Increasing Your Return on Life.®

Frank Talk - 2nd Quarter Newsletter (2023)

Published: 06/20/2023

Table of Contents


Written by: Frank Fantozzi

Happy Summer, Clients and Friends!

As we enter summer, we hope that you have some exciting plans to travel or spend time relaxing with family and friends in the coming months. While working hard to accomplish your long-term goals is an important part of securing the future you desire, it’s important that focusing on the future doesn’t come at the cost of living your life to the fullest today. At Planned Financial Services, we believe that finding meaning and purpose in each day is critical for living a fulfilling life. So, whether you’re planning a family vacation, a short weekend escape or simply gathering with family and friends around the firepit in the weeks ahead, know that we’re here to help make sure your life is well lived on your terms. That’s what our focus on Return on Life® is all about. And with the most recent addition to our staff, we’re in a better position than ever to provide the level of service, attention and advice you require. You can read more about our newest team member, Client Liaison Jennifer Damron under Team Updates below.

This spring, we were pleased to have many of you join us for two live webinars, the first was on the markets and economy and the second was on business exit planning. We’ve included links to both recorded webinars and their accompanying presentation slides under our News & Events section, so please take a moment to check those out.

You also don’t want to miss this month’s Market & Economic Update which takes a deeper look at what may be in store for the markets in the month ahead, including a possible “June swoon” and our latest thinking on the tech sector. We will continue to proactively communicate information about the markets and economy, through our regular Market Noise email publication, as well as information and education on topics such as charitable giving, estate planning, retirement income and preparing your business for a sale, through our blog, newsletter, social media channels, email communications, articles, seminars and webinars. If there are topics you would like to see us address through these or other communication channels, please don’t hesitate to contact us with your thoughts and suggestions.

As always, we encourage you to reach out to your dedicated team whenever you have questions or when circumstances in your life change. If you need additional help or someone you know needs our advice, remember, we’re only a phone call away at 440.740.0130.

What’s In It for You?

At-a-glance guide to your 2nd Quarter 2023 Frank Talk newsletter:

News & Events

  • Awards & Recognition
    • Frank Fantozzi: Forbes 2023 Best-in-State Wealth Advisor
    • Cynthia Yang: Forbes Best-in-State Women Wealth Advisors
  • Team Updates
    • Jennifer Damron Joins PFS
  • Upcoming Events
    • Smart Women Breakfast & Awards
    • Understanding Medicare Live Webinar
    • 15th Annual Cleveland Economic Summit
    • Smart Business Family Business Conference
  • Recent Events
    • Market Noise Live Webinar
    • Business Continuity Planning Webinar


  • 2023 Tax Planning Guides
  • Complimentary Second Opinion Service
  • Visit Our Getting Frank Blog and Join Us on Social Media

Market & Economic Update

News & Events

Awards & Recognition

Frank Fantozzi is Recognized in Forbes as 2023 Best-in-State Wealth Advisor

Planned Financial Services President and Founder,  Frank Fantozzi, CPA, MST, PFS, CDFA, AIF®, CEPA, was recently ranked No. 50 in Ohio in the Forbes 2023 Best-In-State Wealth Advisors list. This marks the sixth consecutive year that he was named to the list. According to Forbes, the annual ranking spotlights the nation’s top-performing advisors, evaluated based on criteria* that includes industry experience, client retention and assets under management. View the full list here: Forbes 2023 Best-In-State Wealth Advisors.

Cynthia Yang is Named Among Forbes’ Best-in-State Women Wealth Advisors

Planned Financial Services Wealth Advisor Cynthia Yang, CFA®, (CAIA®), (CIPM) has been recognized for the second consecutive year among Forbes’ Top Women Wealth Advisors Best-In-State. The special report identifies U.S.-based female financial advisors who are leading the way in offering best practices and providing high-quality experiences for their clients, according to Forbes. The annual list is compiled by Forbes with insights from SHOOK Research. Advisors are selected based on quantitative and qualitative data, and are assessed on a variety of criteria, including in-person interviews, years of experience, compliance records and assets under management.

