Category: Blog

Vaccine Hesitancy: Why We Have It and How It Affects Employers and Employees

6 min read

Vaccine Hesitancy, Covid 19 Vaccine HesitancyAccording to a Tufts University survey, six in ten of those surveyed are now vaccinated against COVID-19. However, almost 40 percent of the unvaccinated respondents said they won’t get the vaccine. Only 28.5 percent of the remaining unvaccinated respondents said they will get vaccinated against COVID-19 in the future, with the remaining unvaccinated respondents unable to decide whether they will take the vaccination. With vaccine hesitancy a concern, how can employers encourage more people to get the vaccine?

It is important to understand why some view vaccines skeptically in order to overcome vaccine hesitancy among employees.

The Johns Hopkins University Coronavirus Resource Center attributes vaccine hesitancy to these factors:

The first factor is safety. Since the vaccine was developed faster than most vaccines have been traditionally, many individuals are concerned about reactions, side effects and quality assurance. More can be read from the CDC VAERS Report.

The second reason has to do with the vaccine’s effectiveness, and how well it works against the coronavirus.

The other reasons for hesitancy are due to things like religious beliefs, vaccine phobias and current health issues of the unvaccinated.

This phenomenon is not isolated to the United States. Based on a global survey of 32 nations that Johns Hopkins cites, 98 percent of Vietnamese would get the vaccine, while only 38 percent of those in Serbia would get the vaccine once it’s available.

Navigating Vaccinations in the Workplace

Requesting a Vaccine Exemption Due to Religious Beliefs

Businesses that fall within the purview of Title VII (Civil Rights Act of 1964), must accommodate an employee’s sincerely held religious belief, practice or observance unless it causes an undue hardship on the business.

The CDC says that once a company is aware of a worker’s “sincerely held religious belief, practice or observance [that stops him from accepting the flu shot], the employer has to provide a reasonable accommodation [except if it causes] an undue hardship.” While this refers to influenza, the reasoning behind it applies equally to an employee expressing their religious objection to a COVID-19 vaccination.

Accommodations for Disabled Employees

According to the Equal Employment Opportunity Commission (EEOC), the Americans with Disabilities Act (ADA) covers employers in the private sector and state and local governments that employ 15 or more workers. The ADA offers guidance for employers when an employee requests to be exempt from a COVID-19 vaccination due to a disability. This Act says that employers are able to implement a workplace standard specifying that a person cannot “pose a direct threat to the health or safety of individuals in the workplace.”

If, however, this workplace standard either sorts out or will likely sort out a disabled person from meeting the workplace safety standard by being unvaccinated, the employer must demonstrate that such person without a vaccine would pose a direct threat of risk to another person in the workplace that cannot be reduced by a reasonable accommodation.

The Equal Employment Opportunity Commission (EEOC) believes a direct or proximate threat exists from the unvaccinated person through four tests: length of the danger, how severe and the type of harm that could occur, the chances of the potential harm that will happen, and proximity of the realistic harm.

When it comes to determining if a reasonable accommodation exists, the EEOC lists three criteria: the worker’s professional responsibilities, if there is a different job the worker could transition to in order to make the vaccination less necessary, and how serious it is to the company’s function that the worker be vaccinated.

How to Encourage More Vaccinations

The U.S. Chamber of Commerce cautions that employers who are contemplating mandating their workers take the COVID-19 vaccination, state law varies on how far they can go. However, a good way to get employees vaccinated is by encouraging and not requiring vaccination. Forcing employees to get the COVID-19 vaccination might make workers look for new employment or face a lack of motivation. Depending on the state laws, a vaccine mandate from an employer might lead to a legal battle if employees refuse to get vaccinated or in rare cases an employee dies from the vaccine.

One way to incentivize employees to get the COVID-19 vaccine is by offering them a cash payment to do so. Average incentives range from $50 to $500 with most being $100.

Based on recommendations from the Centers for Disease Control and Prevention (CDC), there are many things employers can do to help get their employees vaccinated against COVID-19.

One recommendation is to have management explain to employees why it’s important to get the vaccination by creating flyers, posters and other forms of communication when staff are entering and leaving the building.

Offering workers, the ability to get vaccinated onsite could encourage people who are on the fence, especially after they see their co-workers get vaccinated.

