As it was signed into law on Thursday, December 30, by President Biden, it’s a good time to look into what’s included in the SECURE 2.0 Act and how it could affect physicians, particularly those who own their own businesses. This act, which builds on previous legislation passed in the past several years, includes many components that have the potential to change aspects of physicians’ financial lives. This legislation looks to continue to strengthen the American retirement system to make sure more people are provided for once they are no longer working. While some of these provisions will not go into effect for years, some of them will have an immediate impact on people of all walks of life, including students, retirees, and those actively working within their careers to save money and set up a stable life for their families.

Let’s look at some of the provisions to help you get an idea of what to expect in 2023 and beyond.

Larger Catch-up Contributions

For individuals over age 50, the maximum limits for contributions to employer plans has been higher to allow them to catch-up for years in the past that they perhaps couldn’t contribute as much. While in 2023 that limit is $7500, starting at the beginning of 2025, those aged between 60-63 will be able to make an annual contribution of up to $10,000. For those earning more than $145,000, the catch-up contribution amount must be made into a Roth IRA with post-tax dollars. For IRA owners, 2024 will mean the catch-up contribution limit will be tied to inflation, meaning it could increase along with the cost of living every year.

More RMD Changes

Beginning 1/1/2023, the age at which retirement account owners must start taking RMDs will go up to 73. This age will increase more in the future—starting in 2033, the age will be pushed to 75. The penalty for not taking an RMD will also decrease from 50% to 25%, and this could be reduced even further to 10% if the account owner withdraws the RMD late and submits an amended tax return.

529 Plans

Not every future plan works out. For those with 529 plans, once the account is 15 years old, it can be transferred into a Roth IRA for the beneficiary with a lifetime limit of $35,000. The rollover is considered toward the usual annual Roth IRA contribution limit. This way, the money can continue to be helpful to the beneficiary in future.

Matching Roth Contributions

For employers who wish to offer Roth account options to their employees, they will be able to provide vested matching contributions rather than only being able to offer pre-tax options. While it may take a bit for payroll and plan providers to catch up to these changes, they offer a new option to help employee savings grow tax-free. In another boon to this type of account, beginning in 2024, RMDs from employer-sponsored Roth accounts will no longer be required.

Charitable Distribution Options

For those who are over age 70 ½ and are charity-minded, there are changes to the Qualified Charitable Distribution rules. Firstly, staring in 2023, the $100,000 limit will be linked to inflation. Also starting in 2023, IRA owners may use part of the QCD as a one-time gift up to $50,000 to one of several types of charitable trusts, including charitable remainder annuity trust and charitable gift annuities. This amount will count toward the giver’s annual RMD.

Student Loan Encouragement

In good news for those who have graduated and are building their careers while paying off student loans, 2024 marks the start of employers being able to provide a sort of “match” to employee student loan payments by making a matching payment into the employee’s retirement account.

Employer-Sponsored Plan Auto Enrollment

In another aim to get Americans saving for retirement, starting in 2025, businesses establishing new 401(k) and 403(b) plans must automatically enroll any qualified employees with a contribution rate of at least 3%. There are also provisions to automatically move employees’ small balance accounts to a new plan should they switch jobs, meaning fewer forgotten low balance accounts at old employers. Coming in 2024, the bill will also create simpler employer plans that will allow smaller businesses to adopt them. These plans will primarily be payroll deferrals linked to annual IRA contribution limits.

Easier Access to Retirement Accounts for Part-Time Workers

To provide part-time employees’ more access to retirement accounts, the original SECURE Act contained provisions for employees who worked between 500 and 999 hours for three consecutive years to be eligible for their company’s 401(k) plan. This new act makes it even easier by reducing the number of years to two. As a note, employees who work at least 1000 hours a year were already required by law to be considered eligible.

Saving for Emergencies

Starting in 2024, defined benefit retirement plans could include an additional savings account designated as a Roth account for emergency savings. This account would accept contributions from non-highly compensated participants with a $2500 annual limit. The first four withdrawals every year could be taken penalty- and tax-free. The plan could even allow for employer matches, further giving employees an easy method of saving for goals as well as preparing for emergencies.

These are the some of the most impactful provisions of the SECURE 2.0 Act, many of which focus on retirement plans and setting up systems to let employers help their employees save for their retirement. From creating new employer-sponsored plans, to matching contributions for those who are paying student loans, to helping employees save for unplanned life events, these legislative changes could make big changes when they take effect.  To learn more about how the changes in the SECURE 2.0 Act could benefit you and offer you new ways to save for retirement, please reach out to our office. We would be happy to guide you through these changes and opportunities as they work with your unique financial situation.

Securities offered through Securities America, Inc., member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Wall Street Alliance Group and Securities America are separate companies.

