Veris visited Washington D.C. Our firm's delegation to US SIF Capitol Hill Day and Member Day events share their insights.
August 1, 2023

Veris Goes to Washington: Insights from US SIF’s 2023 Capitol Hill Day & Member Day

The US Sustainable Investment Forum (US SIF) is a member-based organization, established to be the leading voice advancing sustainable investing across all asset classes. Their mission is to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts.

Veris was proud to co-sponsor US SIF’s 2023 Capitol Hill Day and Member Day in Washington D.C. this summer. Our firm sent Veris CEO Stephanie Cohn Rupp; CIO Michael Lent, Managing Director of Research Roraj Pradhananga, and Director of National Client Service Karen Walls deRochemont to Washington to participate in both events. 

Roraj Pradhananga, Michael Lent, and Karen Walls of Veris Wealth Partners in front of the US Capitol building.

Roraj Pradhananga, Michael Lent, and Karen Walls of Veris Wealth Partners in front of the US Capitol building.

Capitol Hill Day Activities

As part of Capitol Hill Day, approximately 50 US SIF members met with the offices of 40 different Representatives and Senators from both sides of the aisle to help educate members of Congress on financially material Environmental, Social and Governance (ESG) factors and data and why they are important to investors, urge them to support SEC disclosure proposals around climate risk and human capital issues, ask members to support the Congressional Sustainable Caucus in the US House of Representatives and to not allow riders to be attached to the Authorization’s bills that would limit the SEC’s authority. 

The delegation from Veris spoke with congressional aides who work with members of Congress including Senators Chuck Schumer (D-NY), Senator Thom Tillis (R-NC) Corey Booker (D-NJ), Robert Menendez (D-NJ), Jeanne Shaheen (D-NH), and Maggie Hassan (D-NH), Angus King (I-ME), Michael Bennet (D-CO) and Representatives Chris Pappas (D-NH) and Ann Kuster (D-NH). 

It was an honor to walk the halls of Congress in support of our firm’s mission and our clients’ vision for the future. 

Member Day Activities

The delegation from Veris also participated in US SIF’s Member Day event, which gathers together some of the leading voices of the sustainable investment movement for knowledge sharing and field-building conversations. 

At 2023’s Member Day event, we heard remarks from Representative Sean Casten (D, IL-6), Co-Chair of the Congressional Sustainable Investment Caucus, engaged in a listening session with incoming US SIF President Maria Lettini, and heard from industry experts on topics including refocusing the narrative around anti-ESG messaging and the Environmental Protection Agency’s Greenhouse Gas Reduction Fund. 

Stephanie Cohn Rupp, CEO of Veris Wealth Partners and US SIF's Director of Education and Outreach Michael Young.

Stephanie Cohn Rupp, CEO of Veris Wealth Partners and US SIF’s Director of Education and Outreach Michael Young. 

The Veris Delegation’s 6 Major Takeaways 

1. Congressional offices are knowledgeable about ESG topics. 

During our Capitol Hill Day experience, the Veris team saw high levels of conviction and interest from legislative aides who were extremely well versed in the legislative issues around ESG topics. It was inspiring to see so many passionate young professionals who are working to educate our congressional representatives and senators about pending legislation. 

We also saw signs of progress made in terms of greater congressional awareness of relevant critical issues surrounding ESG and in the depth of the questions that had to address their concerns. For example, Senator Chuck Schumer and his aide were very aware of EU Sustainable Finance Disclosure Regulation (SFDR) and the Sustainability Accounting Standards Board (SASB). Their primary questions were around avoiding the pitfalls they have seen Europe face. They wanted our thoughts on the best approach for how to incorporate and codify disclosure rules going forward. They were digging into these topics in detail to inform decision making and rulemaking. 

Hopefully the Congressional Sustainability Investment Caucus, which was created to help inform Congress about ESG topics, will continue to look for new Representatives to join to continue to be internal advocates for these critical issues.

2. There is strong support for SEC disclosure rules. 

All the Democrats that the Veris delegation spoke with were supportive of SEC disclosure rules on Climate Risk and Human Capital Management. 

When we advocated for the passage of SEC disclosure rules, we heard aides say that they see it as a way of increasing transparency for investors so they can better understand the potential impacts of their investment. We heard some aides emphasize the need for public messaging around the potentially negative impact of not including financially material ESG factors in investment decision making. 

The primary concern we heard from our Congressional representatives around standards requiring Scope 3 emission measurement and reporting, was that the requirements might place regulatory burdens on corporations and small businesses. They are concerned about the impact on farmers and the restaurant industry especially and are seeking ways to address these issues. 

Veris' Managing Director of Research Roraj Pradhananga with members of US SIF.

Veris’ Managing Director of Research Roraj Pradhananga with members of US SIF.

3. We heard support for universal global standards. 

One major refrain we heard concerned the need for universal global standards for measurement and reporting of material ESG factors to make it easier for businesses to comply. Linda-Eling Lee, Head of ESG research at MSCI, said that it will be important to ensure that the US  standard is consistent with the regulatory framework in Europe. Universal global standards would make it easier for businesses that operate both in the US and in Europe to comply, because they would not have to abide by two separate sets of rules. 

4. US Congress members on both sides of the aisle need to hear from ESG supporters.

We heard it expressed that our field needs to have a strategy for engaging Republican members of the Senate who seem to be persuadable to vote for policies that support ESG investing. This is particularly important because there are concerns that SEC rulemaking could be blocked by attachments to the appropriation bills in September. 

We also heard from congressional staffers that Democrats need to hear from their constituents on these issues just as much as Republicans do. Hearing from constituents is very important for driving action in Congress across the political spectrum. 

As part of the conversation with Senator Mendez’s office, we discussed the fact that the House passed the Corporate Governance Improvement and Investor Protection Act, which would require disclosure of racial, gender, ethnicity of the board and C-suite members of public companies, in June of 2021 but it still hasn’t passed in the Senate. This Act includes many provisions we want to see, including disclosure on diversity, lobbying, C-Suite compensation, climate related risks, and more. Senator Menendez is pushing for more corporate governance disclosure and there is the potential for movement on that soon. If you support that, you may wish to write to your senators to express your views. 

5. We need to get better at explaining ESG. 

One of the major themes of the conversations that took place at US SIF’s Member Day event was that, as a field, we need to do a better job of explaining what ESG is and why integration of financially material ESG factors is so important in investment decision making. 

Most of the anti-ESG sentiment is broad and focuses on terminology instead of real-world concerns. Critics of ESG tend to attack the acronym in general ways – calling it “woke capitalism” instead of pointing to specific issues. 

