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May 8, 2021

BBVA Bank Review | The Simple Dollar

With a full-suite of banking services online and an easy-to-use interface and mobile app, BBVA is best for those who want to handle all their banking needs online.

Savings APY

0.01%

1Y CD Rate

0.05%

J.D. Power Rating

N/A

SimpleScore

2.8 / 5.0

SimpleScore BBVA 2.8

Savings APY 2

1Y CD APY 2

Customer Satisfaction 2

Mobile App 3

Product Variety 5

BBVA bank, formerly BBVA Compass bank, was founded in 1964 and is based in Alabama. BBVA has quite a few branches spread across seven states — Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas — although around half of those locations are in Texas. BBVA is a full-service bank and has been around a long time, but it also has a strong online banking presence. Unlike many other banks that we would consider “online banks,” BBVA offers a full suite of services, from checking and savings to money market accounts, investing, CDs and even home and auto loans.

BBVA Bank

Min Savings Deposit	Max Savings APY	J.D. Power Survey Score	Key Benefit
$25	0.01% APY	N/A	Full-service banking with many options

What we like about it

BBV bank has been around for quite a while and has a sizable presence in the states where it has branches. Unlike many other banks that offer accounts online, this one offers a full suite of banking services, meaning you can do all of your banking in one place. The website and app are where this bank shines. With an easy-to-use interface that also offers a lot of functionality, it’s easy to manage accounts, even if you don’t live near any branches. Their mobile app offers a wide range of features too, along with great digital security options.

Things to consider

Because BBVA is a more traditional, full-service bank, their interest rates are lower than most online bank offerings, and they do have some fees that are higher than other banks. For example, overdraft fees are $38 each and you can incur up to six per day. That means even simple mistakes can add up quickly. The rates on BBVA’s CDs and savings APY rates are also low, and there are options with higher rates and lower fees available elsewhere.

BBVA checking accounts

BBVA bank offers the Free Checking account, which doesn’t have monthly Service Charge. This account includes free ATM withdrawals at not only BBVA ATMs, but the network of Allpoint ATMs as well, which means you have 44,000 options around the US. Fees for overseas withdrawals are small and reasonable. The bank also offers the Premium Checking account, which earns interest on your money. Like the other accounts, there is only a $35 minimum balance to open it, but if your balance is below $5,000 you’ll pay a hefty $26 monthly maintenance fee. If you’re going to keep that high of a balance, you may want to look at their money market account instead. We have more information on BBVA’s money market accounts below.

BBVA savings accounts

There are a few different types of savings accounts offered by BBVA. The first is the BBVA Build My Savings Account. You can earn a match bonus depending on the term you choose, your opening account balance and how much you add to the account regularly, up to $25 per term.

The BBVA Online Savings Account account also has a minimum opening balance of $25 and the same interest rate, but it does not have the same match options as the Build My Savings Option. It does offer easy access to your funds and a link to your checking account for overdraft protection, and there is no Service Charge for the account. The BBVA Savings Account offers similar benefits to the BBVA Online Savings Account and the same minimum opening balance, but there is a $15 quarterly Service Charge that can be waived if you meet certain criteria.

BBVA money market accounts

The BBVA Money Market account earns better interest than the Premium Checking account, but the APY varies by region. It can be set up as overdraft protection for your checking account, and you can access your money anytime you need it with ATM access or online and mobile banking. You’ll only need a minimum of $25 to open the account, and while there are higher-interest MMAs to be found elsewhere, most require a much more substantial minimum balance.

BBVA CDs

BBVA CDs require a minimum of $500 to open — certainly not the highest minimum around. Rates vary depending solely on term. These are certainly not the most spectacular rates out there if that’s what you’re looking for, but there are no maintenance fees associated with these accounts.

BBVA IRA accounts

As a full-service institution, BBVA offers SEP, ROTH and traditional IRAs with a variety of ways to invest, including mutual funds and ETFs. There are a wide variety of portfolios and funds to choose from based on your needs, how soon you want to retire and how risk-averse you may be. They also offer other ways to invest that can help you build your retirement income, including annuities and lifetime-income options.

BBVA credit cards

There are four credit card options with BBVA bank. All offer varying levels of rewards and interest rates that depend on your credit-worthiness and the type of perks you would like to earn.

The BBVA Rewards Card offers unlimited 1.5% rewards on all purchases and the ability to earn an additional unlimited 0.5% reward bonus with $1,000 in monthly direct deposits to a BBVA deposit account, among other perks like 0% balance transfer options.

The BBVA ClearPoints Credit Card is a rewards card that lets you choose how you earn up to 2x & 3x points in categories you select each quarter. It has no annual fee and offers a 0% introductory APR for 13 months on purchases, among other perks.

The Select Credit Card allows you to choose how you earn 3x the points in categories you select, and it offers access to Visa Signature travel and entertainment benefits, a 24/7 complimentary concierge, and no foreign transaction fees. The downside is the $125 annual fee, which BBVA waives for the first year.

The exception to this is the Optimizer Credit Card, a secured credit card that’s collateralized by a savings account. This card is designed for those who can’t qualify for a traditional credit card and will help rebuild their credit. It has a high interest rate, but the credit limit can be increased at any time with a matching deposit in the savings account.

Regardless of your credit history and your desire for rewards, BBVA probably has a credit card that will work for you.

BBVA investing

There are two investing options with BBVA. The first is self-directed investing, which is just what is sounds like. You control and direct your investments, and you can put your money in mutual funds, ETFs and other options. You can even establish a margin account through the bank.

If you want more options and someone to manage your investing for you, BBVA offers full-service investment accounts as well. This means your money is managed by a professional. BBVA also offers 529 plans and options that help you save to pay for your child’s college managed under this plan.

Compare top bank accounts

Too long, didn’t read?

Are you looking for a full-service bank online that offers plenty of options? If the answer is yes, then BBVA may be the right place for you. Many fees can be avoided though they are steeper than many other banks, and the interest rates are respectable but not the highest around.

If you’re looking for the highest rates and lowest fees, or have very simple banking and financial services needs, BBVA may not be the best place for you. If you shop around, you will find higher interest rates, lower fees and simpler options from other online banks. From full-service investing to traditional banking and lending products, BBVA’s strength lies in its options. If you’re shopping around for a bank, they’re certainly worth a second look.

