Greetings and happy end of 2022!

Thank you all for being a part of Life Planning Partners, Inc. It has been a pleasure serving you for the last 19 years and we are looking forward to our big 20th birthday next year! Many of you have been with us from the very beginning and it has been so rewarding to help you through your decisions about money and life. We appreciate having a great job.

So what is coming up in 2023?

Tax and the SECURE ACT 2.0

We’ll start January with putting the tax letters together for you. Tax forms for your retirement accounts come out early in January, but the tax forms for your taxable accounts usually are released sometime in February. As soon as we verify the accuracy of your forms, we’ll get your tax summary letters to you and your accountant. Make sure you get your tax returns to us when they are completed so we can begin planning for the 2023 tax year.

You may have heard about the passage of the SECURE Act 2.0. The good news for all of us is that it has no effect on taxes for 2022 – Carolyn breathed a big sigh of relief on that! So what is in it that will affect you? The most impactful changes are the increase in age before you have to take distributions from your IRA and increases in retirement plan contributions. A provision that will be useful to a number of clients is the ability to roll a portion of unused 529 plans into a Roth IRA for your children. As always, we’ll make sure we help you take advantage of any of the tax opportunities available to you.

Cash is no longer trash!

After years of bank deposits and money market funds (i.e. “cash”) paying next to nothing, the situation has changed considerably with recent Federal Reserve interest rate hikes. Short-term interest rates are now actually higher than longer-term holdings in many cases, which means cash investments now offer a fairly nice yield.

Fidelity Government Cash Reserves (FDRXX), for example, currently offers an effective yield of around 3.9%, which is higher than the yield on a 10-year U.S. Treasury bond! (And it almost matches the yield on a 30-year bond!) These yields fluctuate constantly of course, but the hefty yield on cash makes it much more attractive than we’ve seen in many years.

So, if you happen to notice an increase in the cash balance of your accounts, it’s because better fixed-income alternatives are getting hard to come by. Sometimes simply holding cash is the better option!

Employee News

We have two news items on the employee front. First, we are actively searching to hire a new planner – keep your fingers crossed for us, as hiring takes a long time. And the second bit is happy/sad news – Krissy’s assistant Samantha is having baby! What is the sad part of that? She has decided that after the baby is born, she is going to become a stay-at-home mom. We are actively searching for another wonderful person to fill her role.

Best wishes for a great New Year and we look forward to working with you in 2023!
Life Planning Partners, Inc.