One part of the American Rescue Plan, which passed in 2021, as the Internal Revenue Service (IRS) outlines, permits businesses to claim tax credits if they give their workers paid time off to get vaccinated. This tax credit is eligible for employer reimbursement through paid sick and family leave. It also provides an employer tax credit if employees need time off to recover from any post-COVID-19 vaccine side effects.

Businesses with fewer than 500 employees are eligible for this tax credit for paid sick and family leave that occurs between April 1, 2021, and Sept. 30, 2021. This includes for-profit, tax-exempt organizations and some government employers. Self-employed taxpayers also are eligible for an equivalent tax credit.

Taking the time to encourage workers to get vaccinated, learning how to navigate certain aspects of employment laws and state laws, and making sure to maximize one’s business balance sheet are all essential tools to make the most of 2021 and set up an even better 2022 fiscal year.

Sources

https://www.uschamber.com/co/start/strategy/employee-vaccination-incentives

https://www.cdc.gov/coronavirus

https://coronavirus.jhu.edu/vaccines/report/building-trust-in-vaccination

https://www.irs.gov/newsroom/american-rescue-plan-tax-credits-available-to-small-employers-to-provide-paid-leave-to-employees-receiving-covid-19-vaccines-new-fact-sheet-outlines-details

https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paid-leave-due-to-covid-19

https://www.eeoc.gov/coronavirus

https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

https://www.ada.gov/regs2010/smallbusiness/smallbusprimer2010.htm#whoiscovered

Advancing Healthcare Initiatives, Small Business Funding and Protecting the Elderly from Scams

3 min read

Advancing Healthcare Initiatives, Small Business Funding and Protecting the Elderly from ScamsFASTER Act of 2021 (HR 578) – This bill expands the definition of major food allergens for food-labeling purposes to include sesame. It is designed to protect Americans with food allergies and related disorders that could be affected by anaphylaxis, food protein-induced enterocolitis syndrome, and eosinophilic gastrointestinal diseases. It also authorizes the Department of Health and Human Services to report on food allergy research and data collection activities. The bill was introduced by Rep. Tim Scott (R-SC) on March 3. It was passed by Congress on April 14 and is currently awaiting enactment by the president.

Advancing Education on Biosimilars Act of 2021 (S 164) – This bill was introduced by Sen. Margaret Hassan (D-NH) on Feb. 2. The legislation requires the Food and Drug Administration (FDA) to educate and promote awareness about biological products and biosimilars among healthcare providers. The FDA may also host a website to provide educational materials. This bill was passed by Congress on April 14 and is awaiting signature by the president.

TRANSPLANT Act of 2021 (HR 941) – This bill reauthorizes the Stem Cell Therapeutic and Research Act of 2005, which makes genetically matched cord blood stem cells available to patients who need them. The legislation was re-introduced by Rep. Doris Matsui (D-CA) on Feb. 8 and passed in the House on April 15. It is currently under consideration in the Senate.

504 Credit Risk Management Improvement Act of 2021 (HR 1482) – Introduced by Rep. Dan Bishop (R-NC) on March 2, this bill passed in the House on April 16 and goes to the Senate next for consideration. It amends the Small Business Act to require the administrator of the Small Business Administration to issue rules relating to environmental obligations of certified development companies and for other purposes.

504 Modernization and Small Manufacturer Enhancement Act of 2021 (HR 1490) – This bill was introduced by Rep. Angie Craig (D-MN) on March 2 and passed in the House on April 15. It is currently under consideration in the Senate. The bill would amend the Small Business Investment Act of 1958 to improve the loan guaranty program in order to enhance the ability of small manufacturers to access affordable capital. In addition, the bill adds policy goals, such as facilitating reduced costs via energy-efficient products and generating renewable energy, and providing aid to revitalize disaster areas. The bill also would increase the maximum loan amount from $5.5 million to $6.5 million for small manufacturers, and reduce the amount that they must contribute to project costs, among other provisions. The legislation authorizes each SBA district office to engage a resource partner to provide training for small manufacturers.