Source: thesimpledollar.com

May 8, 2021

The Best Cities for Artists in America

No starving artists here: These cities are the best places for artists to live well and practice their craft.

Having access to art and culture is one of the best parts of living in a city. While it’s true that art is found and created anywhere — in cities, there are some definite benefits. Cities act as cultural hubs that draw both new and existing artistic talent. There is a feedback loop of inspiration that cities foster.

With people from many different cultures, backgrounds and walks of life living in close quarters, there is vibrant multiculturalism. Urban density makes it easy to try and experience many different things from theater to food. Artists feed off that creative energy. And when you also live surrounded by other creative individuals, you are constantly being inspired to create new work

But it takes more than that to make a city a great place for artists. It’s widely known that both historically and in modern times, artists are often underpaid for their work. That “starving artist” trope didn’t come from nowhere — artists still need to pay for things like rent and food. They still need to make a living in this world the same as everyone else.

That’s why, on top of a thriving cultural scene, artists need to live in a place that supports their passion and livelihood. That ranges from affordable housing for work and creation, walkability to get around to gigs and much more.

So if you’re an artist with a dream, these are the best cities for artists to create and live.

Finding the best cities for artists

Art is for everyone because there are so many different ways to create. You have visual mediums like painting, drawing or photography. There are performance arts like dancing or theater. And there are musicians across an incredible breadth of genres and instructions, from voice to electronic DJ.

Having a thriving artistic community makes a city a better place to live. There are shows and performances to go to, which improves the quality of life for residents and encourages tourism. But to have such a community, artists need to make a viable living in that city. Quality of life and cost of living for essentials like food and housing, plus affordable rent remain important for those looking to dive into their artist endeavors.

To determine the best cities for artists, we looked for cities with a good walk score and t the average price for studio apartments. Many artists need or want separate spaces to create and work in, same as with offices for other industries, so having affordable studios for rent is key.

We also looked for how many museums there are per density and how many artistic organizations were in the city by density. That included theaters, artistic collectives, performing arts centers and more. All cities also had a population of over 50,000.

The following 10 places emerged as the best cities for artists to live and work in.

10. Baltimore, MD

baltimore md

In recent years, Baltimore has risen the charts as one of the best cities for creatives. This is especially true for the visual arts.

There are more than 60 diverse museums within the area, and it’s the home of renowned museums like the Baltimore Art Museum and the Walters Art Museum. Their substantial collections feature historic art from around the world, as well as exciting contemporary work. The city also supports modern, experimental art in outdoor public spaces like the Glenstone museum and sculpture garden and Downtown Frederick Public Art Trail, making art accessible to all.

There are also ample opportunities in the performing arts. The city is home to seven different performing arts companies and numerous dance and music groups.

Living here, artists can enjoy an abundance of creative outlets and good, affordable quality of life. With an average city median income of $51,000, the average cost for a studio apartment is $1,346. This was down 8.3 percent from last year. That gives artists lots of choices for space, as well as affordable rates.

Baltimore also has good public transportation, and a high Walk Score of 72.

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9. St. Louis, MO

st louis mo

This city that was once the gateway to the West is now a gateway for artists to comfortably live and create in an up-and-coming art city. While it is not the most walkable city, there are many other benefits. The average rent for a studio apartment is $1,328 — with plenty of availability.

St. Louis has an especially good reputation for performing arts, with 14 performing art companies and ten dance companies. Performance venues like The Fabulous Fox, housed in a grand old movie theater, and the Center of Creative Arts give the community hubs to experience art. And the contemporary visual arts scene is also on the rise.

The public can appreciate art in outdoor spaces like Citygarden, and museums like the Grand Center and the St. Louis Art Museum boasts exceptional modern art collections. So there are plenty of places for artists to congregate and work together.

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8. Chicago, IL

chicago il

Chicago has a well-deserved reputation for being one of the United States’ best cities for art, alongside staples like Los Angeles and New York City. But of those two, Chicago is the only one to make it into the top 10 best cities for artists. This means it’s much more affordable than the other two, but still gives artists the creative stimulation they crave. It’s also the place where many greats get their start.

Chicago has many benefits — the downtown area is a dense urban grid, with a very high WalkScore of 84. For outlying areas, there’s excellent public transit. However, most art and culture institutions are downtown — from theaters to museums — so it’s a very centralized area. There are outdoor spaces like Millennium Park for fresh air, access to nature and art installations (hello, The Bean). Museums like the Art Institute of Chicago enjoy tremendous renown for their collections.

Plus, there are top-ranked performing arts opportunities, from theater to music to improv at Second City, one of the nation’s best comedy and improv schools. While average studio rent is $1,784, making it the second most expensive city for studios in the top 10, you’ll have access to world-renowned art institutions for learning and displaying your art.

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7. Berkeley, CA

berkeley ca

Although Berkeley is largely known as a center for engineering, science and tech due to UC Berkeley, art and culture are equally strong here. This city of over 121,000 has an incredibly diverse population. And the presence of the university invites fresh, young minds from around the world, feeding innovation and creativity.

Berkeley also feeds off of the cultural thrum of the surrounding Bay Area and nearby San Francisco.

But being in the tech-heavy Bay Area, life is expensive. A Berkeley studio costs an average of $2,250. This makes it the most expensive of the top ten cities. But on the upside, Berkeley is extremely walkable, making it easy to get to the many artistic opportunities that exist. Berkeley is especially known for its performing arts. It’s home to the Berkeley Repertory Theatre, a Tony-winning regional playhouse and other top theater and performance companies.

For visual artists, collectives like the ACCI Gallery and museums like Berkeley Art Museum and Pacific Film Archive exist. West Berkeley and the North Shattuck areas are especially popular artist neighborhoods.

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6. Philadelphia, PA

philadelphia pa

Aspiring and working artists priced out of New York have been turning to Philadelphia. This has made it one of the most exciting artistic hubs on the East Coast. Steeped in history, the city also buzzes with vibrant young minds and modern energy.

Rent and cost of living are significantly lower than in NYC. A studio costs, on average, $1,745. Two top art schools call Philly home: the Pennsylvania Academy of Fine Arts and Temple University’s Tyler School of Art.

