in Financial Planning, Market, Quarter 3

FAFSA for 2023-2024 School Year Opens on October 1

Sep 30, 2022 2:11:19 PM
written by The Retirement Group

October is the kickoff month for financial aid. That's when incoming and returning college students can start filing the Free Application for Federal Student Aid (FAFSA) for the next academic year. The FAFSA is a prerequisite for federal student loans, grants, and work-study, and may be required by colleges before they distribute their own institutional aid to students.

How do I submit the FAFSA?
The FAFSA for the 2023-2024 school year opens on October 1, 2022. Here are some tips for filing it.

  • The fastest and easiest way to submit the FAFSA is online at studentaid.gov. The site contains resources and tools to help you complete the form, including a list of the documents and information you'll need to file it. The online FAFSA allows your tax data to be directly imported from the IRS, which speeds up the overall process and reduces errors. The FAFSA can also be filed in paper form, but it will take much longer for the government to process it.

  • Before you file the FAFSA online, you and your child will each need to obtain an FSA ID (federal student aid ID), which you can also do online by following the instructions. Once you have an FSA ID, you can use the same one each year.

  • You don't need to complete the FAFSA in October, but it's a good idea to file it as early as possible in the fall. This is because some federal aid programs operate on a first-come, first-served basis. Colleges typically have a priority filing date for both incoming and returning students; the priority filing date can be found in the financial aid section of a college's website. You should submit the FAFSA before that date.

  • Students must submit the FAFSA every year to be eligible for financial aid (along with any other college-specific financial aid form that may be required, such as the CSS Profile). Any colleges you list on the FAFSA will also get a copy of the report.

  • There is no cost to submit the FAFSA.

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posted in Financial Planning, FAFSA, School

CHIPs and Science Act Aims to Preserve U.S. Technology Edge

Sep 21, 2022 1:45:22 PM
written by The Retirement Group

Many Fortune 500 employees have been asking about The CHIPs and Science Act of 2022. This act signed into law on August 9, is a bipartisan legislation package that provides more than $50 billion in direct financial assistance for semiconductor companies to increase U.S.-based design, research, and manufacturing capabilities. In addition, the legislation authorizes nearly $170 billion in federal funding over five years for research and development (R&D) programs in strategic areas of science and technology, such as artificial intelligence, quantum computing, wireless communications, clean energy, and precision agriculture.

In a significant expansion of industrial policy, federal subsidies are being offered to help reduce the nation's reliance on semiconductors produced mostly overseas and forge a more resilient supply chain. The largest-ever U.S. investment in public R&D (in dollar terms) is intended to fuel technological innovation more broadly and help ensure U.S. economic competitiveness — primarily against China — in the future.

CHIP independence
A semiconductor (also called a microchip or chip) is a tiny set of electronic circuits on a small piece of silicon or germanium. A single advanced chip may have more than 50 billion microscopic transistors. Chips power nearly all electronic devices used by consumers, including computers, mobile phones, vehicles, and medical devices. The crucial role that chips play in the economy became more evident during the pandemic, when a surge in demand kicked off a global shortage that disrupted supply chains and later helped drive up inflation. A dependable supply of chips is also important for national security reasons — the U.S. Department of Defense purchases 1.9 billion semiconductors annually for its communications and weapons systems.1

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posted in Financial Planning, Science, Technology

AT&T Pensions Would Drop About 22% If Rates Were Calculated Today

Sep 20, 2022 1:33:32 PM
written by The Retirement Group

New rates were just released for October 2022 and they increased 0.57% in the second segment!