Team Updates

Client Liaison Jennifer Damron Joins the Planned Financial Services Team

We are pleased to announce that Jennifer C. Damron joined our independent financial and investment planning firm as a client liaison. Jennifer’s broad financial services industry experience complements and further strengthens the firm’s multidisciplinary team approach to providing you with a consistently exceptional experience. Prior to joining Planned Financial Services, Jennifer spent seven years as a senior financial analyst at Cleveland-based AML RightSource where she led a team of 20 analysts focused on providing technology-based compliance and fraud prevention solutions to financial services institutions. Prior to that, she spent 13 years at Powers & Powers in Berea, Ohio as a legal assistant in the firm’s probate practice. She is a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS) and the Association of Certified Fraud Examiners (ACFE) and is a Notary Public for the State of Ohio.

Upcoming Events

Smart Business: Smart Women Breakfast & Awards – July 20, 2023

For the 7th consecutive year, PFS will participate as a sponsor of the Smart Business Smart Women Breakfast & Awards on July 20th, 8:00 am – 10:30 am, at the Westin Cleveland Downtown. PFS Wealth Advisor  Chelsea Hussey, CLU®, ChFC®, CFP® will be an award presenter. The Smart Women Breakfast addresses issues facing women in the workplace. The conference also recognizes the achievements of leading businesswomen, inspiring male advocates, and effective women’s programs through the Smart Women Awards program.

Understanding Medicare Live Webinar on August 10, 2023

Get Your Medicare Questions Answered, on August 10 from 11:00 am – 12:00 pm.

Take the guesswork out of Medicare planning! Join guest speaker, Rodika Koloda, Life & Health Advisor at Insurance Systems Group and PFS Wealth Advisor and host, Danielle LeChard, to determine which options are right for you and when you can enroll or change plans. You’ll get the facts about Medicare, as well as answers to all your questions, including how health and/or prescription drug coverage from a current or previous employer could affect your choices. Don’t miss out! Watch for an email providing webinar details and registration instructions.

Save the Date! 15th Annual Cleveland Economic Summit – September 21, 2023

We look forward to welcoming you and your guest(s) to our 15th Annual Cleveland Economic Summit on September 21st at the Cleveland Botanical Garden/Woodland Hall from 4:00 – 6:30 pm. The Summit features dynamic speakers addressing topics impacting the local and national business environment and factors influencing your taxes, business and personal finances. Save the date and watch for an invitation via email in the coming weeks with more details about the speakers and venue. 

2023 Smart Business Family Business Conference – September 28, 2023

For the 7th consecutive year, Planned Financial Services will sponsor the Smart Business Family Business Conference & Family Business Achievement Awards with Frank Fantozzi participating as one of the industry expert panelists providing insight and addressing the challenges of family businesses. The conference will take place on Thursday, September 28th  from 7:30 a.m. – 11:00 a.m. at Corporate College East in Cleveland, Ohio.

Recent Events

Business Continuity Planning Webinar: Why Exit Planning Is Business Strategy

We were pleased to welcome the business owners and business partners who joined us on May 17th for our live webinar event and Q&A session: Why Exit Planning Is Business Strategy. As a Certified Exit Planning Advisor and business owner, Frank shared his insight on the critical role exit planning can play in helping to maximize business value now and when you’re ready to exit. Frank also had the privilege of speaking on this topic at a meeting of the Lake County Bar Association on May 31st.

If you missed the live webinar: Why Exit Planning Is Business Strategy, or would like to hear it again, click the links below to access the recording or download the presentation slides.



Market Noise Live: 2023 Market Perspective

Thank you to those who joined us for our recent Market Noise Live webinar and Q&A, Managing Market Volatility & Uncertainty: A 2023 Market Perspective on May 25th. Host Frank Fantozzi was joined by Wealth Advisors Cynthia Yang, CFA®, CAIA®, CIPM, and Chelsea Hussey, CLU®, ChFC®, CFP® who shared insights on what they believe may be in store for the financial markets and economy in the months ahead, what this could mean for your business and personal investment planning and how PFS is working to help manage portfolio risk and position client portfolios for long-term success.