And there is art everywhere, from museums to public spaces. The Philadelphia Art Museum is the third-largest in the U.S., and the Rodin Museum has one of the largest collections of his work outside Paris. Performing arts-wise, there is a great live music scene, especially for classical music thanks to the Philadelphia Orchestra.

The Avenue of the Arts acts as a hub, with performance spaces for everything from dance to experimental work. Dancers will also find a welcoming community here, as there are multiple esteemed dance companies.

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5. Seattle, WA

seattle wa

Seattle’s reputation for incredible live music needs no introduction. Grunge originated here, thanks to influential bands like Nirvana. And music and performance are still part of the lifeblood of the city. But there’s more to Seattle’s art scene than that.

There are over 80 theater companies and great dance companies like the Pacific Northwest Ballet. Galleries and small venues provide space for experimental, undercover art movements. But “mainstream” art also has a place here at museums and places like the Seattle Art Museum, Chihuly Garden and Glass and the Olympic Sculpture Park.

In Seattle, studio apartments run an average of $1,481. And this is down almost 14.2 percent from last year, so there is plenty of space available and demand.

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4. Washington, D.C.

Washington D.C.

The U.S. capital is a hotbed for history and art, which go hand in hand here. There are abundant museums and inspiring architecture everywhere you turn. But it’s not just about the past. There is also a thriving contemporary art community.

Check out spots like the Culture House DC, a 19th-century church painted in bold colors and now houses an artist collective. And there are frequent art festivals and performances of music, dance and theater.

If you’re an artist looking for a city with a lot of options for studios, D.C. is the place for you. The average rent is $1,686, plus it’s also a very pedestrian-friendly city that’s easy to navigate on foot.

All in all, D.C. offers a great emerging art scene in a city that’s affordable and safe, with plenty of history to inspire you.

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3. Pittsburgh, PA

pittsburgh

In 2018, Pittsburgh ranked as one of the top cities in America for artistic vibrancy. It’s no small wonder. Similar to Philadelphia, artists love the affordable cost of living — $1,194 for a studio.

In Pittsburgh, they’re finding world-class museums, outdoor festivals, creative collectives and performing arts companies that are pushing boundaries and generating buzz. Some must-visit spots include the Carnegie Museum of Art, the Andy Warhol Museum and The Mattress Factory.

Outside of town, you’ll also find Frank Lloyd Wright’s architectural masterpiece, Fallingwater.

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2. Minneapolis, MN

minneapolis mn

Coming in at No. 2 in the top 10 best cities for artists is one half of the Twin Cities itself: Minneapolis. Of course, this Midwest hub is well-known for its friendly residents, parks, lakes and outdoor access. But it also has fantastic opportunities for art.

Minneapolis has 55 different museums to visit, among them the eye-catching Weisman Art Museum. As a city that loves nature, lots of art is outdoors and open for everyone. Minneapolis is especially well-known for its vibrant murals, easily found all over the city. Oh, and of course, there’s a great music scene. What else would you expect from the home of Prince?

Add in low rent on studios, $1,236 on average, and you’ll discover why it’s no wonder so many artists find inspiration here.

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hartford ct

Topping the list of the best cities for artists is the Connecticut capital of Hartford. This scenic city celebrates both contemporary and historic art through its many institutions, from museums to collectives.

World-class touring performances come through at venues like the Bushnell Center for the Performing Arts. And local companies like TheaterWorks showcase contemporary work. The city is also committed to promoting diverse artists and voices. For example, the unique Artists Collective highlights the work of the African Diaspora. And the Real Art Ways organization supports experimental and new work in a variety of mediums.

Beyond the artistic community, Hartford is also very affordable for working artists. It boasts the cheapest prices for studio apartments — the average being $1,121.

Good quality and cost of living go a long way toward supporting an artist’s lifestyle. And if the urban scene isn’t sufficiently inspiring, Connecticut’s natural beauty is also sure to spark the imagination.

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The 50 best cities for artists

Now that you’ve seen the top 10, let’s branch out to discover even more cities that have created an atmosphere where artists can thrive and create. Please note, our methodology allows for ties.

Methodology

To find the best cities for artists, we used the following data points:

Performing arts businesses and establishments per density
Museums per density
Walk score
Average rent of a studio apartment

We looked at cities with at least 50,000 people according to the U.S. Census Bureau’s 2019 population estimates and ranked each city in each of these four categories. Then, we added up the rankings for each of the four categories to determine a final score for each city. Ties were allowed in our rankings. The cities with the lowest overall score were determined to be the best cities for artists.

We excluded cities from this study that had insufficient rental inventory or other data.

Business and establishment data comes from commercially sourced business listings. This may not account for recent business openings or closures.

Rent prices are based on a one-year rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory as of April 2021. Our team uses a weighted average formula that more accurately represents price availability for each unit type and reduces the influence of seasonality on rent prices in specific markets.

The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

May 7, 2021

10 States With the Highest Sales Taxes

Before you embark on a shopping spree in any of the 10 worst states for sales taxes featured here, you’ll want to make extra room in your budget. Our biggest offender clocks in at 9.55% once both state and local sales taxes are factored in (continue reading our round-up to find out which state is the priciest culprit).

However, retirees and other relocators shouldn’t judge a state by its sales tax alone. While this expense may be costlier in some areas, residents in states with a high sales tax may be able to reap the benefits of other tax-related perks, such as not having to pay state income tax.

Got your attention? Take a look at our list to find out which states will nickel-and-dime you the most on everyday purchases.

Sales tax values are for 2020 and were compiled by the Tax Foundation. Income tax brackets are for the 2020 tax year. Property tax values are for 2019.

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10. New York

Overall Rating for Middle-Class Families: Least tax-friendly

State Sales Tax: 4% state levy. Localities can add as much as 4.875%, and the average combined rate is 8.52%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit. Clothing and footwear that cost less than $110 (per item or pair) are exempt from sales tax. Groceries and prescription drugs are exempt, too. Motor vehicle sales are taxable, though.

Income Tax Range: Low: 4% (on up to $8,500 of taxable income for single filers and up to $17,150 for married couples filing jointly); High: 8.82% (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly).

Starting in 2021, the top rate is 10.9% on taxable income over $25 million (regardless of filing status).

New York City and Yonkers imposed their own income tax. A commuter tax is also imposed on residents of New York City, as well as on residents of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester Counties.