We heard an idea expressed that the best approach would be to focus on our shared values and find ways to talk about financially material ESG factors and ESG in personal terms so that it’s more relatable. One powerful way to do this would be to offer real-world examples of environmental, social, and/or governance factors guiding decision-making. For example, increased wildfire risk due to climate change has already led at least two major insurance companies to stop offering homeowners insurance in the state of California.

Take a look at ESGtruths.com to get specific talking points to help connect with people – your friends, family, colleagues and elected representatives alike. 

6. US SIF seeks to further build the field. 

US SIF is helping to build the field of sustainable investing through research, education, media outreach, and policy advocacy. Your voice and perspective can help accelerate that work. 

If you are not already a member, consider joining US SIF. Membership is open to asset owners and asset management firms, and other types of organizations and service providers that are active in the field of sustainable and responsible investing.

If you are a member, US SIF’s New CEO Maria Lettini said at Member Day that she is actively seeking feedback on the future of the organization. She wants to hear from Members on what vision for the future we collectively want to see the organization advocating for. If you are a member, you can contact US SIF to express your ideas about the best path forward.

Disclaimer 

The information above is provided for informational purposes only, represents only a summary of topics discussed, does not constitute investment advice, and solely reflects the views of the authors, which are subject to change without notice. Additionally, this document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such third-party sources and take no responsibility, therefore.

Although Veris has highlighted herein various initiatives relating to policy activism in which it has participated, no inference should be drawn as to the success or failure of such initiatives or the ultimate impact on the financial or impact results achieved by our clients.  

Veris WP
Title How the US Debt Ceiling Debate & Potential Default Might Impact Your Investment Portfolio
March 13, 2023

How the US Debt Ceiling Debate & Potential Default Might Impact Your Investment Portfolio

By Michael Lent, CIO, Partner, and Co-founder of Veris Wealth Partners

The US hit the debt ceiling on January 19th of 2023. As of today, Congress has not yet voted to raise the debt limit, which it must do before it can borrow the additional funds necessary to pay for its approved budgeted spending (not unapproved future spending) on everything from salaries for military personnel to crucial social programs like Social Security and Medicare.¹ 

The US Department of the Treasury has already started taking “extraordinary measures” to keep the United States from defaulting on its obligations at least until June of this year.²  As the threat of default looms, a partisan debate is happening in Congress – with Republicans demanding spending cuts before agreeing to vote to raise the debt limit again and Democrats saying they will not negotiate the debt ceiling.³  

To help you better understand this situation – and how your portfolio might be impacted – here is a look at the current debt ceiling debate in the US in context of what happened when we last faced a near-default in 2011.

What is the Debt Ceiling?

When the government spends more money than it takes in, it must borrow money to meet its financial obligations. Ever since the passage of the Second Liberty Bond Act in 1917, US law has required that Congress first vote to increase the debt ceiling before the government can issue any more debt to cover spending it has already agreed to.⁴ 

A long-time source of controversy, partisan debt-ceiling debates about government spending and debt have sometimes led to instances of political brinkmanship. But these standoffs have always ended in a vote to raise the debt ceiling. According to the US Treasury, Congress has raised the debt ceiling 78 times since 1960 – under Presidential administrations led by both Republicans (49 times) and Democrats (29 times).⁵

The State of the National Debt and the Balance of Power

The national debt, representing the entire amount of debt accumulated by the Federal Government, currently stands at approximately $31.45 trillion.⁶ 

Our nation’s debt has increased under both Democratic and Republican presidential administrations and during periods of time when Democrats and Republicans were in control of the House of Representatives and/or Senate.⁷  

Today, just as in 2011, both the Presidency and Senate are controlled by Democrats and the House of Representatives controlled by Republicans. However, the Republicans have a much narrower margin this year. This situation surrounding the debt ceiling today is again likely to come down to the wire. 

What Happened When the US Came Close to Default in 2011 

The US previously came dangerously close to default during the Obama Administration, when Congressional Republicans refused to raise the debt ceiling without spending cuts. According to the Government Accountability Office (GAO), the US reached its debt limit on May 16, 2011 and the US Treasury began taking extraordinary measures projected to extend the Treasury’s borrowing authority until July 8th of 2011.⁸ 

One result of the near default in 2011 was that, for the first time in the history of the United States, Standard & Poor’s downgraded the nation’s credit rating to AA+.⁹ Rating agency Moody’s also lowered its outlook on US debt to negative while maintaining its AAA rating.¹⁰ 

Global financial stability was threatened during this time. Markets were volatile. The S&P 500 started to fall in July of 2011 and by that August, it had fallen by over 16%.¹¹  

Two days before the expected default of 2011, a compromise was reached to raise the debt ceiling and reduce government spending. Default on the debt was avoided, but many economists believe that the cuts in spending had a negative impact on economic recovery after the great recession.¹² The GAO also estimated that delays in raising the debt limit in 2011 increased Treasury’s borrowing costs by about $1.3 billion that fiscal year.¹³

Is Default Likely in 2023? What Might Happen if there is a Default?    

If we look at what happened in 2011 for insight about what might occur in 2023, as we get closer to the date when the Treasury Department can no longer avoid non-payment of bond interest, social security, etc. we can predict that we are likely to see greater stock and bond market volatility. While it is unlikely, default is possible given the position of a sector of the Republican Party. 

S&P Global Ratings put out a bulletin on the debt ceiling crisis in January of 2023 predicting that after engaging in “brinkmanship” that Congress will “address it on time” to” prevent severe consequences on financial markets and the global economy.” ¹⁴ Mark Zandi, the Chief Economist of Moody’s Analytics, published a slightly less optimistic analysis of the situation that same month, warning that rampant polarization and “heightened dysfunction in Congress” make the odds of default “uncomfortably high” and forecasting that – if default does occur – “interest rates will spike, and stock prices will crater with enormous costs to taxpayers and the economy.”¹⁵

Since it has never happened before, no one is certain of exactly what would happen in the event of a default, but I believe that would trigger US debt being further downgraded, borrowing costs going up and that major stock and bond market sell offs would be likely.

Michael Lent is a founding principal and the CIO of Veris Wealth Partners. He received his Certified Investment Management Analyst (CIMA®) designation in 2002. Michael has been delivering financial planning and investment consulting services to high-net-worth families, family offices, and foundations for over 30 years. Michael is a member of the Investments & Wealth Institute™ and previously served as Chair of the Board of Directors of US SIF. Learn More.  