If you missed the live presentation, or would like to revisit all or a portion of it, you can access the recorded webinar and presentation slides at these links:




Prepare for the Year Ahead with Our Complimentary Tax Planning Guides

  • Our at-a-glance guide to your 2023 Federal Tax Rates makes it easy to quickly find the information you need from federal income tax brackets and rates to capital gains and qualified dividend rates, contribution limits for retirement plans, annual gift and estate tax exclusion amounts, and more. Feel free to download it, print it out or save it to your device to access throughout the year. View or download your complimentary 2023 Federal Tax Rates guide now!

Our Complimentary Second Opinion Service Was Designed for Your Family Members, Friends and Business Associates

Our complimentary Second Opinion Service continues to be well-received among the friends, family members and colleagues of our clients and business associates. This valuable service provides the people you care about with an opportunity to benefit from the same expertise and guidance that you have come to expect as a valued client of Planned Financial Services.

In many cases, a second opinion will simply provide confirmation, and the confidence that those you care about are on track to fulfill their values and achieve their goals with their current financial provider or strategy. However, if needed, we are happy to suggest ways in which we can help, including recommending another provider if we are not a good fit for their needs. Either way, following a Discovery Meeting and Investment Plan Meeting with our experienced team, they will receive a Total Client Profile and a Personalized Financial Assessment of their current situation.

Download a full description and learn more about the Planned Financial Services Second Opinion Service and the benefits it offers to the people you care about most.

Don’t Miss Out on the Topics that Are Important to You: Visit Our Getting Frank Blog

Get a jumpstart on the new year with timely information on the financial planning, business growth and investment topics that are meaningful to you. Visit our Getting Frank Blog at We post new articles and opinions weekly, so be sure to visit often. You can also read the latest blog articles by connecting with Frank personally on social media at LinkedIn, Twitter and Facebook.

Market & Economic Update

Time for a June Swoon?

There is no shortage of headlines referencing the “sell in May and go away” seasonal pattern for stocks, but perhaps investors should focus more on a potential June swoon. As debt ceiling negotiations progressed in Washington before the revised June 5th X-date, the S&P 500 continued to struggle with key resistance at 4,200. While the deal reached in Washington could be a catalyst for a breakout, overbought conditions in the technology sector and mega-cap space—the primary drivers of this year’s market advance—could make this a high hurdle for the market to clear on a near-term basis, especially without broader participation.

The technical setup for the technology sector remains bullish, but overbought conditions have become widespread. Perhaps the rally may be a little too much too fast, as the sector’s Relative Strength Index (RSI) is overbought along with over one-quarter of tech sector stocks. Even the ratio chart comparing the sector to the S&P 500 is well-extended above its rising 50- and 200-day moving averages (dma). While overbought conditions provide validation of the sector’s uptrend, and overbought does not mean over, odds for a shorter-term consolidation and/or pullback appear to be growing. The good news is that if there is mean reversion, it would likely be toward the sector’s uptrend and provide a potential pullback opportunity for investors seeking a better entry point into tech. In the event of a pullback, both the rising 20- and 50-dmas provide dynamic support levels to watch, along with the August highs near 2,650.


Don’t expect any seasonal tailwinds for stocks this month. The S&P 500 has generated average and median price returns during May of 0.0% and 0.1%, respectively, making it the fourth worst-performing month since 1950. Furthermore, the index has only produced positive returns 54.8% of the time during June. For additional context, the S&P 500 has posted average monthly returns of 0.7% and finished positive 61% of the time for all months since 1950.

While the overall average June return is underwhelming, when the S&P 500 does trade higher during the month, the average return has been 2.5%. In contrast, when the S&P 500 trades lower during the month, the average June return has historically been -3.0%.

What About Tech?

The seasonal setup for the technology sector in June is even worse. Since 1990, the sector has generated average and median price returns during the month of 0.0% and -1.7%, respectively, making it the second-worst month based on average returns and the worst month based on median returns. Furthermore, the tech sector has only produced positive returns 42.4% of the time during June, the lowest positivity rate across the calendar.