Interest Rates Here


AT&T recently sent a memo to their employees warning them about the impending pension drop. AT&T estimates employees will lose between 15% - 30% on their lump-sum value. Employees would lose a significant amount on their pension lump-sums if the lump-sum was calculated based on September's interest rates. The segment rates, used by AT&T, track the U.S. 10 Year Treasury rate, which means that as the U.S. 10 year Treasury rate increases, so do the segment rates. That is why the U.S. 10 Year Treasury rate is a great indicator of the IRS segment rates. The 10 Year Treasury rate has increased by over 2% since November 2021. When interest rates move up or down, an AT&T employee’s pension lump-sum amount will move in an inverse direction. A 1% increase in interest rates typically means a 10% decrease in lump-sum value. Our calculations show that lump-sums would drop by approximately 22% if AT&T used the current interest rates. This means that an employee with a $1,000,000 lump-sum would lose around $220,000, not including the interest they would have earned on the original $1,000,000. If rates continue to rise, this lump-sum loss will be substantially larger by the end of the year. The exact percentage an employee loses on their lump-sum will change depending on an employee's age, years of service, hire date, job title, and a few other factors. 

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posted in Financial Planning, Pension, AT&T

Prepare Now for Future Emergencies

Sep 14, 2022 3:52:30 PM
written by The Retirement Group

September is National Preparedness Month, part of an effort by the Federal Emergency Management Agency (FEMA) to raise public awareness and inspire disaster readiness. Most communities could be impacted by some type of natural disaster, whether it's a wildfire, hurricane, tornado, earthquake, or flood.

Here are some tips to help keep your family safe in an emergency and allow you to leave quickly with the items you need most..

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posted in Financial Planning, Emergency, Preparation

New Cancellation for Federal Student Loans and Delayed Repayment to 2023

Sep 1, 2022 2:41:11 PM
written by The Retirement Group

On August 24, 2022, just a few days before federal student loan repayment was set to resume, President Biden announced a plan for additional student loan debt relief.

Federal student loan repayment was originally halted in March 2020 at the start of the pandemic. The new plan extends the payment moratorium through the end of the year, offers partial debt cancellation, and includes proposed updates to the Public Service Loan Forgiveness program and a new income-based repayment plan.

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posted in Financial Planning, Student Loans, Federal

Market Month: August 2022

Sep 1, 2022 2:29:27 PM
written by The Retirement Group

The Markets (as of market close August 31, 2022)

Through the first half of August, the stock market continued to ride July's rally. Including the first two weeks of August, stocks had posted four consecutive weekly gains — the longest weekly rally of 2022. The latest inflation data showed prices had fallen in July, bolstering investor confidence that the Fed may begin to reel in its aggressive interest-rate hike policy. By mid-August, the S&P 500 had recouped half of its losses from the beginning of the year, and the Nasdaq had risen over 20.0% from its low in June. U.S. corporate profits rose 9.1% to a fresh record high of $2.62 trillion in the second quarter of 2022, following a 4.9% drop in the previous period. It appeared that even if the Fed continued its hawkish push to get inflation down to the 2.0% target, the economy had thus far been resilient, with the labor market continuing to show strength, while industrial production advanced.

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posted in Financial Planning, Stock Market, Interest rates, Inflation

Inflation Reduction Act: What You Should Know

Aug 18, 2022 10:50:01 AM
written by The Retirement Group

The Inflation Reduction Act, signed into law on August 16, 2022, includes health-care and energy-related provisions, a new corporate alternative minimum tax, and an excise tax on certain corporate stock buybacks. Additional funding is also provided to the IRS. Some significant provisions in the Act are discussed below.

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posted in Financial Planning, Inflation, IRS, Inflation Reduction Act

Is the U.S. Economy in a Recession?

Aug 12, 2022 11:18:40 AM
written by The Retirement Group

In an early July poll, 58% of Americans said they thought the U.S. economy was in a recession, up from 53% in June and 48% in May. 1 Yet many economic indicators, notably employment, remain strong. The current situation is unusual, and there is little consensus among economists as to whether a recession has begun or may be coming soon. 2

Considering the high level of public concern, it may be helpful for Fortune 500 employees and retirees to look at how a recession is officially determined and some current indicators that suggest strength or weakness in the U.S. economy.

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posted in Financial Planning, Gas, Mileage, IRS

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Information regarding the lump-sum payout may or may not apply to specific employees based on factors such as mergers, acquisitions, years of service, age, or the date an employee was hired.