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Johan Vako is a financial analyst at Wall Street Alliance Group.

It has been a concerning year for consumers as we’ve watched inflation rising across the U.S.,
with higher prices affecting every area of people’s purchases, from gas to groceries. This
increase has curtailed the spending power of most Americans, and while inflation is never a
circumstance to be welcomed, there is some small comfort in the anticipation of a small
kickback in terms of lowered tax bills.

Next year will bring changes in many tax provisions when the IRS makes its annual inflation
adjustments for 2023. While these adjustments are usually small, because of the consistently
high inflation rate over the past several months, analysts believe that these upcoming changes
will be more impactful on taxes for 2023. Here are some examples of provisions expected to
change next year and the potential advantages they could create:

• Automatic inflation adjustments will raise the threshold for income tax brackets. For
  2023, the top bracket limit is expected to increase by almost $50,000 for a married
  couple, meaning a combined income of $693,750 would put them into the top bracket.
  The top 37% tax rate will apply to individuals with incomes starting at $578,125. The
  increase across all tax brackets will be around 7%. This is a large jump, considering it
  was a 3% increase for 2022.

• Standard deduction (the deduction allowed for taxpayers who do not itemize deductions
  on tax returns) amounts will also probably increase in 2023. The anticipated increase will
  move from $25,900 for 2022 to $27,700 in 2023 for taxpayers filing jointly.

• Contribution limits for retirement accounts may be raised. This would allow for greater
  tax advantages for those contributing, with more savings for those who maximize their
  annual contributions. Employer-sponsored retirement accounts, including 401k plans,
  use a particular formula to determine inflation-related increases. It’s expected that the
  maximum contribution amount for retirement plans will increase by $2000 over 2022 to a
  max of $22,500 for 2023. For workers who are aged 50 or over, the catchup amount will
  rise from $6500 to $7500, if not more. For IRA accounts, which determine inflation-
  related increases using the usual IRS formula, the current limit of $6000 will likely
  increase to $6500 for 2023. Flexible spending accounts for healthcare are also expected
  to experience a limit increase, from $2850 to $3050 for tax year 2023.

• For those looking to shelter assets from estate taxes that will be levied against their
  heirs’ inheritance, the federal estate tax exclusion amount will likely be raised as well.
  From the current $12.06 million amount, it is expected that the amount will go up to
  $12.92 million for tax year 2023. This would allow a married couple to protect nearly $26
  million from estate taxes.

• Tax-free gift limits are also expected to increase for 2023. Wealthy individuals may use
  this amount to gift assets to their children or other beneficiaries without the givers or
  recipients having to pay taxes on the amount. The current limit for tax-free gifts is
  $16,000 for a married couple. In 2023, it is expected that the amount will jump to
  $17,000.

• While the current annual child tax credit of $2000 isn’t adjusted for inflation, the
  additional child tax credit that is listed as refundable even for those taxpayers who are
  not required to file taxes is adjusted. There is an expected increase from $1500 to $1600
  next year to account for inflation. However, the income limits that determine a taxpayer’s
  child tax credit will not be increased to account for inflation at this time.

• There is also an expected climb in Social Security benefits for seniors. This increase is
  anticipated to be larger than the potential changes to tax provisions due to inflation. At
  this point, analysts expect there to be an approximate 8.7% increase in monthly
  payments to seniors from Social Security. This is due to an increase in the estimated
  base wage tax level used to calculate Social Security benefits for recipients.

To make the adjustments that will affect taxes, the IRS utilizes formulas and methods that are
established in federal law. This is why the amounts may look different from the type of inflation
numbers that we see in news headlines and articles. Tax-provision adjustments use a particular
index to measure inflation which is called the chained consumer-price index. This index
analyzes not just what is purchased across the nation, but specifically takes into account the
different items individuals choose to purchase as prices increase and they may be forced to
change their regular shopping habits.

Using this index, the IRS examined the average of the index from September 2021 to August
2022 to determine precisely what the adjustments for 2023 will be. The increases discussed
here are estimates proffered by analysts; the actual IRS tax provision adjustments will be
announced either in October or November. In turn, these adjustments will be in effect for the
2023 tax year. It’s important to understand the types of changes that could affect your taxes to
ensure you speak with your tax professionals to be in the best position to take advantage of any
adjustments that could benefit you.

Securities offered through Securities America, Inc., member FINRA/SIPC. Advisory services
offered through Securities America Advisors, Inc. Wall Street Alliance Group and Securities
America are separate companies.

The post High Inflation Adjustments To Your 2023 Tax Bill – by Johan Vako first appeared on Wallstreet Alliance Group.