In Summary

A June swoon may be in the cards for the broader U.S. equity market as the S&P 500 continues to struggle with resistance at 4,200. At the same time, overbought conditions have become widespread across the technology sector, which is 1) responsible for most of the index gains this year and 2) carries around a 28% index weight. While overbought conditions provide validation of the tech sector’s uptrend, and overbought does not mean over, probabilities for a temporary consolidation and/or pullback appear to be growing. The good news is that if there is mean reversion, it would likely be toward the sector’s uptrend and provide a potential pullback opportunity for investors seeking a better entry point into tech. We maintain a neutral recommendation on the technology sector and are waiting for a better entry point.

Closing Remarks

As these and other conditions evolve in the weeks and months ahead, you can rely on your PFS team to continue to monitor and adjust our portfolios and keep you up to date on market and economic developments. We understand the concerns that can accompany change and uncertainty and are confident in our approach to navigating through these challenging times.

We also want to remind you that you are always welcome to contact your dedicated team if you have questions or to schedule time to meet with us at our office. For those who prefer to meet virtually, we continue to use Zoom for virtual meetings, and are always available via phone. Just let us know how you prefer to meet, and we’ll make it happen!

We are always honored to help our clients’ friends and business associates take greater control of their future with guidance from the PFS team. We welcome and are grateful for the many introductions our clients continue to provide. If you, or someone you know, has questions or concerns about your personal investment strategy or business finances, please don’t hesitate to share information about our complimentary Second Opinion Service and reach out to us at 440.740.0130.

Don’t forget to connect with PFS on Twitter, LinkedIn, Facebook and YouTube.

Real People. Real Answers. 

Health, Happiness, and Good Fortune,

Frank Fantozzi
President & Founder



A portion of this research material was provided by LPL Financial, LLC, June 2023. All information is believed to be from reliable sources; however, neither Planned Financial Services or LPL Financial make any representation as to its completeness or accuracy.


This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

For a list of descriptions of the indexes and economic terms referenced in this publication, please visit

All index and market data from FactSet and MarketWatch.

Unless otherwise stated Planned Financial Services and the third-party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific issues with a qualified tax advisor.

Planned Financial Services, LPL Financial, Forbes, SHOOK Research, Smart Business, Rodika Koloda, Insurance Systems Group, and  the Lake County Bar Association are all separate, unaffiliated entities.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

What You Should Know About the Active vs. Passive Fund Debate

Written by: Cynthia Yang

According to Strategas Securities, 62% of actively managed large-cap “core” funds (that buy a mix of growth and value stocks) outperformed the stock market as a whole in 2022. That’s notable, because in most years, passively managed funds that mimic market indexes tend to do better than their actively managed counterparts. Does this mean you should invest only in index funds? Not exactly.

Defining terms

Passive, or index, funds generally strive to track the performance of a particular market index, such as the S&P 500, Russell 2000 (smaller-cap U.S. stocks) or FTSE All-World Index (foreign stocks). Typically, they buy and hold all, or a representative sampling, of their chosen index’s securities and sell only to mirror changes in the index. Because trading is kept to a minimum, these funds usually are tax efficient. And their costs are low because they rely on a formula or algorithm rather than labor-intensive research and monitoring of individual stocks.

Active funds, in contrast, rely on rigorous analysis to evaluate individual securities and build portfolios that attempt to beat market indexes, reduce risk or achieve other goals. Because these funds often try to maximize profits by selling when investment objectives dictate, they tend to  be less tax efficient than index funds. Their need for expert analysts to select securities means that expenses generally are higher.

Why both styles are “active”

It’s important to understand that purely passive investing doesn’t really exist. Short of buying every security in the world, all investment portfolio choices are “active” to some extent. For example, if you choose the “passive” strategy of investing in an S&P 500 index fund, you’ve made an active decision to limit your investment to the U.S. large-cap stocks contained in that index. But they’re only a small fraction of the securities available in the United States and foreign markets.

Passive investing supporters often point to the fact that the majority of actively managed large-cap equity funds underperform their benchmark index over the long term. The semi-annual S&P Indices Versus Active (SPIVA) scorecard confirms that 89% of actively managed funds lag the S&P 500 index over a  15-year period (as of June 30, 2022). In part, this is because these funds charge higher expenses.

However, some actively managed funds in other categories, such as bonds and small-cap equities, regularly beat their indexes. And even some actively managed large-cap stock funds outpace their benchmarks, particularly over the short term. The trouble is finding those active funds that beat indexes — and keep doing so in different markets.

