Due to recent increases in the price of fuel, the IRS has increased the optional standard mileage rates for computing the deductible costs of operating an automobile for business purposes for 2023. However, the standard mileage rates for medical and moving expense purposes remain the same for 2023. The standard mileage rate for computing the deductible costs of operating an automobile for charitable purposes is set by statute and also remains unchanged.
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posted in Financial Planning, Mileage, IRS, 2023
How Fortune 500 Employees Can Avoid Penalties?
72(t) payments, also known as “substantially equal periodic payments,” are advantageous because they are exempt from the 10% early distribution penalty that usually applies to withdrawals before age 59 ½. You can take them from an IRA at any time, but only from a workplace plan after leaving Fortune 500.
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posted in Financial Planning, Lump Sum, Pension, Retirement Planning, Retirement, ExxonMobil, Chevron, Verizon, Northrop Grumman
The Markets (as of market close February 28, 2023)
Before reviewing your company 401(k) plan, check out how the market can affect your retirement. February saw stocks slide lower after posting solid gains to begin the year. Each of the benchmark indexes listed here retreated from their January totals, with the Dow falling the furthest, followed by the Global Dow, the S&P 500, the Russell 2000, and the Nasdaq. Investors saw hope in January that inflation may be waning. However, February data showed inflationary pressures reversed course and expanded. The Federal Reserve has consistently maintained that it seeks to achieve maximum employment and hold inflation at the rate of 2.0%. So far in 2023, job growth has been solid, with more than 500,000 new hires, while the Consumer Price Index (+0.5%) and the Personal Consumption Expenditures Price Index (+0.6%) revealed increasing inflationary pressures over the previous month. Inflation has risen 5.4% since January 2022, according to the latest PCE price index. With evidence that the economy can withstand further tightening, the Federal Reserve is likely to continue to drive interest rates higher and for a longer period of time. This, coupled with lagging corporate earnings and the Russia/Ukraine war, which is entering its second year, has caused some investors to move from risk.
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posted in Financial Planning, Lump Sum, Pension
On January 19, 2023, the outstanding debt of the U.S. government reached its statutory limit, commonly called the debt ceiling. The current limit was set by Congress at about $31.4 trillion in December 2021.
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On the day the limit was reached, Treasury Secretary Janet Yellen instituted well-established "extraordinary measures" to allow necessary borrowing for a limited period of time. While Yellen projects the extension will last until early June, the Congressional Budget Office (CBO) estimates it may last until sometime between July and September. However, the CBO cautions that if April tax revenues fall short of its projections, the Treasury could run out of funds earlier. 2–3
On the day the limit was reached, Treasury Secretary Janet Yellen instituted well-established "extraordinary measures" to allow necessary borrowing for a limited period of time. While Yellen projects the extension will last until early June, the Congressional Budget Office (CBO) estimates it may last until sometime between July and September. However, the CBO cautions that if April tax revenues fall short of its projections, the Treasury could run out of funds earlier. 2–3
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posted in Financial Planning, Retirement, 2023, Spending, Debt
After years of numerous delays, the U.S. Department of Homeland Security has once again extended the REAL ID enforcement deadline from May 3, 2023, until May 7, 2025.
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What is a REAL ID?
A REAL ID is a type of enhanced identification card. The REAL ID Act, passed by Congress in 2005, set minimum security standards for state-issued driver's licenses and identification cards. Under the Act, residents of every state and territory are required to have a REAL ID-compliant license/identification card, or another acceptable form of identification (such as a passport), in order to:
What is a REAL ID?
A REAL ID is a type of enhanced identification card. The REAL ID Act, passed by Congress in 2005, set minimum security standards for state-issued driver's licenses and identification cards. Under the Act, residents of every state and territory are required to have a REAL ID-compliant license/identification card, or another acceptable form of identification (such as a passport), in order to:
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posted in Financial Planning, Retirement, Identification
The SECURE 2.0 legislation included in the $1.7 trillion appropriations bill passed late last year builds on changes established by the original Setting Every Community Up for Retirement Enhancement Act (SECURE 1.0) enacted in 2019. SECURE 2.0 includes significant changes to the rules that apply to required minimum distributions from IRAs and employer retirement plans. Here's what you need to know.
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posted in Financial Planning, Retirement, RMDs, IRS, SECURE Act
The Markets (as of market close January 31, 2023)
January proved to be a bumpy ride for investors, with stocks ultimately ending higher to begin the new year, despite concerns that the economy may be headed toward a significant slowdown or even a recession. Nevertheless, each of the benchmark indexes listed here posted solid gains in January, led by the Nasdaq as tech stocks rebounded from a rough 2022. Stocks began the month by climbing higher over the first two weeks of January. However, equities lagged mid-month, only to rebound at the end of January, closing out the month on a positive note.
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posted in Financial Planning, Stock Market, 2023, January
The IRS announced that the starting date for when it would accept and process 2022 tax-year returns was Monday, January 23, 2023.
Tips for making filing easier
To speed refunds and help with tax filing, the IRS suggests the following:
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posted in Financial Planning, Mileage, IRS, Tax Season
Long-term bonds generally provide higher yields than short-term bonds, because investors demand higher returns to compensate for the risk of lending money over a longer period. Occasionally, however, this relationship flips, and investors are willing to accept lower yields in return for the relative safety of longer-term bonds. This is called a yield curve inversion, because a graph showing bond yields in relation to maturity is essentially turned upside down (see chart).
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posted in Financial Planning, 2023, Recession
Amid the 1,650-page, $1.7 trillion omnibus spending legislation passed by Congress last week and expected to be signed by President Biden were several provisions affecting work-sponsored retirement plans and, to a lesser degree, IRAs. Dubbed the SECURE 2.0 Act of 2022 after the similarly sweeping Setting Every Community Up for Retirement Enhancement Act passed in 2019, the legislation is designed to improve the current and future state of retiree income in the United States.
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posted in Financial Planning, 2022, SECURE Act
