life

Want to Tell the IRS What You Think?

The Discerning Investor by by Julie Jason
by Julie Jason
The Discerning Investor | May 7th, 2021

Did you know that the Internal Revenue Service (IRS) wants to know your views about taxes, rules, forms, publications and, in my words, “possible frustrations”? Your comments can potentially influence policy for 2021-2022.

The mechanism is the Priority Guidance Plan (PGP), which is run by the Treasury Department's Office of Tax Policy and the IRS. The timing is now, as the comment deadline is May 28.

The PGP helps “identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance,” according to IRS Notice 2021-28 (tinyurl.com/udajenhb).

The public is invited -- even encouraged -- to be a part of the process. If you have an interest in communicating, I would recommend that you visit Regulations.gov to read other comments first, to get a sense of how to present. Go to tinyurl.com/uj36je4c and search comments.

For example, you’ll find a letter from an individual taxpayer pointing out “significant confusion” about how inherited IRAs are to be handled under new laws that went into effect for deaths occurring after 2019. Another comment letter is about student loans.

As someone who has served on the Taxpayer Advocacy Panel (TAP) for three years representing the state of Connecticut, from my own experience, I can attest to the fact that the IRS does want feedback from the public.

I encourage you to take the time to offer your views by the May 28 deadline. Probably the best way to organize your comments is to state the problem, show an example and suggest a possible fix.

You’ll be able to read your own comment letter online after you post it, but you won’t get a response. The IRS does not acknowledge comments, according to an IRS spokesperson.

Getting back to experience with the TAP, you may be interested in doing the same. The TAP is a federal advisory committee to the IRS made up of approximately 75 citizen volunteers. The TAP reports to the secretary of the Treasury, the commissioner of the IRS and the National Taxpayer Advocate.

The volunteer members of TAP make recommendations to improve IRS service. The TAP “listens to taxpayers, identifies major taxpayer concerns and makes recommendations for improving IRS service and customer satisfaction.”

The TAP is seeking members in the following locations: Arkansas, California, Connecticut, Delaware, Georgia, Idaho, international, Kentucky, Massachusetts, Michigan, Missouri, Minnesota, Montana, North Dakota, Nebraska, New Mexico, New York, Oklahoma, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Wisconsin and West Virginia.

The panel is also seeking alternates in the following locations: Alabama, California, Connecticut, District of Columbia, Florida, Hawaii, Idaho, Kentucky, Massachusetts, Michigan, Missouri, North Dakota, Nebraska, New Hampshire, New Mexico, Nevada, Ohio, Oregon, Rhode Island, Texas, Vermont, Wisconsin, West Virginia and Wyoming.

According to an IRS news release (tinyurl.com/3u7wxjdb): “To be a member of the TAP, a person must be a U.S. citizen, be current with his or her federal tax obligations, be able to commit 200 to 300 volunteer hours during the year and pass a Federal Bureau of Investigation criminal background check.”

The deadline to apply for this recruiting season is May 14. You can contact the TAP through its website (tinyurl.com/2u9p82z8) or at 888-912-1227. To watch a video about TAP recruitment, go here: tinyurl.com/3dnwrfnk.

When I served my three-year term with the TAP, I found the experience not only educational, but also very rewarding. It’s a big commitment and a worthy cause. For anyone who wants to make a difference on behalf of taxpayers, I highly recommend throwing your hat into the ring, now, or in the future.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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Money
life

Survey Shows Parents, Kids Are Talking More About Money

The Discerning Investor by by Julie Jason
by Julie Jason
The Discerning Investor | April 30th, 2021

Are you talking with your children about money as often as once a week or more? That seems to be a new trend, according to the “13th Annual Parents, Kids and Money Survey” released last week by T. Rowe Price (tinyurl.com/9xj2k4v4). Close to 50% of parents surveyed had money conversations with their children once a week or more, up from 22% in 2020.

The survey, which focused on how the pandemic impacted the financial well-being of families, asked questions of both parents and their children.

Being an advocate of financial literacy for all age levels, I find this to be a promising trend. After all, few schools offer financial programs.

As a 2020 “Survey of the States” by the Council for Economic Education (tinyurl.com/yj88bhrx) reported, only 21 states required high school students to take a course in personal finance, and just 25 states required high school students to take a course in economics. That’s an improvement over years past, but hardly enough.

Financial experts who study financial literacy agree that parents (and grandparents) have an impact.

“Our research shows that kids who have had frequent money conversations with their parents are better positioned for financial responsibility in adulthood,” said Jerome Clark, strategic program manager in T. Rowe Price’s Multi-Asset Division.

That’s enough of a reason to seriously consider initiating talks about finances with children of all ages. However, based on decades of experience working with families, I wouldn’t recommend money discussions at mealtime.