Property Taxes: In the Empire State, the median property tax rate is $1,692 per $100,000 of assessed home value.

For details on other state taxes, see the New York State Tax Guide for Middle-Class Families.

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9. California

Overall Rating for Middle-Class Families: Most tax-friendly

State Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.68%, according to the Tax Foundation. Groceries and prescription drugs are exempt from these taxes, but clothing and motor vehicles are taxed.

Income Tax Range: Low: 1% (on up to $17,864 of taxable income for married joint filers and up to $8,932 for those filing individually); High: 13.3% (on more than $1,198,024 for married joint filers and $1 million for those filing individually).

Property Taxes: If you’re planning to buy a home in the Golden State, the median property tax rate is $729 per $100,000 of assessed home value.

For details on other state taxes, see the California State Tax Guide for Middle-Class Families.

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8. Kansas

Overall Rating for Middle-Class Families: Least tax-friendly

State Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.69%, according to the Tax Foundation. These rates also apply to groceries, motor vehicles, clothing and prescription drugs.

Income Tax Range: Low: 3.1% (on $2,501 to $15,000 of taxable income for single filers and $5,001 to $30,000 for joint filers); High: 5.7% (on more than $30,000 of taxable income for single filers and more than $60,000 for joint filers).

Property Taxes: Kansans who own their homes pay a median property tax rate of $1,369 per $100,000 of assessed home value.

For details on other state taxes, see the Kansas State Tax Guide for Middle-Class Families.

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7. Illinois

Overall Rating for Middle-Class Families: Least tax-friendly

State Sales Tax: 6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.82%, according to the Tax Foundation. Food and prescription drugs are taxed at only 1% by the state. Clothing and motor vehicles are fully taxed.

Income Tax Range: There is a flat rate of 4.95% of federal adjusted gross income after modifications.

Property Taxes: For homeowners in Illinois, the median property tax rate is $2,165 per $100,000 of assessed home value — the second highest in our round-up.

For details on other state taxes, see the Illinois State Tax Guide for Middle-Class Families.

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6. Oklahoma

Overall Rating for Middle-Class Families: Not tax-friendly

State Sales Tax: 4.5% state levy. Localities can add as much as 7%, and the average combined rate is 8.95%, according to the Tax Foundation. Prescription drugs are exempt and motor vehicles are taxed at a rate of 1.25% (a 3.25% excise tax also applies). Grocery items and clothing are taxable at 4.5%, plus local taxes.

Income Tax Range: Low: 0.5% (on up to $1,000 of taxable income for single filers and up to $2,000 for married joint filers); High: 5% (on taxable income over $7,200 for single filers and over $12,200 for married joint filers).

Property Taxes: For Oklahomans who own a home, the median property tax rate is $869 per $100,000 of assessed home value.

For details on other state taxes, see the Oklahoma State Tax Guide for Middle-Class Families.

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5. Alabama

Overall Rating for Middle-Class Families: Tax-friendly

State Sales Tax: 4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.22%, according to the Tax Foundation. Prescription drugs are exempt. Groceries and clothing are fully taxable, while motor vehicles are taxed at a reduced rate of 2% (additional local taxes may apply).

Income Tax Range: Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others); High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others).

Some Alabama municipalities also impose occupational taxes on salaries and wages.

Property Taxes: In Alabama, the median property tax rate is $395 per $100,000 of assessed home value — the lowest on our list.

For details on other state taxes, see the Alabama State Tax Guide for Middle-Class Families.

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4. Washington

Overall Rating for Middle-Class Families: Most tax-friendly

State Sales Tax: 6.5% state levy. Municipalities can add up to 4% to that, with the average combined rate at 9.23%, according to the Tax Foundation. Grocery items and prescription drugs are exempt. Clothing is taxable, as are motor vehicles. However, there’s an additional 0.3% tax on sales of motor vehicles.

Income Tax Range: Washington has no state income tax.

Property Taxes: Home buyers in the Evergreen State can expect to pay a median property tax rate of $929 per $100,000 of assessed home value.

For details on other state taxes, see the Washington State Tax Guide for Middle-Class Families.

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3. Arkansas

Overall Rating for Middle-Class Families: Mixed tax picture

State Sales Tax: 6.5% state levy. Localities can add as much as 5.125%, and the average combined rate is 9.51%, according to the Tax Foundation. Prescription drugs are exempt. Grocery items are taxed at 0.125% (additional local taxes may apply). Motor vehicles are taxed if the purchase price is $4,000 or more (7% tax rate in Texarkana). However, starting in 2022, the rate on sales of used motor vehicles priced between $4,000 and $10,000 will only be 3.5%. Clothing is taxed at the standard rate.

Income Tax Range: Low: 2% (on taxable income from $4,500 to $8,899 for taxpayers with net income less than $22,200), 0.75% (on first $4,499 of taxable income for taxpayers with net income from $22,200 to $79,300), or 2% (on on first $4,000 of taxable income for taxpayers with net income over $79,300); High: 3.4% (on taxable income from $13,400 to $22,199 for taxpayers with net income less than $22,200), 5.9% (on taxable income from $37,200 to $79,300 for taxpayers with net income from $22,200 to $79,300), or 6.6% (on taxable income over $79,300 for taxpayers with net income over $79,300). Beginning in 2021, the top rate for taxpayers with net income over $79,300 will be 5.9% (on taxable income over $8,000).

A “bracket adjustment” of between $40 and $440 is subtracted from the amount of tax due for taxpayers with net income from $79,301 to $84,600.

Property Taxes: For homeowners in the Natural State, the median property tax rate is $612 per $100,000 of assessed home value.

For details on other state taxes, see the Arkansas State Tax Guide for Middle-Class Families.

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2. Louisiana

Overall Rating for Middle-Class Families: Tax-friendly

State Sales Tax: 4.45% state levy. Localities can add as much as 7%, and the average combined rate is 9.52%, according to the Tax Foundation. Groceries and prescription drugs are exempt from the state’s sales tax, but localities may tax these. Clothing and motor vehicles are taxable.

Income Tax Range: Low: 2% (on $12,500 or less of taxable income for individuals, $25,000 for joint filers); High: 6% (on more than $50,000 of taxable income, $100,000 for joint filers).