Fraud and Scam Reduction Act (HR 1215) – This bill would establish an office within the Federal Trade Commission and an outside advisory group for the purpose of preventing fraud that specifically targets the elderly, including mail, telephone and internet scams. Furthermore, the bill would create a Senior Scams Prevention Advisory Group to create educational materials for distribution to employees of retailers, financial services, and wire-transfer companies to help them identify and prevent scams that affect older adults. The FTC also would establish an advisory office within the Bureau of Consumer Protection to monitor scams targeting older adults, educate consumers and receive complaints. The bill was introduced by Rep. Lisa Blunt Rochester (D-DE) on Feb. 23. This bill passed in the House on April 15 and goes to the Senate next for consideration.

New Rules and Ways to Use HSAs/FSAs

3 min read

New Rules HSAs FSAs, health savings account People who own a high-deductible health insurance plan may have the ability to open a health savings account (HSA). They can contribute pre-tax income to an HSA and invest the money for tax-free growth in a variety of mutual funds, stocks and exchange-traded funds (ETFs).

The funds may be withdrawn tax-free when used to pay for qualified expenses, such as the plan’s high deductible, copayments and coinsurance. The funds also can be used to purchase a wide range of health-related products.

However, a recent poll found that 40 percent of respondents who have access to a health savings account do not fully understand them. Perhaps that is why legislation passed last year that increased eligible uses of HSA funds largely went under the radar. The CARES Act included a provision that greatly expanded the number and types of health-related products and services that can be paid for with money from an HSA or an employer-sponsored Flexible Spending Account (FSA). The following list includes many of the newly eligible expenses (some require a Letter of Medical Necessity (LMN) from a licensed provider):

  • Over-the-counter medications, such as for fever, cold and flu, headache, muscle aches, acid, heartburn and indigestion relief, allergy and sinus relief, anti-diarrheal and constipation medicine
  • Toothache relief
  • Skin and rash ointments, medicated body lotions
  • Rubbing alcohol
  • Thermometers
  • Band-Aids and bandages
  • Kinesiology tape
  • Hot and cold therapy packs, cooling headache pads
  • Eye drops
  • Facial cleansers, face wipes
  • Prescription acne medication and over-the-counter acne treatments
  • Sunscreen and SPF moisturizers (including expensive anti-aging facial lotions with SPF protection)
  • Lip balm for sun protection and chapped lips
  • Sleep and snoring aids
  • Smoking cessation nicotine gum, patches, lozenges, inhalers and nasal sprays
  • Prescription sunglasses
  • Humidifiers, air purifiers and filters
  • Dietician fees
  • Some mental health treatments and services
  • Prescription hormone replacement therapy
  • Birth control pills
  • Pregnancy tests
  • Fertility tests
  • Fertility treatments such as in vitro fertilization, intrauterine insemination, fertility medication, the temporary storage of eggs or sperm
  • Birth classes and medically certified doulas
  • Breast pumps, breastfeeding classes, absorbent breast pads, breast milk storage bags
  • Baby monitors and potty training undies
  • Feminine care items, such as pads, tampons, cups and sponges
  • DNA/Ancestry kits

In 2021, the contribution limit for a health savings account is $3,600 for individuals and $7,200 for families; anyone age 55 or older can make an additional $1,000 annual contribution.

Just recently, the IRS published guidelines for employers regarding the use of Flexible Spending Account funds. Because of social distance guidelines and shutdowns in 2020, many people continued to work from home and contribute to their FSA but were unable to use those funds, which are generally designed to be used in the year saved (or otherwise lost).

The new guidelines allow employers to carry over or extend the grace period for unused health and/or dependent care FSA funds to the immediately following plan year. This new rule is retroactive for the 2020 and 2021 plan years. Note that while the IRS permits these new extension rules, it’s up to employers to decide what they want to do.

7 Ways to Save 10K a Year

4 min read

Save 10K a Year, how to save moneyIf you’re scratching your head and wondering if we’ve lost our minds, please keep reading. You can do this. All you need to do is plan your steps – and stick to it. After all, Confucius says, “A journey of a thousand miles begins with a single step.” So let’s get moving.

Save Before You Spend

This might well be the opposite of what you do: you get your weekly or monthly paycheck, determine what expenses are ahead, then dedicate what’s left to savings. To save $10,000, the first thing to do is put away the money you’ve designated to reach your goal first (50 percent? 25 percent?), then live off the amount that’s left. Yes, it’s backwards, but in the end it’s the way forward to realize your 10k dream.