You don’t have to choose

If you’re generally a hands-off investor who wants your portfolio’s returns to reflect that of major market indexes, you may want to buy one or more low-expense index funds. Fortunately, most investors don’t actually have to choose between active and passive investing. You can hold a variety of investment types — including active and passive funds, as well as individual securities — in a diversified portfolio.

Just make sure your overall portfolio reflects your long-term goals, financial resources, investment knowledge and risk tolerance. Risk tolerance is especially important because any investment has the potential to dramatically fall in value and could even lose money over the long-term. Contact Planned Financial Services or your investment advisor to discuss your options.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

Estate Planning: Steer Clear of These 5 Common Mistakes

Written by: Chelsea Hussey

Wealth management and estate planning go hand in hand. A well-designed estate plan can help ensure that you share your hard-earned wealth according to your wishes and protect it from creditors and tax liability. As you develop your plan, or review an existing one, be aware of these five common mistakes.

1.  Failing to fund your revocable trust

A revocable or “living” trust is the centerpiece of many estate plans. This type of trust can help you avoid probate and manage your assets in the event you’re incapacitated. For a revocable trust to do its job, however, you must “fund” it. That means transferring title to your assets to the trust.

Your advisors may help you fund the trust at the time it’s created, but as you acquire new assets, you need to transfer title to your trust. Otherwise, those assets may be subject to probate upon death.

2.  Neglecting to review and update your plan

It’s critical to review your plan periodically and update it to reflect any changes in your goals or financial circumstances. A review is particularly important after major life changes, such as marriage, birth of a child, divorce or death of a loved one.

These changes often require adjustments to your plan to ensure that it continues to meet your wishes. For example, if you neglect to update beneficiary designations, you may inadvertently leave assets to an ex-spouse or deceased person’s estate rather than to your children, parents or siblings.

3.  Not planning for incapacity

Much of estate planning focuses on what happens when you die. But it’s equally important to have a plan for making financial and health care decisions should you become too ill or incapacitated to make them yourself. Execute a financial or property power of attorney as well as a health care power of attorney (sometimes referred to as a living will, advance directive or health care directive). These documents allow you to name someone you trust to manage your financial affairs and make health care decisions on your behalf in the event you’re unable to. They also provide guidance on making those decisions (including your preferences regarding life-sustaining medical treatment).

Revisit your health care directives periodically and update them to reflect changing circumstances. It’s also a good idea to execute new ones every few years, even if nothing has changed, because financial institutions and health care providers sometimes are reluctant to honor older documents.

4.  Holding assets jointly with a child or other family member

When you own real estate or other assets as “joint tenants with right of survivorship,” they pass to your co-owner automatically without probate or the need to set up a trust. But this strategy has some big disadvantages. For example, when you add someone to the title as joint owner, an asset is exposed to claims by that person’s creditors.

What’s more, with certain assets, such as bank or brokerage accounts, your co-owner can sell or dispose of them without your consent. And you won’t be able to sell real estate or pledge it as collateral without your co-owner’s written authorization. This type of ownership can also trigger higher estate, gift and income taxes.

5.  Forgetting to make contingency plans for beneficiaries

What happens if a beneficiary predeceases you? To avoid having state law dictate who receives your property, name contingent beneficiaries on retirement accounts and insurance policies. And be sure your will or trust is clear on what happens if an heir predeceases you.

Suppose you’re splitting your assets equally between your two children. If one of them dies, what happens to his or her share? If your plan (or state law) provides for assets to be distributed per capita (“by the head”), they will go to the surviving child, potentially disinheriting your grandchildren. In contrast, if assets are distributed per stirpes (“by the branch”), then half will go to your surviving child and the other half will go to the deceased child’s family.

Avoid pitfalls

These pitfalls are just a few of the many estate planning mistakes that can trip up even financially sophisticated individuals. To avoid errors, work with qualified advisors who will design and maintain a plan that meets your financial goals as they evolve.

Sidebar: Choose trustees with care

A trust is only as effective as the trustee you appoint to make critical investment and financial decisions. Many people name a spouse or other family member as trustee, but there are several drawbacks to such choices. Unless the person is a financial professional, he or she may not be qualified to manage the trust assets. And a family member who’s also a beneficiary of the trust may have a conflict of interest.