Sources

1 https://www.usaspending.gov/

2 https://home.treasury.gov/system/files/136/Description-of-Extraordinary-Measures-Aug2021.pdf

3 https://www.washingtonpost.com/us-policy/2023/02/05/debt-limit-gop-proposals/

4 https://bgrdc.com/history-of-debt-limit-and-why-it-matters/

5https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit

6 https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/

7 https://www.washingtonpost.com/politics/2023/02/07/debt-republicans-democrats-trump-biden/

8 https://www.gao.gov/assets/files.gao.gov/assets/gao-12-701.pdf

9 https://www.bbc.com/news/world-us-canada-14428930

10https://money.cnn.com/2011/08/05/news/economy/downgrade_rumors/index.htm

11 https://www.schwab.com/learn/story/us-hits-debt-ceiling-will-it-impact-investors

12 https://www.epi.org/blog/abolish-the-debt-ceiling-before-it-commits-austerity-again-the-gop-used-the-debt-ceiling-to-force-spending-cuts-in-2011-it-cant-be-allowed-again/

13 https://www.gao.gov/products/gao-12-701

14 https://www.spglobal.com/ratings/en/research/articles/230120-bulletin-credit-faq-u-s-sovereign-debt-hits-the-ceiling-again-12617455

15 https://www.moodysanalytics.com/-/media/article/2023/debt-limit-brinkmanship.pdf

This content is intended for informational purposes only, provides only a summary of topics discussed, does not constitute personalized investment advice or recommendations, and solely reflects the opinions of Veris Wealth Partners (“Veris”), which are subject to change without notice. The information contained in this document contains certain forward-looking statements, often characterized by words such as “believes,” “anticipates,” “plans,” “expects,” “projects,” and other similar words, that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements.

Certain information contained herein is derived from third party sources. While Veris believes such information to be accurate, we have not independently verified the accuracy or completeness of such information.

Veris WP
February 13, 2023

SECURE Act 2.0: What Does this New Law Mean For You?

By Tim Kingsbury, CERTIFIED FINANCIAL PLANNER™

Intended to persuade more Americans to begin saving for retirement, the Securing a Strong Retirement Act, otherwise known as SECURE Act 2.0, was passed into law as part of the omnibus spending package signed by President Biden on December 23rd of 2022.¹ This bipartisan legislation will change hundreds of rules related to 401(k), 403(b), traditional and Roth IRAs and other types of retirement accounts.

These rules were already complex, and SECURE Act 2.0 adds a number of new considerations that Americans must make when planning for the future.² How might this new law impact you or your family? Here are five provisions in SECURE 2.0 that you might want to be aware of: 

1. The Required Minimum Distribution (RMD) Age is Changing

Starting on 1/1/2023, the age that Americans must begin taking required minimum distributions (RMDs) from their retirement accounts went up from 72 to 73 years of age, according to Section 107 of the SECURE act.³ You may also want to be aware that SECURE 2.0 will raise the RMD age again in just a few years. In 2033 the RMD age will increase from 73 up to 75 years of age.⁴ 

When Americans reach the RMD age, the IRS begins requiring us to withdraw a specific minimum amount from our IRA, SIMPLE IRA, SEP IRA, and other types of retirement plan accounts every year.⁵ Now, if you are 73 years of age or older and do not withdraw the minimum, you are at risk of having to pay a tax penalty. The law is so new that, as of the time this was written, the IRS worksheet you can use to determine your RMD still links to 2022 data, but we believe they should update it soon. Consult your tax professional for the latest information. 

2. New Option to Rollover a 529 Plan to a Roth IRA in Some Circumstances

A 529 account is a savings plan that many families use to save for qualified educational expenses, including tuition for colleges and universities. Many parents, grandparents, and other family members often wonder what happens to the money if the student they are saving for decides not to go to college? SECURE 2.0 now offers a new option for certain 529 plan holders that find themselves in that situation. 

According to Section 126 of SECURE 2.0, beginning in 2024, if you have held that 529 plan for at least 15 years and meet the new law’s other requirements, you will have the option to rollover money saved in a 529 plan account into a Roth IRA set up in the name of the 529 plan beneficiary.

The beneficiary must have compensation income or earned income in excess of the contribution amount. Those Roth contributions must be within the annual contribution limit and a $35,000 lifetime cap is in place on what can be rolled into the Roth IRA.⁶

3. Qualified Charitable Distributions (QCDs) Will Now Be Indexed for Inflation

Transferring funds directly from your IRA’s custodian to a qualified 501(c)(3) organization (not a donor-advised fund or private foundation) is known as a Qualified Charitable Distribution (QCD). In certain circumstances, QCDs can be counted towards your annual required minimum distribution.⁷ 

Under Section 307 of the new law, individuals who are 70½ years of age or older can still use a QCD to donate up to $100,000 to qualified charities from their IRA. But SECURE 2.0 includes a provision that means the annual IRA QCD limit of $100,000 will be indexed for inflation, effective for tax years after 2023.⁸ 

4. Changes for High Earners Making Over 50 Catch Up Retirement Contributions 

Beginning in 2024, anyone earning wages of $145,000+ will be required to deposit all catch-up retirement contributions into a Roth 401k/403b or other retirement account, according to Section 603.⁹

5. Providing Retirement Benefits for Household Employees 

Households that employ nannies and other domestic workers are now allowed to provide retirement benefits to those employees under a Simplified Employee Pension (SEP IRA), according to Section 118.¹⁰

 

Tim KingsburyTim Kingsbury is a Wealth Manager and CERTIFIED FINANCIAL PLANNER™ professional in the New York office of Veris Wealth Partners. Tim’s focus is on helping clients meet their financial and impact goals. Learn more. 

Sources

¹ kiplinger.com/retirement/bipartisan-retirement-savings-package-in-massive-budget-bill

²finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

³fidelity.com/learning-center/personal-finance/secure-act-2

⁴finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

⁵irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds

⁶finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

⁷fidelitycharitable.org/guidance/philanthropy/qualified-charitable-distribution.html#:~:text=A%20qualified%20charitable%20distribution%20(QCD,taking%20their%20required%20minimum%20distributions.

⁸finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

⁹finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

¹⁰finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

DISCLAIMERS

The information contained herein is provided for informational purposes only, represents only a summary of topics discussed, and should not be construed as the provision of investment, tax, or legal advice. Rather, the contents simply reflect the opinions and views of the authors. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without notice. There is no guarantee that the views and opinions expressed herein will come to pass.

Furthermore, the information contained herein contains certain forward-looking statements, often characterized by words such as “believes,” “anticipates,” “plans,” “expects,” “projects,” and other similar words, that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this document.

Additionally, this document contains information derived from third party sources.  Although we believe these third party sources to be reliable, Veris Wealth Partners makes no representations as to the accuracy or completeness of any information derived from such third-party sources and takes no responsibility therefore.