In the survey of more than 2,000 parents and their 8- to 14-year-olds, it turned out that COVID-19 was a factor in driving the frequency of conversations about money -- and the subject matter.

The pandemic impacted most of those surveyed (80%), mostly in a negative way (67%). For example, about one out of three families were saving less for retirement, and 35% were dipping into retirement savings to pay for living expenses. Almost one of three families decreased savings for college, and 35% were saving less for other goals. One of two (57%) families reported they had credit card debt, up from 43% in 2020.

Meanwhile, you can assume that the kids are observing their parents and learning. What are they picking up?

In my personal experience of working with families, I can share that kids are sponges. They can be learning lessons about credit or household finances. Or those lessons can be about how to solve money problems. Or both.

From my perspective, it is important for parents to keep in mind that children also pick up on their parents’ emotional state. One out of two kids reported that their parents were more stressed. Some kids had their allowances reduced.

As Clark noted, “Kids often pick up on unspoken cues, and stressful situations can be turned into powerful teaching tools.”

The important thing in this case is to deliberately teach these monetary lessons rather than run the risk of children picking up on financial stress and coming to their own conclusions.

To help with the dialogue, check out T. Rowe Price’s “Money Confident Kids” website (tinyurl.com/esxrz4y5), which features a number of learning tools, including a section on conversation starters. Also see the Consumer Financial Protection Bureau’s “Money as You Grow” page (tinyurl.com/66w9ntvk), and the “Youth & Money” section (tinyurl.com/cdjxvc25) on the website of the American Bankers Association.

It’s important to be involved in helping your children (and grandchildren) learn about financial literacy and handling money, and hopefully guide them toward sound financial habits that will last them a lifetime.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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Family & ParentingMoney
life

Decision-making in Retirement

The Discerning Investor by by Julie Jason
by Julie Jason
The Discerning Investor | April 23rd, 2021

How do you make decisions? Tools can be very helpful for simple situations -- and potentially less useful for more complex cases when more data has to be considered, as in the case of someone transitioning into retirement.

Consider this situation: Imagine you are a single person, age 60, with $250,000 of retirement savings, earning $55,000 a year and planning to retire in two years.

Say you were asked to focus on three key retirement issues: 1) Age at which you would claim Social Security from ages 62-70; 2) A general withdrawal progression (increasing, flat or decreasing) from retirement savings and whether you would like to take extra withdrawals from your retirement savings prior to claiming Social Security; and 3) Whether to purchase an annuity.

This was the case study presented to 400 participants recently by a team at UCLA and Cornell University. When the participants were divided into two groups and used a custom-built financial decision tool, the results differed based on how they considered the elements.

Group one, or the “separate condition,” assessed each of the three retirement issues one at a time as if each was an isolated decision. Each decision was independent of the others. For example, when to start Social Security was isolated from retirement savings withdrawal strategies and annuities. Participants saw the results of only one decision at a time.

As a result, when the participants selected a plan for withdrawals from retirement savings, they only saw the age when that money would run out, but nothing about the cumulative effect related to Social Security or an annuity.

Group two, or the “aggregated condition,” was permitted to take in all three aspects in a larger, big-picture context. For example, they were given the effect on the 60-year-old’s annual income from all sources. And, they saw the probability of having sufficient resources at the age of 85.

Intuitively, the second group had more data to deliver more holistic advice. That makes sense in the practical world of investment management that I can attest to. One would say that the bigger-picture approach wins probably in all cases, unless, of course, a single issue is all that needs to be addressed (for example, in this case study, the individual does not have a retirement plan or enough in savings to buy an annuity). That person can use a tool to isolate the Social Security timing question. In this case, the SSA’s calculator at tinyurl.com/b2wma32c can be very useful indeed.

With a set of tools that can take in a bigger picture for a more complex financial situation, one can better evaluate the financial trade-offs of each isolated decision point, as the study concluded. The study, “Broad Framing in Retirement Income Decision Making,” can be found at tinyurl.com/p2p8rjza.

Effective tools can be an important part of planning for (and living in) retirement. If you have any favorite online tools, email me at readers@juliejason.com and your suggestions may be discussed in a future column.

On another note, I invite you to attend a virtual talk I’m giving at the Greenwich Library, “Giving to the Next Generation,” on Wednesday, May 5, at 1:00 p.m. EDT. To register, go to tinyurl.com/y29wzrwv or email Yang Wang at ywang@greenwichlibrary.org.

If you are interested in 401(k) investing, I will be giving a series of short virtual talks on “How to Be a 401(k) Champion®.” For the schedule, see www.juliejason.com/events.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

MoneyAging

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