Set Up a High-Interest Savings Account

So that cash you’ve set aside? Deposit it into a savings account that will make your money grow. Several good options are Vio Bank (APY: 0.57 percent), Comenity Direct (APY: 0.55 percent), and Ally Bank (APY: 0.5 percent). This could mean the difference of hundreds (or even thousands) of dollars of interest over time.

Baby Step Your Way There

Break your goal into small chunks. Let’s say your monthly savings goal to get to 10k is $500 a month. If that’s too overwhelming, break it into two $250 chunks. If that’s too much, $125 a week, and so on. You can even parse out per day: $500 divided by 30 days in a month = $16. You can do this!

Start a Side Hustle

If you find you can’t make the amount you want to save each month and you aren’t able to tailor your expenses to fit your goal, start a side gig. For instance, if you’re able-bodied, consider helping people move and/or helping them assemble furniture. Other options include babysitting, food delivery, taking market research surveys, running errands and more. TaskRabbit is a great resource to find all kinds of ways to increase your income.

Cut Unnecessary Expenses

Look closely at your expenditures. Decide if you’re really reading that magazine and think about canceling the subscription. Pack a lunch and/or cook in for dinner. Call your internet and cell phone provider to see if they have a better deal. If you want to add an extra $1,000 to your savings each year, all you have to do is cut out $84 a month. This is doable.

Commit to a Budget

Everything that means something requires hard work and commitment. Take an afternoon, put it all down on paper, and promise to live within a dedicated financial scope. Compare your short-term gratification to your long-term financial goal. Imagine how good you’ll feel when you’ve saved $10,000. The power of visualization works.

Track Your Progress

If you’re feeling overwhelmed along the way, it pays to go back and see how far you’ve come – and we’re talking literally see it. Make your milestones visible. Hang a chart in your kitchen and color it in when you make a deposit. Or if you’re more analytical, create a spreadsheet, but keep it on your desktop. Checking this every day will help keep you on point.

Saving for a goal like this can be fun and even exciting. All you have to do is be mindful, make a conscious decision to follow your plan, and your 10k dream will be realized before your know it.

Sources

How To Save $10,000 In A Year (10 Simple Tips)

https://www.bankrate.com/banking/savings/rates/

Everything There is to Know About the New Child Tax Credit

3 min read

Child Tax Credit 2020The Child Tax Credit as we know it originated during the Clinton administration, but the recently enacted American Rescue Plan created a new version. The updated version of this tax credit could have a beneficial impact on Americans struggling through the COVID-19 pandemic. There are changes to many aspects of the credit, so let’s look at each one below.

Monthly Payments Versus Once-a-Year Credit

First, the new version of the Child Tax Credit applies only to the year 2021. If a family qualifies, the credits are $3,600 for each child under age 6 and $3,000 for those ages 6 to 17.

The major difference is not the limits, but that in 2021 half of the credit will be paid on a monthly basis in the second half of the year. From July through December, the credit will be paid out at a rate of $300 for each child under age 6 and $250 for each child ages 6 to 17. In prior years, the tax credit was available only when filing an annual tax return. The other half of the credit in 2021 will be reconciled on 2021 income tax returns.

Income Limits and Phase-Outs

Similar to the stimulus checks, the tax credit is based on adjusted gross income. To receive 100 percent of the credit, the AGI limits are $75,000 for single filers, $112,500 for heads of household and $150,000 for those married filing jointly.

The phase-outs start once a taxpayer exceeds these AGI thresholds. Every $1,000 in AGI over the limit reduces the credit by $50 (per dependent child). For example, if a couple filing jointly earned an AGI of $165,000, their credit will be reduced by $750 per child.

Qualification for the Credit

While the tax credit is ultimately based on 2021 income, to facilitate the monthly payments, the new Child Tax Credit will use 2020 income tax returns. For those who haven’t filed yet, the look-back will be to 2019. The monthly payments will be based on these already filed tax returns and then the balance of the credit be reconciled based on 2021 income.

If a taxpayer receives more interim monthly payments on the tax credit than their 2021 AGI entitles them to, they will need to pay back the unqualified portion of the credit.

Unique Situations

In the scenario where a child crosses age thresholds mid-year in 2021, the age for determining the credit will be based on how old the child is on Dec. 31, 2021. For example, a child who turns 6 before the end of the year will qualify for the lower $3,000 credit and not the $3,600 for those under 6.