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Raising kids is a special kind of experience, full of excitement, pride, and challenges. One thing families have on their side is the child tax credit that is available for parents to claim as an expense on their annual tax returns. Recently, there were changes made to the child tax credit through the American Rescue Plan Act in March of 2021 to help families as the US recovers from the economic difficulties of the COVID-19 pandemic. However, these changes are only temporary, so it’s important to know what the changes are and how to make best use of them this year.

Here are the FAQs for IRS Child Tax Credit:

• What is the maximum age for children to qualify? The new law raised the maximum age of children who qualify from 16 to 17, so parents of older teens can benefit.

• What are the new credit amounts? For children ages 5 and younger, the credit amount is $3600 per child. For children between ages 6 and 17, the credit amount is $3000 per child.

• What are the income qualifications? To fully take advantage of these credits, income for a single filer must be less than $75,000, less than $112,500 for head of household filers, and less than $150,000 for joint filers. Those with higher incomes can still benefit, but the amount phases out as the income level rises. Families with higher incomes, which are considered over $400,000, qualify for the credit amount that existed under the previous law, which is $2000 per qualified child.

• When does the filer receive these credits? Beginning July 15 and then the 15^th of each month until the end of the year, half of the credit may be taken by qualified filers in monthly installments, with the remaining half claimed when the recipient files their tax returns for 2021. For children 5 years of age and younger, the monthly payments are up to $300, and for children between 6 and 17, the payments are up to $250 monthly.

• Who qualifies for monthly payments? To qualify, filers must have income less than the previously given limits and a qualifying child under 18 years of age at the end of 2021 with a Social Security number. They must have a primary residence in the US for more than half of the year or file with a spouse who does. Lastly, they must have filed a 2019 or 2020 tax return and claimed the child tax credit on one of them (or alternately, have given the IRS their information using the IRS non-filer tool). While higher income families will only receive the previous law’s amount, as previously stated, they can also request monthly payments.

• Can those who don’t owe the IRS qualify? Yes, because the credit is fully refundable, even those who don’t owe the IRS anything can still get the child tax credit.

• What should a filer do to start the monthly payments? The IRS will use the information already on file to begin the monthly payments, so generally nothing needs to be done. If information needs to be updated, filers should use the Child Tax Credit and Update Portal. This includes number of children, filing status, or any other new information that could have an effect on the credit. For non-filers, there is also a Non-Filer Tool that can be utilized.
• How can a filer opt out of monthly payments? To opt out of the monthly payments, the Child Tax Credit and Update Portal can also be used. This is where any status checks can be made as well.

• When can these credits be claimed? As these tax law changes are only temporary, the increased credit amounts and higher maximum age for children are applied only for the 2021 tax year.

• Do babies born in 2021 qualify for the credit? Yes, newborns born in 2021 are eligible under the ‘5 years of age and under’ level for the child tax credit. If the new little dependent hasn’t been reported by July, a filer has two choices. First, the whole credit can be claimed when tax returns are filed. Secondly, the Child Tax Credit and Update Portal can be used to report the baby as a new dependent and thereby claim the monthly payment option.

The child tax credit updates may be great news for parents, providing an addition to cashflow that is always beneficial when raising a household and figuring out a budget. Because these updates are only temporary, it’s important to understand this opportunity now and see how it fits into your planning. To make sure you’re making the most of the credit, make sure to speak with a financial professional who can help you calculate the amount you can receive and whether monthly or lump sum payments suit your unique situation and needs.

Johan Vako is a financial analyst at Wall Street Alliance Group.

Securities offered through Securities America, Inc., member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Wall Street Alliance Group and Securities America are separate companies. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. Securities America and its representatives do not provide tax or legal advice; therefore it is important to coordinate with your tax or legal advisor regarding your specific situation.

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Wall Street Alliance Partner, Aadil Zaman, appeared on Yahoo Finance to discuss with Alexis Christoforous about impact of Biden Presidency and Vaccine news on the stock market and how investors need to prepare.

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Wall Street Alliance Group Partner, Aadil Zaman joins Yahoo Finance’s On The Move panel to explain why it’s important for physicians to implement wealth preservation strategies during the coronavirus pandemic.

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Aadil Zaman from Wall Street Alliance Group appeared on TD Ameritrade Network’s “Morning Trade Live” show with Oliver Renick to discuss our firm’s key investment views and latest stock ideas.

“We personally own Amazon, Facebook, Apple, Alphabet and SPDR Gold Shares.”

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By Syed Nishat and Aadil Zaman

Op-Ed: Physicians Need to Plan for Their Own Financial Health
— Here’s how to start

No Estate Planning

The post Op-Ed: Physicians Need to Plan for Their Own Financial Health by Syed Nishat and Aadil Zaman first appeared on Wallstreet Alliance Group.

The post Op-Ed: Physicians Need to Plan for Their Own Financial Health by Syed Nishat and Aadil Zaman appeared first on Wallstreet Alliance Group.