Friday Financial Five–July 5th, 2013

Friday, July 05, 2013

Dan Forbes, GoLocalProv Financial Expert

 

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New Providence taxes are out

It’s that wonderful time of the year when Providence sends out revised tax bills, and the first installment is due soon. While commercial taxpayers should be feeling good, many residential property owners have seen an increase. As noted by the city, there is no “exemption” for homestead. Instead, there is an owner occupied rate and a non-owner occupied rate. Here’s the website to check tax liability and make payments. Be mindful of the surcharge applied when payments are made online.

Paychecks soon to be allowed every two weeks

It took a long time and plenty of hard work, but the bill allowing paychecks to be paid bi-weekly as opposed to weekly has finally passed. Years of pushing by small business advocates and some members in the general assembly finally have this in front of the governor. If signed, the bill takes effect January 1st, 2014. The reduction in payroll expense is expected to save a boatload of money.

Annuities again under the microscope

Insurance companies may be rethinking the guaranteed income riders that have been pushed on the public over the last decade. There’s been a combination of low fixed income returns in annuity company portfolios and more annuity owners exercising the income option than anticipated. It’s gotten to the point that the SEC is getting involved. The SEC’s main concern is a hidden “cap”, which would deplete an income benefit to zero when reached. It’s time for everyone to pull their annuities out of the drawer for a closer look.

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The DOMA ruling and financial planning

The recent Supreme Court decision striking down the Defense of Marriage Act means same sex couples will need to take a fresh look at financial planning decisions. Most importantly, couples will be able to strategize Social Security benefits to maximize income and possibly shelter assets from the federal estate tax. Another consideration is the handling of IRAs, where same sex couples will now be able to rollover accounts inherited from a spouse as opposed to being forced to take death distributions.

Student loan rates see a huge increase

The Federal student loan rate set in 2007 has jumped for new loans from 3.4 to 6.8 percent. For those nearly 7 million people taking a loan out this year, this needs to be addressed. If there isn’t further action taken this year, it may provide an opening for the private loan market. For those in the process of applying for a loan, delay for a bit until there’s more information on a possible government compromise.

 

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].

 

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