Existing Child Tax Credit is Still Available

One of the unique features of the new Child Tax Credit is that the old version is still available. This version established under the Tax Cuts and Jobs Act of 2017 has significantly higher AGI thresholds: single taxpayers with an AGI of $200,000 and married filing jointly at $400,000. As a result, many taxpayers will still qualify for this version with its lower credit of $2,000 per child and no monthly payments.

Conclusion – There’s More to Come

As the July 1, 2021 start date approaches, the IRS will release more details on the new Child Tax Credit and what taxpayers can do to take advantage of the changes.

E-Invoicing Presents Opportunities for Businesses to Save

4 min read

E-Invoicing Invoicing is an important process in any business. Unfortunately, it’s also a laborious process that requires accuracy. With technology advances, businesses have tried to use various means to ease the invoicing process. Some outfits send scanned invoices; others might transfer PDFs through email; and some still use manual invoices. In this technology age, businesses are choosing to automate functions in a bid to increase overall business productivity and efficiency. E-invoicing is a technology that promises to help entrepreneurs add value to their businesses.

What is E-Invoicing?

E-invoicing is the exchange of an invoice between a buyer and seller using an integrated electronic format. This allows the buyer to pay online through a card payment, direct debit or other option after receiving the e-invoice.

E-invoicing is not a new technology; it’s already used by large scale businesses and governments. Some governments have already mandated the use of e-invoices from their suppliers and even for taxpayers. These programs have been running onsite, making it expensive for small and medium businesses (SMB) to use. Another challenge for SMBs has been dealing with multiple providers who have different platforms and technologies. This is a challenge because it requires a business to support extra business processes when sending or receiving invoices.

However, the rise of cloud computing and Software as a Service (SaaS) technologies has become an enabler for SMBs to implement e-invoicing.

Making e-invoicing available as SaaS eliminates complicated system installations and integrations that have previously been a challenge to SMBs. The SaaS systems come with features that allow you to automate the invoicing process, send reminders, accept online payments and generate reports, among other things.

Benefits of E-Invoicing

Here are some reasons that businesses are moving to e-invoicing:

  • Eliminates the manual process of sending invoices between a buyer and seller.
  • Prevents human error with the use of a template. The automated e-invoice ensures correct data is used with a validation process. This ensures there is no mistyped information, no data entry errors, no double entry, missed details or wrong data. Therefore, it improves accuracy.
  • Low cost of processing, since it helps to cut down on administration costs and printing invoices. It also saves a business from the task of sending emails back and forth concerning an invoice.
  • Maintains a more predictable cashflow as e-invoicing facilitates the seller receiving payment faster.
  • Enables ease of tracking invoices as you can track and trace the entire document journey. This means better accounting.
  • Enhanced convenience. Businesses create a different number of invoices depending on their transactions. E-invoicing provides a convenient way to store the invoices and easily retrieve them when needed.
  • Saves on time so you can concentrate on other business activities. There is no need to waste time looking for client information and entering data every time you need to send an invoice.
  • Improves the accounting process. When a business integrates e-invoicing with an accounting system, the invoicing function is faster and easier to handle.
  • Enhances invoice security and guaranteed delivery. There is no risk of invoices getting lost in the mail or landing in junk email. Encrypted file transfer and digital signatures are used to enhance security.
  • Real-time processing, which allows one to view the live delivery and processing status of an invoice.
  • Remote handling as SaaS can be accessed from anywhere. This makes it possible to send an invoice anytime and from anywhere as there is no need for printers or scanners.

Conclusion

The business environment is becoming increasingly competitive and the adoption of technology that automates processes can only help. E-invoicing provides an opportunity for business owners to effectively use their time on growing their business instead of spending it on a labor-intensive administration process. This service also helps SMBs align themselves with large corporations.

Finally, as with any technology, business owners should take time to research which e-invoicing service provider will best serve their unique business needs.

How Businesses Can Hedge Against Increasing Inflation

3 min read

Increasing InflationInflation is on the rise. According to a recent Economic News Release from the U.S. Bureau of Labor Statistics (BLS), the Producer Price Index for final demand grew by 1 percent in March. February saw “final demand prices” grow by 0.5 percent; and January’s final demand prices increased by 1.3.