Property Taxes: The median property tax rate in Louisiana is $534 per $100,000 of assessed home value.

For details on other state taxes, see the Louisiana State Tax Guide for Middle-Class Families.

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1. Tennessee

Overall Rating for Middle-Class Families: Most tax-friendly

State Sales Tax: 7% state levy. There’s also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined rate of 9.55%, according to the Tax Foundation. Groceries are taxed at 4% by the state, in addition to any additional local taxes. Clothing is taxed at the standard rate. Motor vehicles are taxed at the basic 7% rate, plus the additional 2.75% on purchases between $1,600 and $3,200. There’s no tax on prescription drugs.

Income Tax Range: There’s no state income tax in Tennessee. However, dividends and some interest are subject to the Hall Tax at a 1% rate in 2020. The first $1,250 in taxable income for individuals ($2,500 for joint filers) is exempt. 2020 is the last year for this tax, which is being phased out. Also, the tax is waived if you’re over the age of 100.

Property Taxes: In Tennessee, the median property tax rate is $636 per $100,000 of assessed home value.

For details on other state taxes, see the Tennessee State Tax Guide for Middle-Class Families.

Source: kiplinger.com

May 7, 2021

5 Ways to Perfect Your Credit Score

If you’re trying to perfect your credit score, it’s important to first understand what makes up your credit report and credit score. Your credit score is determined by an advanced algorithm which was developed by FICO and pulls the data from your credit report to determine your score. When calculating your credit score, the following information is going to affect your credit score in the corresponding percentages:

35 percent: History of on-time or late payments of credit.
30 percent: Available credit on your open credit cards
15 percent: The age of your lines of credit (old = good)
10 percent: How often you apply for new credit.
10 percent: Variable factors, such as the types of open credit lines you have

Many of this may be common sense or information that you’ve already learned over time, resulting in a good credit score but possibly not a perfect score. If you have a bad credit score, it could take a lot of time and work to perfect your score and you may first want to consider repairing your credit. If your credit score is already above 700 but you’re trying to shoot for that perfect score of 850 to ensure the best deals and interest rates, here are 5 ways to perfect your credit score:

1. Maintaining Debt-To-Limit Ratio

To perfect your credit score, it’s recommended that you keep your debt-to-credit ratio below 30% and, if possible, as low as 10%. The debt-to-limit ratio is the difference between how much you owe on a credit card versus how much your credit limit is. For example, if one of your credit cards has a credit limit of $5,000, then you should always keep the balance below $1,500 but preferably around $500. As you can see above, 30% of your credit score is determined by the available credit on your open credit cards, so keeping the debt-to-limit ratio will increase your available credit and also show that you’re responsible with your credit.

2. Keep Your Credit Cards Active

Make sure that you use your cards at least once a year to keep them shown as “active” credit and make sure that you never cancel your credit cards. 15% of your credit score is determined by the age of your lines of credit, so you should always keep your credit cards active to lengthen the age of your line of credit. Many people tend to cancel cards that they no longer use – many times because the rates aren’t very good or because they have another card with better benefits – but even if you don’t use the cards very often (just once a year is fine), you should keep them active. Typically, someone with a credit score over 800 has credit lines with at least 10 years of positive activity.

3. Always Pay Bills On Time

Probably the most well-known factor of a credit score and the factor that has the biggest impact on your credit score (35% of your score) is your history of paying your credit payments on-time. If you have a history of always making your credit card, mortgage, and car payments on time, you will greatly improve your credit score. This can also have an adverse effect as well, should you ever make a late payment. Unfortunately, it only takes one late payment to severely reduce your credit score so it’s crucial that you make sure to always make credit payments on time.

4. Dispute Errors On Your Credit Report

If you don’t already, make sure that you request a copy of your credit report once every year and review it for errors. It is actually quite common for credit reports to contain errors which can be disputed and potentially allow you to have negative items removed from your credit report. If, for instance, your credit report shows a late payment on a credit card but contained errors in the record, you can dispute the negative item and request to have it removed from your report. Having a negative item, like a late payment, removed from your report can improve your credit score significantly. While disputing errors on your credit report can be tedious and take a lot of time, it is usually worth it. Another option would be to contact a credit repair agency to help you dispute any negative items on your credit report.

5. Reduce The Number of Credit Inquiries

While this may only affect 10% of your credit score, keeping the number of credit inquiries down can still help to build that perfect credit score but is often ignored. You should never have more than one credit inquiry per year but many people do not realize how often this is done and often times have their credit checked more than once per year. If you’re applying for a car loan, checking your credit score online, or applying for a new credit card, these type of actions will almost always result in a credit inquiry and should be avoided if you’ve already had a credit inquiry earlier in the year. Make sure you do your research on what will result in a credit inquiry so that you don’t accidentally have more than one a year without realizing it.

Source: creditabsolute.com

May 7, 2021

How to Use Your Health Savings Account (HSA) for Retirement Investing

Saving for retirement is difficult, but it’s an important part of everyone’s financial life. There are a number of ways to make saving for retirement easier, such as using tax-advantaged accounts like individual retirement accounts (IRAs) and 401(k) plans.

One special type of tax-advantaged account, the health savings account (HSA), isn’t specifically designed to help people save for their retirement. However, its unique benefits make it one of the most powerful tax-advantaged accounts out there.

If you have access to an HSA, it can be one of the best ways to set money aside for retirement.

What Is an HSA?

A health savings account (HSA) is a special type of account that is designed to help people save money to pay for medical bills. HSAs are only available to people who have certain types of health insurance plans called high-deductible health plans (HDHPs).

Like retirement accounts, HSAs offer tax advantages that make it easier to set aside money to pay for medical bills. If your employer offers eligible insurance plans, they may also make contributions to your HSA on your behalf, similar to 401(k) matching.

The unique tax benefits of HSAs are what make them potent vehicles for saving for both medical expenses and retirement.

Pro tip: If you’re thinking about opening an HSA, you can get started through Lively. There are no hidden fees and you’ll be able to set up recurring contributions.

How Do HSAs Work?

Understanding how HSAs work is essential to making the most of them when it comes to saving for both health care and your retirement. You risk paying penalties if you fail to follow the rules.

Insurance Requirements

First, not everyone can open an HSA. They’re only available to people who have a qualifying high-deductible health plan.