Another option is to name a disinterested third party, such as a CPA, attorney or financial advisor or an institutional trustee, such as a trust company or bank trust department. These third parties are more likely to be free of conflicts of interest, specialize in trust management, and have investment and tax expertise. For the best of both worlds, consider naming two co-trustees: a trusted family member and a professional or institutional trustee.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for specific individualized tax, legal or accounting advice. We suggest that you discuss your specific tax issues with a qualified tax, legal or accounting advisor.

SECURE 2.0 Act: New Law Makes Saving for Retirement Easier

Written by: Mike Rinaldi

Legislation enacted at the end of 2022 included the long-awaited SECURE 2.0 Act of 2022 (SECURE 2.0), which expands on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. Many of the changes made by SECURE 2.0 make it easier to save for retirement in a tax-advantaged manner. Here are some of the highlights.

Taking RMDs

The first SECURE act raised the age at which individuals must begin taking required minimum distributions (RMDs) from IRAs and employer-sponsored retirement plans — from 70½ years to 72 years for those who turn 70½ in 2020 or later). SECURE 2.0 increases the starting age further, to 73 beginning in 2023 and to 75 beginning in 2033. Keep in mind that if you turned 72 in 2022 or earlier, you must continue taking RMDs as scheduled. Similarly, if you turn 73 before 2033, you need to continue taking RMDs as scheduled, even after the starting age increases to 75.

Note: An apparent drafting error creates some ambiguity over whether RMDs start at age 73 or 75 for people born in 1959. Congress will likely make a technical correction to the act to clarify that the RMDs start at age 75 for people born in 1960 or later.)

Delaying distributions

If you don’t need the funds for living expenses, delaying RMDs can boost your retirement savings by allowing additional years of tax-deferred  growth. Delaying RMDs may also reduce income tax on distributions if you’ll be  in a lower tax bracket when they’re made. If you turn 72 in 2023, and you’ve already scheduled your first RMDs, consider delaying them by a year.

The penalty for failing to take an RMD on a timely basis is also changing. In the past, it could result in a tax penalty equal to 50% of the amount that was required to be withdrawn. SECURE 2.0 reduces the penalty to 25% (starting in 2023). The law also provides for further reduction, to 10%, for those who correct the missed RMD in a timely fashion.

Starting in 2024, Roth accounts in employer-sponsored plans will no longer be required to make RMDs. This is the same treatment currently available to Roth IRA owners.

Catch-up and matching contributions

Currently, individuals age 50 and older may make annual catch-up contributions of an additional $7,500 to 401(k) plans and similar employer-sponsored plans and an additional $1,000 to traditional or Roth IRAs. Starting in 2024, the catch-up amount for IRAs will be adjusted for inflation. And, beginning in 2025, employer plan participants ages 60 through 63 will be able to make catch-up contributions equal to the greater of $10,000 (adjusted for inflation) or 150% of the regular catch-up amount.

Starting in 2024, employer plan participants who earned more than $145,000 (adjusted for inflation) from their employer in the previous year must make any catch-up contributions to a Roth account. In other words, these highly compensated employees will no longer be able to make catch-up contributions on a pre-tax basis.

SECURE 2.0 also boosts employer-matching contributions. Beginning in 2023, employees may elect to receive matching funds as after-tax Roth contributions — provided their plan offers this option. (Employer-matching Roth contributions will be taxable to the employee when they’re made.) The act also enables employer plans to treat certain student loan payments as plan contributions for matching purposes.

Section 529 issues

Section 529 plans are a great way to fund qualified educational expenses, but distributions used for other purposes are subject to tax and penalties. SECURE 2.0 provides relief for overfunded 529 plans. Starting in 2024, the law permits up to a lifetime limit of $35,000 to be rolled over into a Roth IRA (for the same beneficiary), free of tax and penalties.

To qualify for a rollover, the 529 plan must be at least 15 years old and the rolled over funds can’t include any contributions (plus earnings on those contributions) made to the plan within the preceding five-year period. Rollovers in a given year are also subject to otherwise applicable limits on Roth IRA contributions.