According to BLS, the Producer Price Index (PPI) consists of many indicators and evaluates the mean difference over a period of time for the “selling prices received by domestic producers of goods and services.” In other words, PPI is a way to gauge how much manufacturers and similar businesses face in increased costs due to inflation.

This inflation gauge takes a broad survey of approximately 10,000 unique manufactured items and the amount of inflation businesses face. The BLS’ PPI measure looks at items produced by fisheries, food growers, miners, manufacturers, etc. It also includes 72 percent of production of the service sector, as the 2007 Economic Census found.

Hedging with Futures  

One way to reduce risk is by hedging. A popular example is with futures contracts. Much like buying an insurance policy, futures contracts can reduce the impact of a negative event, such as a spike in commodity prices.

If a company is worried about the price of oil for their planes or coffee for their cafes, they can enter into a futures contract to buy a designated quantity of that particular commodity at an agreed-upon price, with the ability to exercise it on or before the expiration date.

With a futures contract, a company can better plan its budget based on the contract’s parameters and the cost of the contract. If the price of the commodity rises in the future due to increased demand or limited supplies, the business can save money by taking delivery of the particular commodity at the originally agreed upon price through the futures contract.

Since the goal of hedging is to protect against losses, it’s important to weigh the cost of the futures contract. If the price of the commodity falls for the above-mentioned futures contract example, the company would still be forced to buy the commodity at the contract’s price, which would be a poor investment. If, however, it sells the futures contract before its expiration to avoid receiving the physical commodity at a poor price, that would lead to a loss. Having a contingency plan to reduce losses in futures contracts is always a good part of a hedging strategy.

Negotiate with Suppliers

Much like businesses enter into specified timeframes with suppliers, companies can do the same with their purchased supplies to provide more predictable prices. When the PPI measurement is used, the purchasing company can contract with its supplier to settle on the initial product’s price, and how price fluctuations will be determined going forward. Since the PPI is released monthly, the price can adjust accordingly (decrease or increase, depending on the PPI) for the supplier and purchasing company. It can be re-evaluated every three, six or 12 months, for example.

While there’s no predicting the future and if and how much commodity prices may rise and impact businesses, the more tools that businesses have to mitigate increased costs, the more likely they are to survive rising inflation.

Sources

https://www.bls.gov/ppi/ppifaq.htm

https://leg.mt.gov/bills/2007/fnpdf/HB0204.pdf

https://www.bls.gov/news.release/ppi.nr0.htm

Economic Stimulus, Making the Post Office Solvent Again, Gun Control, Voting Rights and Restricting China’s Influence

4 min read

Gun Control, Voting RightsAmerican Rescue Plan Act of 2021 (HR 1319) – This $1.9 trillion relief bill provides stimulus money to address the continued impact of COVID-19. Provisions include issuing $1,400 checks to taxpayers, increasing the Child Tax Credit up to $3,000 and the dependent care credit to $4,000, and providing funds for schools, small businesses, renters and landlords, increased subsidies for Americans who buy individual health insurance, and $160 billion allocated toward vaccine development and distribution. The bill was introduced by Rep. John Yarmuth (D-KY) on Jan. 15, first passed in the House on Feb. 27 and in the Senate on March 6, and was signed into law by President Biden on March 11.

SAVE LIVES Act (HR 1276) – This bill was introduced by Rep. Mark Takano (D-CA) on Feb. 24. The legislation would authorize the Department of Veterans Affairs (VA) to furnish a COVID-19 vaccine to veterans ineligible for the VA health care system, who live abroad, and family caregivers of veterans, among others. The bill passed in the House on March 9 and in the Senate on March 17. It has been returned to the House for approval of changes.

USPS Fairness Act (HR 695) – This act would repeal the requirement that the U.S. Postal Service annually prepay future retiree benefits, decades in advance. The current mandate, which was signed into law in 2006, has since threatened the viability of the USPS. While the Post Office generates enough revenue to cover its operating costs, this prepayment of pension and retiree healthcare benefits has pushed its bottom line into the red. The bill was introduced by Rep. Peter DeFazio (D-OR) on Feb. 2 and enjoys bipartisan support.

