New Year Resolutions

TOP TIPS - Wealth Management Resolutions for a New Decade

The turn of the new decade is the perfect time to review your wealth management strategy, including your retirement accounts, tax and estate plans and, of course, the status and suitability of your cross-border assets.

Here we provide our top tips for getting your wealth management in order for the 2020s.

Preparedness not prophecy is key

In wealth management terms, it is important to keep one eye on the future without actually trying to predict what it may hold. If we've learnt anything recently, it is the futility of predictions.

British expats in the United States are likely to know this better than anyone. Not only have there been the volatilities and uncertainties of the Trump presidency and the ongoing spectre of impeachment to contend with, but the long drawn-out and sometimes farcical Brexit situation has been, at times, difficult to bear.

Fortunately, it seems that the latter will finally be on the path to resolution, with a Brexit due date of 31 January now firmly on the horizon, and this will hopefully mean UK government is able to re-establish a less myopic political outlook.

So, the best advice we can give to investors and retirement planners during these volatile times is to remain disciplined to your individual wealth management strategy; even when your gut tells you to make a move, the sensible thing is always to review your portfolio in its entirety and speak to your international financial adviser before making any rash decisions in respect of your assets.

Get to grips with new IRS rules

The IRS has made inflationary adjustments in many areas and you will need to factor these in as part of your financial and tax planning in 2020 and onwards. For example, you will need to be aware of all of the following:

  • The IRS has moved the standard deduction up by $200 to $12,400 for singles.
  • Married joint filers now have a standard deduction of $24,800 (up from $24,400).
  • The employee contribution limit for 401(k)s, 403(b)s and most 457 plans is now $19,500 (up from $19,000 in 2019).
  • Savers who are 50 or older can now save an additional $6,500 into their retirement account (up from $6,000).
  • If you have an adjusted gross income greater than $124,000 and you're single (or $196,000 for married joint filers), you will not be able to make a full contribution directly to a Roth IRA (discuss the possibility of using the ‘backdoor Roth' strategy – a non-deductible contribution into an IRA which is then converted into a Roth).
  • Healthcare savers can save up to $3,550 (up from $3,500). $7,100 is the new limit for family plans.
  • If you have a health-care FSA,you can save up to $2,750 (up from $2,700).*

Making sure you use the new allowances, and benefiting from the compound interest, could mean a big difference to your pension pot when you finally retire.

Review your estate planning

The beginning of the new decade is the perfect time to review your succession plans. The Tax Cuts and Jobs Act 2017 vastly increased the amount that can be bequeathed without attracting federal estate and gift taxes and this will be particularly good news for HNWIs.

Before the enactment (in 2017) the exempt amount stood at $5.49 million per person, with any amount over that figure subject to 40% tax. In 2020 this figure now stands at $11.58 million per person. The annual gift exclusion stays at $15,000.*

However, you will need to consider the impact of the new SECURE Act.

Reconsider your asset allocation

If there is one take-home from current global political volatility it is the importance of having a sufficiently diversified asset allocation; any adverse event in an overly-invested region could devastate an undiversified portfolio.

As a UK national or US resident, you should be wary of overinvesting in home-grown stocks – with Brexit unfolding and President Trump still embroiled in impeachment proceedings, it is a good idea to ensure that you have a broad spread of investments across a variety of regions and international assets. Avoid over-exposure to any single country or asset class.

Blacktower in the US

Blacktower (US) LLC has the expertise you need to help you protect and grow your money over the long-term so that you can move into the new decade with confidence.

Contact us today for a review of your retirement accounts, pensions and cross-border assets.


Disclaimer: Blacktower (US) LLC is not a tax adviser and independent tax advice should be sought. The above does not constitute advice and Blacktower makes no recommendation as to the suitability of any products or transactions mentioned.


* https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2020

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