Veris Wealth Partners
September 14, 2022

A Look at a Few of the Potential Benefits & Limitations of The Inflation Reduction Act & Biden Student Loan Forgiveness Plan

by Tim Kingsbury, Advisor at Veris Wealth Partners

August 2022 saw encouraging news coming from Washington with the passage of the Inflation Reduction Act (IRA)1 and the introduction of the Biden Student Loan Forgiveness plan.2 The potential effects of these initiatives are too extensive to unpack quickly, but this brief overview offers insights into a few of the most promising benefits and some of the limitations.

Inflation Reduction Act / IRA

The IRA is an extremely complex piece of legislation that includes new spending, taxes, and policies that touch on climate and our environment, energy, manufacturing, transportation, health care, and other important parts of our society and our economy.3

Here is a look at a few of the credits and rebates included in the legislation that are likely to have a major impact for Americans and for our environment.

The IRA’s EV Tax Credit

Tax credits are a dollar-for-dollar reduction in tax liability so they are more valuable than a tax deduction. The IRA includes a $7,500 New Electric Vehicle Tax Credit including two separate credits that take into account where the battery minerals were sourced and assembled.4 After the IRA was enacted on August 16, 2022 the tax credit was immediately effective for qualifying electric vehicles for which final assembly occurred in North America.5

We believe that one major potential positive impact of the IRA’s new credit is that it is likely to accelerate the onshoring of EV battery manufacturing in the United States so that we see significant growth over time. More information and changes to the eligibility requirements will be forthcoming in 2023.

Limitations

  • The IRA sets a Manufacturers Standard Retail Price (MSRP) cap of $55k for cars and $80k MSRP cap for new vans, trucks and SUVs. Vehicles priced over that amount do not qualify for the credit.
  • Before 2023, manufacturer sales caps of 200,000 vehicles are in effect that may negate the new tax credit, including vehicles from Tesla, GM and Toyota. Please refer to the Department of Energy’s list or use their VIN number decoder for availability as this is subject to change. Beyond 2023, manufacturer sales caps are lifted.
  • The law sets a Modified Adjusted Gross Income (MAGI) limit of $150k for individuals, $300k married filing jointly and $225k head of household.6
  • Note that the $4,000 Pre Owned Electric Vehicle Tax Credit, for model years at least two years earlier than year of purchase, are subject to MAGI limit of $75k individual, $150k married filing jointly and $112.5k head of household.

Prior to purchase, please consult your accountant or CPA to double check eligibility, as some provisions may change.

IRA High Efficiency Home Rebates

The IRA also offers incentives designed to help homeowners pay for more environmentally friendly and energy efficient home technologies, including a variety of rebates:7

  • $8,000 for heat pumps
  • $1,750 for heat pump water heaters
  • $840 for a heat pump clothes dryer or electric stove
  • $4,000 for electrical panel upgrades
  • $2,500 for electrical wiring improvements
  • $1,600 for insulation and sealing
  • And more…

Beginning sometime in 2023, various point of sale rebates should come online once additional guidelines are released.

Limitations

  • The law sets a collectable maximum of $14,000 in high efficiency home rebates.
  • To be eligible for these rebates, household income cannot exceed 150% of area median income as calculated by HUD. Fannie Mae provides an area median income lookup tool, but please consult your accountant or CPA to double check eligibility.

IRA Residential Clean Energy Credit

A tax credit for installing clean household energy such as solar (PV panels, batteries, setup costs etc.), wind, or geothermal has been raised from 26% to 30% from 2022 to 2032 – independent of the prior $14k High Efficiency Home Rebate cap.7

Student Loan Forgiveness Plan

The cost of college has soared over the last few decades, with the average price of tuition, fees, and room and board for an undergraduate degree jumping 169% between 1980 and 2020.8 Over the same period of time, government investment in financial support for students has declined.9 Massive amounts of student loan debt is the result. The Department of Education now estimated that the average American undergraduate student now graduates with nearly $25,000 in student loan debt. Those debts have a disproportionately high negative impact on middle class and lower income families, particularly on people of color, which many experts point to as a cause of the widening racial wealth gap in this country.10

To respond to this growing crisis, President Biden, Vice President Harris, and The Department of Education introduced a Student Loan Forgiveness Plan this August designed to provide relief to low and middle income federal student loan borrowers.11 This plan may yet be challenged at the Supreme Court, but currently it includes:

  • $10k of student loan forgiveness, plus an additional $10k if Pell Grants are held, if income was under $125k for individuals or $250k Married Filing Jointly/Head of Household for either years 2020 or 2021. Parents with PLUS loans are also eligible, subject to income limits.
  • The Federal student loan repayment freeze was extended until the end of 2022.
  • Monthly payments for income driven repayment plans were cut to 5% of a borrower’s discretionary income – down from 10% of discretionary income.
  • Monthly payments for graduate loans will be capped at 10% of discretionary income, down from 20%.
  • Balances will not increase as a result of accrued income as long as monthly payments are made on time.
  • Remaining balances will be totally forgiven after 20 years of payments or 10 years of payments if the balance is $12k or less.

Anyone who believes they are eligible should consult an accountant or tax professional for exact qualifications.

More Information Coming in 2023

We welcome these developments and we eagerly await additional information and guidelines. As 2023 approaches, these new policies will become more concrete and clear.

If you think you may benefit from the IRA or Student Loan Forgiveness plan, please consult your accountant/CPA, financial advisor, or wealth manager before taking any action.

Tim Kingsbury is an Advisor and CERTIFIED FINANCIAL PLANNER™ professional. He is located in the New York office of Veris Wealth Partners and is focused on helping clients meet their financial and impact goals. Learn more.

Sources

1 https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf

2 https://studentaid.gov/debt-relief-announcement/

3 https://www.nytimes.com/interactive/2022/08/13/upshot/whats-in-the-democrats-climate-health-bill.html

4 https://techcrunch.com/2022/09/02/a-complete-guide-to-the-new-ev-tax-credit/

5 https://home.treasury.gov/system/files/136/EV-Tax-Credit-FAQs.pdf

6 https://www.jdpower.com/cars/shopping-guides/how-the-new-ev-tax-credits-work#:~:text=The%20IRA%20also%20sets%20personal,and%20%24150%2C000%20for%20joint%20filers

7 https://electrek.co/2022/08/19/us-tax-credits-rebates-climate-law/

8 https://www.forbes.com/advisor/student-loans/college-tuition-inflation/

9 ​​https://www.theatlantic.com/politics/archive/2018/05/american-higher-education-hits-a-dangerous-milestone/559457/

10 https://www.brookings.edu/research/student-loans-the-racial-wealth-divide-and-why-we-need-full-student-debt-cancellation/

11 https://studentaid.gov/debt-relief-announcement/

The information above is provided for informational purposes only and reflects the views of the authors. Additionally, this document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such third-party sources and take no responsibility, therefore.