Violence Against Women Reauthorization Act of 2021 (HR 1620) – This is a reauthorization of the Violence Against Women Act of 1994, a popular law that protects and provides resources for victims of domestic abuse and sexual violence. The bill expired at the end of 2018 after Congress failed to act due to partisan disputes over guns and transgender issues. It was re-introduced by Rep. Sheila Jackson Lee (D-TX) on March 8 and passed in the House on March 17. It is currently under consideration in the Senate.

Bipartisan Background Checks Act of 2021 (HR 8) – This bill establishes new background check requirements for every firearm sale. It prohibits a firearm transfer between private parties unless a licensed gun dealer, manufacturer or importer first takes possession of the firearm to conduct a background check. The bill was introduced by Rep. Mike Thompson (D-CA) on March 1 and passed in the House on March 11. This bill is currently under review in the Senate.

For the People Act of 2021 (HR 1) – This bill was introduced by Rep. John Sarbanes (D-MD) on Jan. 4 and passed in the House on March 3. It is currently under consideration in the Senate. The purpose of this legislation is to protect and expand voter rights. Specifically, the bill:

  • Expands voter registration (automatic and same-day registration)
  • Increases voting access (vote-by-mail and early voting)
  • Prohibits removing voters from voter rolls
  • Requires states to establish an independent commission to deploy congressional redistricting
  • Establishes provisions related to election security, including sharing intelligence information with state election officials and supporting states in securing their election systems
  • Prohibits campaign spending by foreign nationals, requires additional disclosure of campaign-related fundraising and spending, mandates additional disclaimers in political advertising, and establishes an alternative campaign funding system for certain federal offices
  • Establishes additional conflict-of-interest and ethics provisions for personnel who work in the three branches of government
  • Requires the president, the vice president, and certain candidates for those offices to disclose 10 years of tax returns

CONFUCIUS Act (S 590) – This bill, also referred to as the Concerns Over Nations Funding University Campus Institutes in the United States Act, is designed to mitigate China’s influence on U.S. post-secondary educational institutions that are directly or indirectly funded by the Chinese government. Specifically, educational institutions contracted with Confucius Institutes that also receive federal funding must include provisions in those agreements that prohibit the application of foreign law on those campuses and grant full control over teaching plans, activities, research grants and employment decisions to the U.S. university. The act was introduced by Sen. John Kennedy (R-LA) on March 4 and passed in the Senate on the same day. It is currently under consideration in the House.

Roth Conversion in 2021?

4 min read

Roth Conversion in 2021?In 2020, a year when all income brackets benefited from lower tax rates, the stock market took a nosedive at the beginning of the pandemic. For investors sharp enough to see the opportunity, this was an ideal time to convert a traditional IRA into a Roth IRA.

When you conduct a Roth conversion, the assets are taxed at ordinary income tax rates in the year of the conversion. So, the best time to do this is when your current income tax rate is low and when your IRA account balance loses money due to declining market performance. Once you convert the account to a Roth, those assets continue to grow tax free and are no longer subject to taxes when withdrawn later.

If you believe those stocks will rebound, you can direct the traditional and new Roth IRA custodians to move the shares as they are, rather than selling them for cash. Or, if you are converting the entire account and choose to remain with the same brokerage, you can simply instruct the custodian to change the account type. This way you can keep the same investments, pay applicable taxes on the account balance at the time of the conversion, and then never have to pay taxes on future gains.

While the stock market did recover in 2020, many market analysts believe equities are currently overpriced and could experience another correction this year. On top of that, with Democrats now in control of the White House and both houses of Congress, many expect legislation that will increase income taxes, at least among wealthier households.

Therefore, in order to avoid higher taxes on a long-accumulated traditional IRA, 2021 might be a good year to conduct a Roth conversion. The key is to try to time that conversion with a market loss. By conducting a conversion before income taxes increase, you’ll pay a lower rate, and all future earnings can grow tax-free and be distributed tax-free. Bear in mind, too, that a Roth does not mandate required minimum distributions at any age. The full account balance of a Roth has the opportunity to continue growing for the rest of the owner’s life.

A Roth conversion is not the best strategy for everyone. Consider the following scenarios that are not ideal for conversion.