Revisit your plan

These are just some of the many changes contained in SECURE 2.0’s 300-plus pages. Significant new tax laws such as this often requires individuals to revise their plans. Contact Planned Financial Services or your financial advisor to discuss how SECURE 2.0 affects yours.

Sidebar: QCDs just got even better

If you’re charitably inclined, you know that charitable deductions are available only if you itemize and may be limited to a certain percentage of your adjusted gross income (AGI). A qualified charitable distribution (QCD) allows people age 70½ and older to bypass these restrictions by transferring up to $100,000 tax-free from an IRA to a qualified public charity. As a bonus, this amount counts toward any RMDs for the year.

Among other changes, the SECURE 2.0 Act expands the advantages of QCDs. It does it in two ways:

  1. If you’re 70½ or older, you can now make a one-time QCD of up to $50,000 to a charitable gift annuity or charitable remainder trust that benefits you or your spouse. That means you enjoy the tax benefits of a QCD, while receiving a lifetime income stream.
  2. The $100,000 and $50,000 limits will be adjusted for inflation going forward.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for specific individualized tax, legal or accounting advice. We suggest that you discuss your specific tax issues with a qualified tax, legal or accounting advisor.

No Emergency Fund? What Are You Waiting For?

Written by: Danielle LeChard

Even if you and your family weathered the crises of the past couple years, you probably know people who haven’t fared as well. Health problems, business shutdowns, lost jobs and inflation have all exerted extreme financial pressure on Americans. But an emergency savings fund has kept some people afloat.

A cache of cash can help if you lose your job, experience health problems, or face emergency home repairs and other unexpected expenses. But you need to make sure you’re saving enough, given your income and lifestyle.

Cover nondiscretionary expenses

You may have heard that you need cash savings of three to six months of living costs. But this rule isn’t as straightforward as it may sound. Some experts say you need to save enough to cover three to six months of expenses. Others believe you should save three to six months of take-home pay. Depending on your family’s financial and other circumstances, you may need to save an amount at the lower end or aim for the six-month target.

Emergency fund savings targets often are expressed in terms of take-home pay, but most people are better off focusing on expenses, particularly nondiscretionary expenses. During a temporary emergency, you can always eliminate spending such as vacations, entertainment, dining out and nonessential shopping. Your emergency fund really needs to cover mortgage and property taxes or rent, utility, phone and Internet bills, car payments, food, health care, insurance, and credit card or other debt payments.

Focus on your target

Determine the target size of your emergency fund by totaling nondiscretionary expenses over the time period you anticipate it would take to find a new job or cover another emergency. Be sure to subtract other income sources, such as a spouse’s salary or rental property income.

Keep in mind that reasonably foreseeable expenses aren’t emergencies and should be saved for separately. For example, you may expect you’ll need to replace your roof in two years. Or you may be planning an elective medical procedure or a family celebration in the near future. Don’t dip into emergency funds for these planned events.

At the same time, try not to save too much. If you save substantially more than you’ll reasonably need in a low-interest savings account, you may actually lose money to inflation over time. Plus, you might miss out on opportunities to invest those funds in tax-advantaged retirement accounts or in other assets.

Take immediate action

If you don’t have an emergency fund, you’re not alone. According to the Consumer Financial Protection Bureau, 24% of Americans have no emergency savings, 39% have less than a month’s worth of expenses saved and 37% have more than a month’s worth. If you land in one of the groups that would be forced to turn to credit cards, subprime loans or other undesirable methods to finance an emergency, start building your cash cushion immediately.

You might arrange for a portion of every paycheck to be deposited automatically in a savings account. Also consider reducing certain expenses, such as entertainment subscriptions and restaurant meals. Or adjust your tax withholdings, so you receive more currently instead of a tax refund when you file your annual return.

A secondary issue

People who don’t have adequate savings usually suffer from another issue: They lack a household budget. Make a realistic expense plan now and stick to it so you’ll be able to put money aside for an emergency. If you’re having trouble budgeting or finding funds to save, contact Planned Financial Services or your financial advisor.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for specific individualized tax, legal or accounting advice. We suggest that you discuss your specific tax issues with a qualified tax, legal or accounting advisor.

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