Veris WP
June 27, 2022

The End of Roe

“With sorrow — for this Court, but more, for the many millions of American women who have today lost a fundamental constitutional protection — we dissent.1“

– Supreme Court Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan

Veris Wealth Partners condemns the Supreme Court’s disgraceful decision overturning Roe v. Wade.

We share the sorrow expressed by Justices Breyer, Sotomayor, and Kagan in their dissenting opinion in the case of Dobbs v. Jackson Women’s Health Organization and we find it appalling that women in the United States no longer have a federally guaranteed constitutional right to abortion access.

The Immediate and Future Impact of this Decision

At least 26 states are expected to ban abortion in the coming days.2 No one is exactly certain of what may come next, but the dissenting Justices wrote, “Whatever the exact scope of the coming laws, one result of today’s decision is certain: the curtailment of women’s rights, and of their status as free and equal citizens.”

In their response to the decision, the ACLU wrote that “Forcing women and other people to carry a pregnancy against their will has life-altering consequences, including enduring serious health risks from continued pregnancy and childbirth, making it harder to escape poverty, derailing their education, career and life plans, and making it more difficult to leave an abusive partner. This decision could also lead to pregnancy losses being subject to suspicion, investigation, and arrest, and patients and doctors being thrown in jail.”3

The response issued by the Association of American Medical Colleges (AAMC) sounded the alarm that almost half of US OB-GYN residency programs are located in the 26 states where abortion is expected to be outlawed. They make the point that it will now be challenging, if not impossible, for a great number of American medical school students to get vital training not only in abortion care, but also in treating women who are suffering miscarriages and other related OB-GYN issues.4

Another impact of this decision is that other rights are likely at risk. In his concurring opinion to the Dobbs decision, Justice Clarence Thomas wrote that the Supreme Court “should reconsider all of this Court’s substantive due process precedents, including Griswold, Lawrence, and Obergefell”.5 These are the decisions that guaranteed access to contraception, struck down sodomy laws and legalized same-sex marriage.

Action Steps

The next elections will be crucial to determining what comes next. Many say that this decision to overturn Roe was the result of 50 years of activism, voting, and political maneuvering from the anti-choice movement. We believe we all must rise to this moment and do what we can to fight for women’s rights, for human rights, in the United States.

Please vote.

Please support organizations that are still providing reproductive health care and those that are fighting for reproductive rights for women in the United States including:

Veris Wealth Partners reaffirms our commitment to continue to support the reproductive rights of women and girls in the United States.

Sincerely,

Veris Wealth Partners

References

1 https://www.politico.com/news/2022/06/24/read-supreme-court-dissent-opinion-on-roe-v-wade-pdf-00042264

2 https://www.guttmacher.org/infographic/2021/if-us-supreme-court-overturns-or-guts-roe-v-wade-26-states-are-certain-or-likely

3 https://www.aclu.org/press-releases/aclu-comment-supreme-courts-decision-overturn-roe-v-wade

4 https://www.aamc.org/news-insights/how-repeal-roe-v-wade-will-affect-training-abortion-and-reproductive-health

5https://www.politico.com/news/2022/06/24/thomas-constitutional-rights-00042256

The information above is provided for informational purposes only and reflects the views of the authors. Additionally, this document contains information derived from third-party sources.  Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such third-party sources and take no responsibility, therefore.

Veris WP
June 2, 2022

Veris Wealth Partners Supports Women’s Reproductive Rights

“Restrictive abortion regulation can cause distress and stigma, and risk constituting a violation of human rights of women and girls, including the right to privacy and the right to non-discrimination and equality, while also imposing financial burdens on women and girls.” 1 -The World Health Organization

Since 1973, American women have had a federally guaranteed constitutional right to abortion access. A leaked first draft of Justice Samuel Alito’s majority opinion has given us early warning that the Supreme Court is preparing to take that right away by overturning Roe v. Wade.2

Veris Wealth Partners affirms our support for women’s rights – including women’s right to have control over their bodies. We are unapologetically pro-choice. We believe that access to abortion is a basic right to medical care. We also condemn any effort to demonize abortion, as women often make this choice with anguish.

The Potential Consequences of the End of Roe

Striking down Roe v. Wade means the states will decide this issue. After Roe falls, over half of all states are expected to outlaw abortion3 and in some cases deem doctors, medical teams, and patients as criminals.4 The state of Texas, for example, has already passed a “trigger-ban” ordering that anyone arrested for performing or inducing an abortion be charged with a first-degree felony5 – punishable by life in prison and up to a $10,000 fine.

We believe that this decision will negatively impact millions of women in the United States – including those who are likely to resort to dangerous, and often deadly, non-medical methods of abortions. According to the World Health Organization, “unsafe abortion is a leading – but preventable – cause of maternal deaths and morbidities” globally.6

Our leading health institutions do not support the decision to overturn Roe v. Wade. Dr. Gerald Harmon, president of the American Medical Association, responded to Alito’s leaked draft by saying, “With deliberations underway, we strongly urge the Court to reject the premise of the draft opinion and affirm precedent that allows patients to receive the critical reproductive health care that they need. Allowing the lawmakers of Mississippi or any other state to substitute their own views for a physician’s expert medical judgment puts patients at risk and is antithetical to public health and sound medical practice.”7

The Outsized Impact of this Decision on Marginalized Women & Girls

Because of long-standing inequities in our country, women and girls from marginalized backgrounds are expected to experience the worst impacts of the Supreme Court’s decision.8 Lack of access to adequate healthcare and contraception means that women of color are more likely to experience unintended pregnancy than white women.9 Evidence of racial disparities in women’s access to health care can already be seen in maternal mortality data. Research compiled by the CDC in 2020 showed that the maternal death rate for Black women was 2.9 times greater than the rate for non-Hispanic white women.10 The worst negative economic impacts of this decision are also expected to disproportionately fall on BIPOC women.11

Additional Support is Needed for Women and Families in the United States

Many women choose abortions because they cannot afford to raise a child.12 In addition to full reproductive rights, we believe that women and their families also need access to:
● Affordable healthcare
● Family planning and contraceptives (including education and training)
● Policies that support mothers and families
● Paid family leave
● Affordable childcare
● Workplaces that support parents through scheduling, pay, benefits…etc.
● Tax policy that provides financial benefit to family caregivers

Actions We Are Taking

Veris made a corporate donation to Planned Parenthood Federation of America in May 2022, which was matched by Partners within the firm.

