ABSTRACT
If you speak with any financial, tax, or legal professional, the consensus is usually the same--there has been an overwhelming amount of legislation passed in recent years. In 2017, there was the Tax Cuts and Jobs Act (TCJA), arguably the largest tax reform within the past two decades. Two years later, Congress passed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), bringing substantial changes to the employee benefit and retirement space. Then in 2020, the world came to a standstill due to the COVID-19 pandemic. To avoid a crippling and prolonged recession, the US Congress passed three stimulus packages. Altogether, each of the five bills impacts taxpayers in slightly different ways, but they share a high degree of correlation. This includes tax bracket and marginal rate adjustments, revised credits, stimulus checks, and employee benefit and retirement options. Yet despite the numerous legislative changes, there is one area that has gone relatively untouched: student loans.
ABSTRACT
On Mar 11, 2021, newly elected Pres Joe Biden signed into law the American Rescue Plan Act, a $1.9 trillion economic stimulus package designed to lift the US economy out of recession due to the COVID-19 pandemic. The act primarily centers on rebate checks, credits, subsidies, and exclusions, but that is not what has everyone talking. Instead, it is Biden's proposed tax plan--which primarily focuses on America's high-income and wealthy individuals. Conventional planning wisdom tells us two things. First, you should start saving early and often so you can enjoy the miracles of compound interest. Second, tax avoidance (not evasion) is perfectly acceptable and encouraged, and you should only pay what you owe. As such, the choice of retirement saving vehicles becomes a critical decision toward long-term financial success. Generally speaking, lower marginal taxpayers will benefit more from post-tax accounts such as Roth 401(k)s and IRAs because their marginal rate will likely be higher in future years.