  • An investor under age 59½ will be assessed a penalty on newly converted Roth funds withdrawn in less than five years, so this might not work for an early retiree who needs immediate income.
  • If you expect to be in a lower tax bracket during retirement, you should wait until then to pay taxes on distributions of your traditional IRA. Also, if you think you might relocate to a state with lower or no state income tax during retirement, not converting eliminates state taxes on that money entirely.
  • Watch out for a bump in income taxes on a Roth conversion. You might not want to convert if those assets put you in a higher tax bracket during the year of conversion.
  • Also note that if you convert after age 65, higher income reported that year could increase premiums for Medicare Part B benefits, as well as taxes on Social Security benefits.
  • If the non-spousal IRA beneficiary is likely to remain in a lower tax bracket than the owner, he might as well leave the assets in the traditional IRA. Otherwise, the owner will waste more of his estate’s assets to pay taxes on the conversion.
  • If you don’t have available cash outside the traditional IRA to pay the taxes on the conversion, the money will come out of the account and substantially drop the value. Consider whether or not your investment timeline is long enough to make up for that loss.
  • If your goal is to leave that IRA money to a charity, don’t bother to convert. Qualified charities are exempt from taxes on donations.

If you’re planning to leave a Roth IRA to your heirs, they also enjoy tax-free distributions as long as that Roth was opened and funded for at least five years before you pass away. This is another reason why it might be better to convert to a Roth IRA sooner rather than later.

3 Best Ways to Save for College

4 min read

Save for CollegeWhat if you could save enough for your child to go to college debt-free? It might sound impossible, but with dedication, hard work, and careful planning, you can do just that. According to Dave Ramsey, American personal finance advisor, here are the top three tax-favored plans to get started.

The Education Savings Account (ESA)

Otherwise known as the Education IRA, this plan allows you to save $2,000 (after tax) per year, per child. Let’s do that math. If you begin saving when your child is born and put away $2,000 a year until they’re 18, you’ll be investing $36,000. Not too shabby. And the good news is that qualified distributions are tax-free, which means you won’t have to pay anything when you withdraw the funds to pay for college. The other upside is, depending on the rate of growth, you’ll earn more than you would in a regular savings account. However, there are some caveats. You can’t contribute if you make more than $110,000 (single) or $220,000 (married filing jointly); the contribution cap is $2,000 a year; and the money must be used by the time your child is 30.

The 529 Plan

If you want to save more for your child’s education or you don’t qualify for the income limits of the ESA, then this might be a better fit because you can contribute up to $300,000, depending on what state you live in. Ramsey recommends you look for a 529 Plan that allows you to choose your investment funds. Also, he says most of the time there aren’t any income restrictions based on your child’s age; however, there are some limits, so choose wisely. This plan also grows tax-free. One thing to note: restrictions may apply if you want to transfer your funds to another child.

The UTMA or UGMA (Uniform Transfer/Gift to Minors Act)

One of the best things about these plans is they’re not just designed to save for education. For example, if your kiddo wants to take a gap year, this can cover living expenses. The account is set up in your child’s name but it’s controlled by a custodian (usually a parent or grandparent). The custodian manages the account until the child is 21 (18 for the UGMA). One of the pluses of this plan is that since the account is owned by the child, the earnings are usually taxed at the child’s rate, which is generally lower than that of the parents. For some people, the savings can be significant. However, there are two important things to know: (1) once your child is of legal age, she can use the funds however she likes (a trip to Europe, a sports car…or college?) and, (2) the beneficiary can’t be changed after selected.

While setting up a college fund is a smart goal, it’s not the only one. Prior to starting down these paths, Ramsey recommends that you consider paying off your mortgage, credit cards, and your own student loans. He also suggests setting up an emergency fund of three to six months and allocating 15 percent of your salary to retirement through a 401(k) and/or a Roth IRA. For more help, he recommends both parents and children read “Debt-Free Degree.” This book walks you through how to go to college without student loans.

Saving for an education might feel completely overwhelming, but if you start early enough, do your homework and create a solid plan, it’s absolutely possible.

Sources

https://www.daveramsey.com/blog/saving-for-college-is-easier-than-you-think

https://www.troweprice.com/personal-investing/accounts/general-investing/ugma-utma.html#:~:text=Because%20money%20placed%20in%20an,this%20savings%20can%20be%20significant.&text=Up%20to%20%241%2C050%20in%20earnings%20tax%2Dfree.&text=Any%20earnings%20over%20%242%2C100%20are%20taxed%20at%20the%20parent’s%20rate