An insurance plan’s deductible is the amount that you pay before your insurance kicks and starts covering costs. For example, if you have a $2,000 deductible, you have to pay $2,000 toward your health care expenses before your insurance pays any of the cost.

For an insurance policy to qualify as an HDHP, it must meet the following requirements:

It charges a higher annual deductible than typical health plans (for 2020, the minimum is $1,400 for individuals and $2,800 for families).
It has a maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses (for 2020, the maximum is $6,750 for individuals and $13,500 for families).
It may, but is not required to, provide preventative care without a deductible or with a lower deductible.

Other Qualifications

The exact requirements for qualifying for an HSA are:

You are covered by an HDHP.
You have no other health insurance coverage, with the following exceptions:
- Liabilities incurred under workers’ compensation laws, tort liabilities, or liabilities related to ownership or use of property.
- A specific disease or illness.
- A fixed amount per day (or other period) of hospitalization.
- Coverage for accidents, disability, dental care, vision care, and long-term care.
You aren’t enrolled in Medicare.
You aren’t claimed as a dependent on anyone else’s tax return.

If you meet the requirements, you can open an HSA.

Contribution Limits

Like other tax-advantaged accounts, you cannot make unlimited contributions to an HSA. There is a limit on how much you can contribute each year.

For 2020, the limit is $3,550 for individual plans and $7,100 for family plans.

Some employers that offer HDHPs make contributions to their employees’ HSAs as an employee benefit. Employer contributions count toward these limits, so make sure you don’t exceed the contribution limit with your contributions and your employer’s contributions combined.

Tax Advantages

The primary reason that people use HSA for savings is the tax advantages. Like traditional IRAs and 401(k)s, the money you contribute to an HSA is contributed before tax. That means you can deduct the amount you add to the account from your income when filing your taxes.

If you have a taxable income of $50,000 and put $5,000 in your HSA, you can report your taxable income as just $45,000. That will save you about $1,100 on your tax bill, meaning your $5,000 contribution only costs you $3,900 out of pocket.

With a traditional IRA or 401(k), you pay income tax on the money that you withdraw from the account. HSAs are different. If you use the money in the account for qualified health expenses, you pay no taxes on the withdrawals either. This makes them doubly tax-advantaged.

If you have extra money in your HSA after you turn 65, you can begin making withdrawals from the account for nonmedical expenses too. If you do, you pay income tax on the amount you withdraw, but no penalties, just like a retirement account.

Penalties

Typically, you can only withdraw money from an HSA for qualified medical expenses. The IRS outlines all qualified expenses in its Publication 502, but it includes most things you’d expect, including:

Ambulance fees
Birth control
Body scans like MRIs or X-rays
Contact lenses
Dental treatment
Drug addiction care
Eye exams
Hearing aids
Hospital services
Physical exams
Prescriptions
Surgery

If you withdraw money from an HSA for a nonmedical expense and you are under age 65, you pay a 20% penalty on the amount withdrawn. You also have to pay income tax on your withdrawal, meaning you are doubly punished for using the money for nonmedical expenses when you’re under 65.

Once you reach age 65, however, you can use HSA funds for nonmedical expenses penalty-free, but will still have to pay income tax on the amount withdrawn.

Although you generally don’t have to prove that you’ve used your HSA money for qualified medical expenses when you file your taxes, you should always save your receipts so that you can show how much you spent compared to how much you withdraw. The receipts will come in handy if you wind up getting audited.

How to Use an HSA for Retirement Savings

HSAs are useful for saving for health care expenses, but they’re one of the most powerful retirement accounts available to Americans. If you want to use your HSA to save for retirement, these tips can help.

1. Contribute as Much as You Can

If you want to use your HSA for retirement savings, the first thing to do is contribute as much as you can to the account.

Typically, you want to contribute to your 401(k) until you max out the amount that your employer will match. Getting employer matching contributions is like getting a raise, so it’s worth getting as much in matching funds as possible.

After that, you can focus on putting money in your HSA until you max it out.

2. Invest Your Balance

The name “health savings account” might make you think that your HSA is a simple savings account. Savings accounts pay interest, but they’re not great for long-term wealth building because you usually wind up losing spending power to inflation.

Depending on your HSA provider, you likely have the option to invest your HSA in the stock market. That means that you can use the money in your HSA to build an investment portfolio like you do in your retirement and taxable brokerage accounts. Building a portfolio of low-cost index funds is a great way to help your HSA’s balance grow.

Just remember to keep some of the money in cash if you plan on using the HSA to cover health expenses as well.

3. Wait Until You’re 65

Once you’ve opened your HSA, made contributions, and invested your money, all you have to do is wait. Once you turn 65, you can withdraw money from the account as if it were a 401(k) or IRA. There’s no requirement that you use the money for health care expenses.

The only downside of this strategy is that IRAs and 401(k)s are slightly more flexible when it comes to withdrawals. You can start taking money from those accounts, penalty-free, when you turn 59 ½.

4. Save Your Receipts

Even if you don’t plan to use your HSA to cover health care expenses, you should make sure that you save every medical-related receipt that you get.

The reason to save every receipt is that there is no time limit for withdrawing money from your HSA after you incur a qualified medical expense.

Consider this example: you injure your leg while out for a run and have to go to the hospital for surgery. After you recover, you get the hospital bill and have to pay $5,000.

You can withdraw money from the HSA now to pay the bill, or you can pay the bill out of pocket, leaving your money in the HSA to grow, tax-free. You decide to pay the bill out of pocket.

Because there’s no time limit on withdrawals, you can take $5,000 out of your HSA, tax-free and penalty-free, any time you want. You can make the withdrawal tomorrow, next year, 10 years from now, or when you retire.

This is better than simply waiting until you turn 65 because withdrawals for nonmedical expenses still incur income taxes. If you pay for medical expenses out of pocket but save your receipts, you can withdraw from your HSA without paying any tax at all, up to the total amount of your qualified medical expenses that you’ve incurred over the years.

This makes HSAs more powerful than standard retirement accounts because you pay no tax on contributions or qualified distributions.

The full list of qualifying medical expenses is long, and some might surprise you. Over time, you’ll likely build up plenty of qualified expenses, which will make it easy for you to make tax-free withdrawals when you need to.