Through our investment managers, Veris clients have taken meaningful actions related to reproductive rights:

● As You Sow filed four resolutions related to sexual and reproductive health in 2022.13 30 Veris clients have endorsed two separate reproductive rights resolutions “Report on risks of policies restricting reproductive rights and strategies to minimize or mitigate risks”.

 – 23 Veris clients endorsed this resolution for TJX Companies
– 7 of our clients endorsed this same resolution for Kroger.

● Another Veris investment manager has filed shareholder resolutions and engaged with portfolio companies on reproductive health & rights and political donations to organizations that are anti-abortion.14

● Another manager provided Veris with proxy voting guidelines for abortion/right to life issues.15

As we know the cost of keeping a child is sometimes prohibitive to women in a precarious financial situation, we have also taken action to support paid family leave. In support of mothers, in 2021 we worked with the Paid Leave for the United States (PL+US) campaign to advocate for a national paid family leave bill in the Build Back Better package. We signed on to the initiative and Alison Pyott met with US Senator Jeanne Shaheen’s office to voice our support. We also provided statements of support including why as a small business this was important to us and our recent paid family leave policy change at Veris. We will continue to support the PL+US network efforts.

What You Can Do

Vote.

Call your congressional representatives and urge them to act to protect women’s access to reproductive choice and health care.

Support organizations that are working to help women get the health care information and services they need while helping to protect reproductive rights for women in the United States:

● Planned Parenthood
● NARAL Pro-Choice America
● Center for Reproductive Rights
● The National Abortion Federation (NAF)

We hope that you will join us in protecting the reproductive rights of women and girls in the United States.

Sincerely,
Veris Wealth Partners

References

1 www.who.int/news-room/fact-sheets/detail/abortion

2www.politico.com/news/2022/05/02/read-justice-alito-initial-abortion-opinion-overturn-roe-v-wade-pdf-00029504

3www.nytimes.com/interactive/2022/us/abortion-bans-restrictons-roe-v-wade.html

4www.politico.com/news/2022/05/06/potential-abortion-bans-and-penalties-by-state-00030572

5https://statutes.capitol.texas.gov/Docs/HS/pdf/HS.170A.pdf

6 www.who.int/news-room/fact-sheets/detail/abortion

7 www.ama-assn.org/press-center/press-releases/ama-statement-draft-supreme-court-opinion

8www.pbs.org/newshour/nation/black-and-hispanic-people-have-the-most-to-lose-if-roe-is-overturned

9https://contraceptionmedicine.biomedcentral.com/articles/10.1186/s40834-020-00118-5

10https://www.cdc.gov/nchs/data/hestat/maternal-mortality/2020/maternal-mortality-rates-2020.htm

11www.newyorker.com/business/currency/the-devastating-economic-impacts-of-an-abortion-ban

12www.guttmacher.org/journals/psrh/2005/reasons-us-women-have-abortions-quantitative-and-qualitative-perspectives

13www.asyousow.org/resolutions-tracker

14www.trilliuminvest.com/documents/latest-shareholder-advocacy-reports 

15 www.domini.com/uploads/files/Proxy-Voting-Procedures-and-Guidelines-Effective-2021-0201-for-web.pdf

The information above is provided for informational purposes only and reflects the views of the authors. Additionally, this document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such third-party sources and take no responsibility, therefore.

Veris WP
Don't Say Gay
April 27, 2022

“Don’t Say Gay” Laws: Action Steps You Can Take

Governor Ron DeSantis signed Florida’s “Parental Rights in Education bill,” dubbed the “Don’t Say Gay” bill by opponents, at the end of March 2022. Veris Wealth Partners has always supported and will always support LGBTQ+ rights and equality. We are disturbed by Florida’s adoption of this law and the news that lawmakers from at least 19 other states are now considering similar legislation. We are devastated to think of the impact this is already having on LGBTQ+ families and especially children.

Language in the Florida law prohibits “classroom instruction” and “discussion” about “sexual orientation or gender identity” for students in kindergarten through third grade “or in a manner that is not age-appropriate or developmentally appropriate” in Florida’s schools. Because the bill does not specify when such instruction would be considered “age-appropriate” we believe it is very likely that it will directly impact children in higher grades as well.

The law also prohibits personnel in Florida’s schools from withholding information from parents regarding a student’s “mental, emotional, or physical health or well-being.” We believe this is widely thought to mean that school counsellors will have to inform parents if a student told them they were gay or trans – even if such disclosure could be harmful to the student. If a Florida parent feels that a school is in violation of any part of this law, the bill gives them the right to request an investigation by a magistrate or sue the school district at the school district’s expense. We believe the consequences of this legislation for LGBTQ+ children threatens their self-esteem and in some cases will be life-threatening.

GLAAD President and CEO Sarah Kate Ellis said in response to this legislation, “banning discussion of LGBTQ people in school is an effort to silence and shame, to divide and disrespect, when all students should feel safe to learn about themselves and each other.”

Many experts agree that laws that target LGBTQ+ youth and families increase the dangers for kids that are already at higher risk of bullying and suicide than their heterosexual and cisgender peers. Research conducted by The Trevor Project found that LGBTQ kids who learned about LGBTQ issues or people in school were 23% less likely to report a suicide attempt.

How Businesses Are Responding to this Legislation

The Walt Disney Company announced a pause to political donations in Florida and vowed to help get the law repealed, but they are not the only corporation taking a stand.

Many business leaders are publicly speaking out against these kinds of laws. Over 240 corporations, including many that joined in response to the Florida law, have signed the Business Statement on Anti-LGBTQ State Legislation produced by Freedom for All Americans and Human Rights Campaign.  

This statement declares, “As business leaders dedicated to equal treatment, respect, and opportunity for all – as well as to improving the financial and investment climate across the country – we call for public leaders to abandon or oppose efforts to enact this type of discriminatory legislation and ensure fairness for all Americans.”

7 Action Steps You Can Take to Help LGBTQ+ Youth Now

As a Veris client, colleague, partner or collaborator, we also wished to share with you concrete actions that you can take in support of LGBTQ+ Youth. Many of us felt helpless watching this proposed legislation become law in Florida – but we can take action and we hope you will consider one or many of the following action steps!

1.Write your legislators.

If you live in Florida or any of the other states currently considering anti LGBTQ legislation call or write your elected officials to share your opinion. For help crafting your message, the ACLU offers a guide with suggestions for Writing Your Elected Officials.

2. Donate to the ACLU.

The American Civil Liberties Union works to protect the rights of LGBTQ people across the nation. To support their efforts you can make a donation to the ACLU. To make an impact at the local level, you can make a donation directly to the ACLU of Florida.

