2021 Financial Planning Guide

A fresh year resets the clock for financial deadlines and requirements. This guide will help you stay current with laws and opportunities to discuss with your personal board of directors. With the economy still recovering from the pandemic and a new administration starting in January, there’s still plenty of change to come. This guide will help you understand laws and their impacts. Most importantly, you’ll see how to stay ahead with Pocket Plan. If you have questions leave them below or join us on our live weekly office hours.

Taxes
The CARES & Secure Act had a big impact on a lot of people. The challenge is that each law has so complex that many of the decisions are specific to your situation and goals.

For instance, the SECURE Act changes:
– IRA Required Minimum Distributions (RMD) can start at age 72
– 10% penalty exception for births or adoptions up to $5,000
– The Stretch IRA is replaced with the 10 year rule for many beneficiaries

CARES Act Changes:

Investment
The stock markets had banner years in 2020. Despite worsening economic data throughout the second half of the year, markets hit all time highs. These were helped by fiscal packages like the CARES Act passed in March 2020.

Additional stimulus passed by Congress could further help the economy with small businesses and those in the hotel and hospitality industries. Stock valuations are at record highs indicating that growth is being overpaid for as a handful of tech monopolies dominate their industry. Stocks like Apple, Microsoft, Amazon, Facebook and Netflix have become magnets to capital with rich valuations. Alternatively investments across industries like commercial real estate may offer opportunities for the right risk tolerance.

Insurance
Health insurance benefits gained great interest due to Covid-19. Accounts like Flexible Spending Accounts and Health Savings Accounts (HSAs).

Retirement
401k and IRA assets should be coordinated with tax planning and investment opportunities. Below are the 2020 IRA and 401k Contribution limits.

IRA & Roth Contributions
Under age 50 $6,500
Age 50 and over $7,500

Phaseout for deducting IRA Contribution*
Married joint return $104,000 – $124,000 MAGI

Single, Head of household $65,000 – $75,000 MAGI
Married separate return $0 – $10,000 MAGI

Phaseout of Roth IRA contribution eligibility
Married joint return $196,000 – 206,000 MAGI
Single, HOH $124,000 – $139,000 MAGI
Married, separate $0 – $10,000 MAGI

401(K), 403(b) 457 elective deferral limit
Under age 50 $19,500Age 50 and over $26,000

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