Advantages of Using an HSA for Retirement Savings

HSAs are one of the most powerful tax-advantaged accounts when used properly, so there are a lot of perks to using one for retirement savings.

1. Tax Benefits Add Up

One of the primary reasons to use an HSA for retirement savings is the tax benefits. If you use the account properly and save your medical receipts you can ultimately pay no tax on any of the money you contribute or withdraw from the account.

Even if you don’t have enough medical expenses to withdraw the entire amount tax-free, you have the backup plan of paying taxes on penalty-free withdrawals after you turn 65, effectively making the account into a second IRA or 401(k). Over the long term, the amount that you save in taxes can be huge.

If you’re in the 22% tax bracket — single earners making $39,476 to $84,200 and couples making $78,951 to $168,400 — and withdraw $10,000 per year from your HSA tax-free, you save $2,200 per year in taxes. That means needing to save about $55,000 less for retirement if you’re using the 4% rule to determine how much of your portfolio to withdraw each year.

2. HSA Contributions Don’t Count Against Retirement Contribution Limits

Using an HSA for retirement savings also increases the amount of tax-advantaged saving “cap space” you have for other retirement vehicles. IRAs and 401(k)s limit your contributions (to $6,500 per year and $19,500 per year, respectively). HSA contributions don’t count against those caps.

If you’re maxing out your tax-advantaged retirement contributions and looking for other ways to reduce your tax bill, HSAs can be an attractive option.

Disadvantages of Using an HSA for Retirement Savings

Just because you can use an HSA to save for retirement doesn’t mean that doing so is a good idea. Here are the disadvantages to consider.

1. You Might Need the Money for Medical Expenses

One reason not to use your HSA for retirement savings is the possibility that you might wind up needing that money to pay for health care expenses. Odds are good that you’ll wind up with a big medical bill at some point in your life.

If you have a high-deductible health plan, the out-of-pocket expense could be significant, and unless you have a strong emergency fund in savings, you might need to tap your HSA account to pay the bill.

If your HSA is one of your primary methods of saving for retirement, you might have to dip into your nest egg to cover a medical emergency, which is never ideal.

2. HSAs Aren’t Designed for Retirement Investing

Another drawback is that HSAs aren’t designed for retirement saving. The tax rules surrounding HSAs make them a great way to save for retirement, but that isn’t their intended purpose. HSA accounts aren’t necessarily optimized for long-term investing.

Some HSA providers might not offer the option to invest your balance at all, or might offer options that charge hefty fees for the privilege. Some HSAs limit your investment options to expensive mutual funds whose fees can eat away at your balance over the long term, meaning your savings will grow much more slowly in an HSA than a specifically designed retirement account.

By contrast, many true retirement plans have specially designed investment options, such as target-date funds, that make saving for retirement easy.

3. The Rules for HSAs Could Change

Finally, just because HSAs are great for retirement savings now doesn’t mean that they will be 20, 30, or 40 years from now. The government could change the rules for how you can use the money in the account. For example, the IRS may add a time limit for withdrawing funds after you incur a medical expense.

Future changes may make it harder to use the money you have in the account or alter the tax implications, which could limit its usefulness as a retirement savings vehicle.

Final Word

HSAs can be a good way to save for retirement, but you need to have a high-deductible health plan to be eligible for one. Furthermore, you must be able to cover out-of-pocket medical expenses by other means in order to make the most of these accounts as retirement savings vehicles.

For most people, 401(k)s and IRAs will be the main methods of saving for retirement. Don’t forget that you can also benefit from opening a taxable brokerage account if you want to invest for long-term goals beyond retirement.

Source: moneycrashers.com

May 7, 2021

Capital One 360 Review 2021 – The Simple Dollar

Capital One 360 is a particularly good choice if you’re looking for a strong all-round option ifn online banking. In fact, it’s The Simple Dollar’s pick for the best free checking account. This online arm of Capital One should appeal to anyone who wants to dip their toes into online banking with a convenient, trusted service that boasts several physical locations and a nationwide ATM network.

Savings APY

0.40%

J.D. Power Rating

854/1,000

1Y CD Rate

0.20%

SimpleScore

3.8 / 5.0

SimpleScore Capital One 3.8

Savings APY 4

1Y CD APY 3

Customer Satisfaction 4

Mobile App 4

Product Variety 4

Capital One 360 is a particularly good choice if you’re looking for a strong all-round option in online banking. In fact, it’s The Simple Dollar’s pick for the best free checking account. This online arm of Capital One should appeal to anyone who wants to dip their toes into online banking with a convenient, trusted service that boasts several physical locations and a nationwide ATM network.

Capital One 360 Highlights

No hidden fees or minimums as you earn interest on your everyday money
38,000 fee-free Allpoint® ATMs and 2,000 Capital One® ATMs
Free MasterCard® Debit Card for all purchases
Mobile check deposits with CheckMateSM & one checkbook’s free

Capital One 360 launched in 2013 after Capital One acquired ING Direct and rebranded the service. As a former ING Direct customer, I “inherited” a Capital One 360 savings account that I still use today, and I can personally attest to the convenience and ease of use it offers.

Capital One 360 at a Glance

When it comes to your banking needs, you’ll have access to just about everything you expect from a bank through Capital One 360, as well as some products that aren’t as common for online-only banks. Here are the key offerings:

Savings: Capital One 360 offers personal, business, and kid-focused savings accounts.
Checking: There’s a no-fee personal checking account and a teen-friendly checking account that links to a debit card and helps teach your child how to manage money.
CDs: Choose from nine terms ranging from six to 60 months when you want to amp up your personal or business savings.
Mortgages: Whether you need a fixed- or adjustable-rate mortgage, Capital One 360 has you covered at competitive interest rates.
Investment accounts: With the Capital One Investing platform, you can build a portfolio of stocks, ETFs, and mutual funds. You can also open an IRA.

In addition, parent company Capital One fills in the gaps with auto loans, credit cards, and more extensive business and commercial banking. However, there are no money market accounts or personal loans.

If you’re nervous about online banking, note that your deposits with Capital One 360 will be protected by the Federal Deposit Insurance Corporation, just like at any brick-and-mortar bank. In addition, your data is fully encrypted and protected by several layers of security such as firewalls, intrusion detection, and multi-factor authentication.