3. Support the Human Rights Campaign.

HRC has vowed to fight to repeal the Parental Rights in Education law in Florida. At the national level, HRC is working to pass The Equality Act, new legislation that would “provide consistent and explicit non-discrimination protections for LGBTQ+ people across key areas of life, including employment, housing, credit, education, public spaces and services, federally funded programs, and jury service.” 

4. Track anti LGBTQ legislation aimed at students.

A record number of curriculum censorship and hostile school climate bills have been introduced in 2022. You can track these laws and visit the Movement Advancement Project’s Policy Spotlight: Curriculum Censorship & Hostile School Climate Bills. 

5. Drive change through conversations about LGBTQ issues.

An Ally’s Guide to Terminology: Talking About LGBTQ People & Equality, produced by MAP & GLAAD, is a free resource to help allies better understand issues that impact LGBTQ issues and language so that you can talk about these matters in a way that will drive positive change.

6. Support The Trevor Project and Trans Lifeline.

The Trevor Project and Trans Lifeline are suicide prevention and crisis intervention organizations for LGBTQ youth and an advocate for LGBTQ youth mental health. These 501(c)(3) organization provides free counseling services and resources to help prevent suicide among LGBTQ youth. The Trevor Project also works at the federal, state, and local level to address factors that increase the risk of suicide among LGBTQ youth. Donate here to The Trevor Project or here to Trans Lifeline.

7. Share Transgender, Non-Binary & Gender Fluid Reading Lists

The Veris team in San Francisco has children attending the Berkeley Unified School District. BUSD developed multiple reading lists, organized by grade level, represent books published in the last 5 years that are devoted to celebrating, representing, and affirming transgender, non-binary, and gender fluid identities and expression. Please feel free to share these lists with friends and family to continue to educate and build awareness, and to break down assumptions and combat intolerance. Transgender Reading Lists.

Veris recognizes these efforts as an element of broader movements that include criminalization of reproductive choices as well as restrictions on truthful education about race in American history (dubbed “Critical Race Theory”). As we approach the next election cycle we anticipate LGBTQ+ people, Reproductive Justice, and issues of Racial Justice will become divisive campaign issues. We recognize the humanity of and harm to people who find their lives and the safety of their existence to be listed as campaign slogans. We stand in support of these communities and we hope you will join us in taking one or many of these suggested steps.

To a better world, together,

The Veris Team

The information contained herein is provided for informational purposes only. The contents including, without limitation, any forecasts and projections, simply reflect the opinions and views of the authors. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without notice. There is no guarantee that the views and opinions expressed herein will come to pass. Additionally, this document contains information derived from third party sources.  Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such third-party sources and take no responsibility therefore.   

Veris WP
March 11, 2022

Veris Wealth Partners Stands With Ukraine

Veris Wealth Partners stands in solidarity with the people of Ukraine. We condemn Russia’s unprovoked attack on Ukraine’s sovereign soil and our hearts grieve for the people who are now suffering incredible losses in this unjust war.

Cities and towns, including civilian neighborhoods, schools and hospitals, have been reduced to rubble across Ukraine and the humanitarian crisis continues to grow. As of this moment, the UN estimates that over two million Ukrainian refugees have fled their homeland. We have been inspired by the incredible bravery and resilience the Ukrainian people have shown in the face of this tragedy. We also applaud the Russian civilians who have risked their freedom by protesting against this war.

Our Firm’s Action Steps & Support for Humanitarian Aid Efforts

This is not only a time that calls for grieving – it is a time that calls for action. As a community of impact investors, we seek innovative ways to use our resources to help solve humanity’s greatest challenges and build a better world. Since this crisis began, Veris has been seeking action steps we can take to help make a positive impact and provide assistance to the people of Ukraine.

Divestment 

Veris began to assess our investments in Russia shortly after the invasion began. At the end of February we learned that our exposure to Russia in client portfolios – through approved mutual funds and separately managed accounts – was limited to four stocks for a total value of approximately $57,000, which represented around 0.003% of our overall AUM. We immediately engaged with our fund managers to divest from these stocks.

Since our move to divest from Russia, one manager has been able to sell one of the positions but market closures, a lack of trading partners and settlement concerns have prevented the sale and valuation of other positions. We are currently awaiting updates from our fund managers on the remaining positions.

We also asked one of the fund managers to reassess their ESG process to ensure better identification of risk factors and limit future exposure. Furthermore, we asked all our approved managers to analyze and assess portfolio companies that will be negatively impacted based on revenues generated from Russia or significantly rely on suppliers based in Russia and we are currently aware of very limited exposure.

We are going a step further and also engaging with our approved fund managers to divest from Russian stocks and bonds if they have exposure in funds that are not approved at Veris. A few of our approved fund managers have already suspended purchases of Russian securities and are actively working to further reduce their exposure to Russia in funds that are not approved at Veris and where we have no investments. Various index providers like MSCI, FTSE Russell, S&P Dow Jones Indices, Bloomberg, etc. have announced that they will remove Russian securities from their indexes and have determined that Russian securities are no longer investable.

Humanitarian Aid

Veris made a significant donation to UNICEF to support a humanitarian project focused on helping the civilian population that is under attack in eastern Ukraine. UNICEF’s emergency response teams and partners are ramping up efforts to deliver safe water to families in communities where water systems are barely functioning.

UNICEF is also providing health care, nutrition and education support where services are severely lacking or have shut down entirely. Children are particularly vulnerable in this crisis and UNICEF teams are working to protect Ukrainian children from violence, exploitation and abuse.

You can learn more about the project and donate to UNICEF’s efforts to protect children and families in Ukraine here.

How You Can Help

If you are looking for ways to support other aid efforts, there are a variety of organizations working to help Ukraine’s civilian population and refugees. Here are a few that are providing essential emergency services on the ground in the region.

  • The Ukrainian Red Cross Society is helping evacuate civilians, support firefighters and emergency personnel working to repair damage to civilian infrastructure.
  • Doctors Without Borders/Médecins Sans Frontières is responding to the humanitarian crisis by reinforcing capacity for surgical care, emergency medicine, and mental health support for displaced people.
  • Razom is a Ukrainian non-profit focused on emergency medical care. Their current emergency response is focused on procuring critical medical supplies and delivering them where they are needed most in Ukraine.
  • The International Rescue Committee is working in Ukraine and Poland to support displaced families with medical supplies, essential items, and services.

All of us at Veris will continue to keep the Ukrainian people in our thoughts. We will continue to seek out meaningful actions we can take to be of service and we will keep you updated on our efforts.

