Broker Check


           The financial impact arising from the pandemic has been profound for many individuals and households.  As is often the case even in the worst of times, strategies can be deployed that can steer a financial plan back on track.  Furthermore, provisions passed in The CARES Act provide additional tools for individuals to enhance their financial condition.

            For many years, individuals who reached age 70½ and owned tax deferred retirement accounts such as IRAs were obligated to withdraw a required minimum distribution (RMD) based on their age and value of the account at the end of the prior year.  The SECURE Act passed last year raised the starting age to 72.  Those individuals who are in the 70½ - 72 age window have an opportunity to convert all or a portion of their tax deferred retirement account to a Roth IRA before the commencement of RMDs.  Since many retirement accounts have declined this year as well as the likelihood that income taxes will rise in a Biden administration, there can be significant long term tax and planning benefits to a Roth conversion.

            Furthermore, The CARES Act allowed individuals to suspend their 2020 RMD.   Individuals who have yet to take their 2020 withdrawal and have no current need for the funds can realize a tax savings by taking advantage of this waiver. 

            One of my major tasks during the fourth quarter in any year is to mitigate taxes on after tax accounts by offsetting gains with losses.  Due to large losses incurred earlier this year, the benefits of tax loss harvesting are likely be very significant.  I have already initiated this process, particularly with portfolios that include assets with large losses directly connected to the pandemic. 

            As a result of declining interest rates resulting from the Federal Reserve’s attempt to bolster the economy, homeowners can benefit by re-financing their homes at historically low mortgage rates.  Most 30 year mortgages are below 3%.  The current interest rate environment represents a golden opportunity for homeowners to reduce both the mortgage payment and/or shorten the length of the mortgage.  Even homeowners who refinanced in the last year or two have discovered that they can benefit by re-financing.  With an uncertain future for the direction of long term interest rates, all homeowners with a sizable and lengthy mortgage should explore possible savings that may result from re-financing.

            The grim statistics from the pandemic has served as a constant reminder of our mortality.  A resultant trend has been a surge in demand for estate planning services.  Long standing wills and trusts are being reviewed and updated to reflect changes in our lives that have occurred since the original documents were executed.  As part of this process, individuals have increased interest in reviewing and increasing insurance protection such as life insurance, disability insurance and long term care policies.

            In a benevolent response to the pandemic, many philanthropic individuals have accelerated their charitable contributions.  Tax benefits created in The CARES Act have provided additional incentives.  Eligible tax payers who do not itemize may deduct $300 of qualified charitable contributions as an “above the line” deduction to their adjusted gross income.  Also, the deductible limits on cash contributions to charities have been raised from 60% to 100% of adjusted gross income.  Before increasing these contributions, individuals with a charitable intent and who itemize their deductions should consult their tax advisors to ensure that they take full advantage of available tax benefits.

            Despite that fact that RMDs may be waived, any individual with a tax deferred retirement account who is age 72 or older and subject to an RMD may still donate up to $100,000 from the account to a qualified charity.  While there is no tax deduction, the distribution is made tax free to the charity.  Please note that the donation must be made directly from the retirement account to the charity in order to qualify. 

            While the financial hardships imposed by the pandemic have often been extreme, opportunities exist that can improve the plight of the less fortunate while providing tax relief for the philanthropic.  In a period of great uncertainty, pro-active tax payers who adjust their plan accordingly may advance their lifetime goals. 


Clifford L. Caplan, CFP®, AIF®                                                                                                                 Stephen Caplan, CSLP®                                                                                             

In the Media:  In September, I was interviewed twice about the impact of the pandemic on the economy and steps individuals can take to address these issues.  Both interviews can be accessed on YouTube and Dropbox through the links indicated below.

Note:  Beginning in 2021, quarterly statements for managed accounts that have accompanied the newsletter will no longer be automatically generated and mailed.  The reasons for this change are security concerns, problems with the mail delivery and, most importantly, the fact that, upon request, our clients can access these statements through Investor 360.  If you wish to continue to receive hard copies or want access to Investor 360, please contact Noralee.