The information contained herein is provided for informational purposes only. While we have made suggestions as to various organizations that are providing support to the Ukranian people, we have not conducted a comprehensive review of such organizations and make no guarantees as to the claims that they make about their programs.

Veris WP
September 16, 2021

The SECURE Act New Era – Retirement & Financial Planning Reminders

By Tim Kingsbury

The December 2019 passage of the SECURE Act may feel like ancient history, but its effects resonate within a few key financial planning issues relevant to investors today. In this blog we will highlight some of the major changes between year-end retirement and financial planning issues.

Return of Required Minimum Distributions in 2021

The CARES Act of March 2020 created a Required Minimum Distribution (RMD) holiday in 2020 due to the pandemic. However, required minimum distributions from retirement accounts have returned in 2021.

Required Minimum Distributions from Retirement Plans Raised to Age 72

For those born after July 1, 1949, the first RMD must be taken by April 1, 2022. If you are born before that date, you should have commenced taking RMDs in the year 2019 or prior.

Qualified Charitable Distributions (QCDs) Remain an Alternative to RMDs

Sending all or a part of your required minimum distribution directly to charity not only fulfills the requirement but is also a non-taxable distribution. Charitably inclined clients should evaluate the tax benefits of sending a QCD to charity versus gifting appreciated securities to charity. Must be 70.5 years or older to perform a QCD.

End of Stretch IRA for Non-Spouse Beneficiaries

In most cases, non-spouse Beneficiaries inheriting a pre-tax retirement account after January 1, 2020 are now required to distribute the entire account balance by the tenth year after receiving the inheritance. Prior to January 1, 2020 a non-spouse beneficiary inheriting a retirement account was able to stretch the required minimum distributions throughout their own life expectancy. Reviewing assets and the tax impact on beneficiaries is even more important with this change.

Age Limit Removed for IRA Contributions

Though the age limit has been removed for IRA contributions, keep in mind that earned income is necessary and deductible contributions remain subject to adjusted gross income limits.

More Changes to Come

The SECURE Act made large changes to the retirement and financial planning landscape, but will likely not be the last piece of legislation to digest. SECURE Act 2.0 is currently being reviewed by Congress. Veris Wealth Partners will continue to monitor and report on subsequent developments.

Tim Kingsbury is an Advisor and CERTIFIED FINANCIAL PLANNER™ professional. He is located in the New York office of Veris Wealth Partners and is focused on helping clients meet their financial and impact goals.

Read more about the author.

The information contained herein is provided for informational purposes only, represents only a summary of topics discussed, is subject to change without notice, and does not represent personalized investment advice, or an offer to sell or the solicitation of any offer to buy any securities.  Rather, the contents including, without limitation, any forecasts and projections,  simply reflect the opinions and views of the authors.  All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without notice. 

Veris WP
March 12, 2020

The new SECURE Act: What You Should Know

By Tim Kingsbury, Wealth Manager

The SECURE Act, passed on Dec. 20, 2019, contains some major changes governing IRAs and retirement plans, charitable contributions, 529 plans and college student loan debt, among other financial matters. In this blog, we focus on key provisions of the Act to help you plan ahead.

Required Minimum Distributions From Retirement Plans Raised to Age 72

Previously, the age triggering Required Minimum Distributions was 70½. The good news is the SECURE Act allows savings and investments to grow 1½ years longer in a tax-advantaged retirement plan – if you are born after July 1, 1949. If you are born before that date, you must still take your RMD at 70½. For those born after July 1, 1949, the first RMD must be taken by April 1, 2022.

End of the Stretch IRA beginning January 1, 2020

Non-spouse beneficiaries inheriting a pretax retirement account, such as an IRA, are now required to distribute the full balance by the end of the tenth year after receiving the inheritance (in most instances).  Previously, a beneficiary would calculate a new RMD based on their life expectancy. That allowed the IRA to “stretch” for multiple years or even decades.  The stretch IRA was a valuable estate planning tool, particularly for parents seeking to transfer wealth to their children. The change may necessitate revisiting your current estate plan. 

Roth IRAs & Roth Conversions

The Act increases the attractiveness of post-tax Roth IRA. Having both pre-tax assets (IRA) and post-tax assets (Roth) has always been advantageous. However, with passage of the Act, clients who anticipate having lower income years may want to consider converting pre-tax IRA assets to post-tax Roth assets.  While a Roth Conversion is a taxable event, it may be smarter to take that step in low income years, especially if planned out over multiple years.  Low-income years often occur between retirement and age 70, particularly if you delay receiving Social Security. 

IRA Contribution Age Limits Removed

Previously, no additional deductible IRA contributions were allowed once an RMDs started if the person was still receiving W-2 (payroll) income. That restriction is now gone. You can continue contributing to your IRA and grow those account balances. More good news.

Expanded 529 College Savings Plan Usage

$10,000 of a 529 Plan may now be used to pay down student loan debt. That is a lifetime limit per beneficiary, but a potentially very good use of 529 savings.  Additionally, 529 Plan funds may now be used for expenses incurred with Apprenticeship programs certified with the federal Department of Labor.  

Kiddie Tax Rate Reverts Back To Parents’ Tax Rate

Tax rates on unearned income for minors, also known as the kiddie tax, revert back to that of the parents under the SECURE Act.  In 2018 and 2019, trust tax rates were used for kiddie tax calculations when the 37% bracket kicks in at just $12,750 of income. That’s no longer the case. Please note that the new rules are retroactive for 2018 and 2019. Refiling taxes could make sense if a minor has an especially large UTMA/UGMA account. 

No Changes To Qualified Charitable Distributions (QCDs), Medical Expense Deductibility

After reaching age 70½, up to $100,000 may be withdrawn from an IRA account annually and sent directly via check to a charity. That QCD limitation remains the same under the SECURE Act. In years when someone is subject to RMDs, the QCDs can fulfill that requirement and avoid taxes incurred on the IRA withdrawal. Charitably inclined clients should evaluate the tax benefits of sending a QCD to charity versus gifting appreciated securities to charity. 

There was also no change in medical expense itemized deductibility under the Act. Medical expense deductibility still occurs when reaching 7.5% of Adjusted Gross Income for 2019 and 2020, instead of the proposed 10% hurdle. 

The Bottom Line

The SECURE Act creates some of the biggest changes in decades to retirement plans and savings and may directly impact your estate plan. Please reach out to your Wealth Manager to discuss the best course of action for you and your family.

 

The information contained herein is provided for informational purposes only and should not be construed as the provision of personalized investment advice, or an offer to sell or the solicitation of any offer to buy any securities. Rather, the contents simply reflect the opinions and views of the authors. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without notice.

Veris WP