Capital One 360 Performance Savings

Capital One 360 Performance Savings has a lot of appeal, the interest rate, currently 0.40% APY, isn’t the highest you can find online, but it’s still pretty competitive — especially when you consider that the national average is .09%, according to Bankrate. Add that to this account’s other perks, including no fees and no account minimums, and you’ve got a compelling savings option. Here are the account features at a glance:

No maintenance fees: At other banks, you may have to pay a fee just to have an account.
No account minimums: You don’t have to have a certain amount of money to open an account or maintain any sort of minimum balance to avoid a fee.
A great rate: You’ll earn 0.40% APY, more than eight times the national average.
Open multiple accounts: You can have up to 25 different savings accounts for free.
24/7 account access: Need to make a withdrawal at 2 a.m.? No problem.
Customer support any day of the week: You’re just a phone call away from a real person.
Easy account management: Schedule stress-free automatic deposits, and track your progress with the My Savings Goals feature.
Mobile check deposit: Depositing funds is as simple as snapping a picture with your phone using the CheckMate feature.

One of the nicest features on this list is the ability to open up to 25 savings accounts without ponying up account maintenance fees. This is a great way to stay organized if you have multiple savings goals.

Right now, I have a few separate savings accounts with Capital One 360, and have had several more in the past, including one dedicated to saving for a down payment on our house. You could also have one emergency-only account, one for a dream vacation, and so on.

I can also vouch for the convenience of the automatic savings plan, which let me funnel a certain amount of money into my savings account every other week without lifting a finger. You can also set up an automatic transfer to take place as often as every week or as little as once every few months depending on your savings goals. It’s a great way to force yourself to save and requires very little effort to set up.

The biggest downside here is the interest rate. I’ve watched my interest rate sink (and sink … and sink) over the past several years from a high of close to 5%, when I opened it with ING. Now, that’s not a situation that’s unique to Capital One 360 — rates have plummeted everywhere, and the current rate of 0.40% is definitely higher than brick-and-mortar banks offer.

However, some competing online-only banks are higher — you’ll find a few in our guide to the best savings accounts. That isn’t a lot in the grand scheme of things, but every bit helps.

Capital One 360 Checking

Capital One 360 Checking shares many of the benefits of the savings account, including no maintenance fees and mobile check deposits. Though I don’t personally use Capital One 360 for checking, The Simple Dollar has picked it as one of the best checking accounts for 2020. Why? Here are some of the main features:

No maintenance fees or minimums: You won’t need to keep a minimum balance or hook up direct deposit to avoid maintenance fees, like many other banks require.
No overdraft fees: At many banks, you’ll pay $30 or more every time your account is overdrawn.
Nationwide ATMs: You’ll get fee-free access to 38,000 Allpoint ATMs and 2,000 Capital One ATMs.
Free debit card: You’ll get a MasterCard debit card to make purchases. And as a bonus, there are no foreign transaction fees if you use it overseas.
Pay other individuals for free: You can easily send money directly to others’ bank accounts, even if they don’t also bank with Capital One 360.
Mobile check deposit: Depositing funds is as simple as snapping a picture with your phone using the CheckMate feature.
Free online bill pay: Use the bill pay center to keep up with bills online — no need to waste checks or stamps. If a bill ever arrives late because of Capital One 360, they will pay your penalty fees.
Earn interest on your balance: You’ll get 0.10% APY on all balances.

One of the biggest perks of Capital One 360 Checking is the lack of an overdraft fee. These fees top $30 at other banks and can add up fast. Instead, Capital One hooks up your checking account to an Overdraft Line of Credit of up to $1,000. You’ll simply pay interest on the amount you’re overdrawn only for as long as you’re overdrawn.

To get an idea of how much that can save you, here’s an example: If you slipped up and overdrew your account by $100 for just five days, you’d only pay about 15 cents in interest with Capital One 360 instead of a fee over $30 with another bank. That’s a big savings for anyone who has let their balance slip into the red from time to time.

On the downside, you’ll have to have a pretty substantial balance to earn anything more than 0.10% APY on this account, and there are competitors that offer better yields on checking. For instance, Ally will bump you up to 0.10%–0.25% depending on your balance, and Bank5Connect offers 0.20% on any balance over $100. If you’re like most people, you aren’t going to park a huge amount of money in a checking account. Still, the interest is a nice bonus.

I also want to mention the fees that I did see: $25 to stop payment, $20 to overnight a check, and up to $40 for domestic wire transfers. The first two fees are in line with national averages, but $40 for wire transfers is high — so take note if you think you may use wire transfers often.

You will also have to pay for checks with Capital One 360. The first checkbook is free, but after that, it’s $5 per book of 50 checks. It’s a trade-off I’ll gladly make for no account maintenance fees and the lack of overdraft gouging, but it’s still worth noting.

Capital One 360 Accounts for Children and Teens

Online banks will probably be even more common once your kids are grown, so Capital One 360 could be the perfect way to teach them about money.

Kids Savings Account: A lot of banks offer savings accounts aimed at teaching kids the value of a dollar, but most earn the paltry interest rates typical at brick-and-mortar institutions. Kids will earn 0.00% APY, but they will have access to tools including the automatic savings plan and My Savings Goals tracker. They get their own log-in to check their balance, but adults will have to transfer money to and from the account.
MONEY (teen checking): This checking account aimed at teens help them learn how to use a checking account and fully featured debit card, but adults can easily keep tabs on account activity. Teens have access to all of Capital One’s ATMs as well, but only adults can initiate online money transfers.

Getting Started with Capital One 360

Capital One has a clean, easy-to-use website, and opening an account is a fairly effortless affair. To open a savings or checking account, you’ll need to enter standard personal information: name, address, date of birth, and Social Security number.

You’ll also need to link your new account to an existing checking account for funding purposes. You simply enter your account number and bank’s routing number, all found on the bottom of your current checks. You’ll be asked to verify ownership of your external account by confirming one or two small deposits from Capital One 360. You can link up to three personal checking accounts to a Capital One 360 checking or savings account.

After you open a savings account, your funds will be held for 10 business days for security purposes. After that, all new deposits are held for five business days before they’re available for withdrawal. Checking account deposits have a standard two-day hold; however, some types of deposits (such as direct deposit) are available sooner. You may have to wait up to five days to access all of a check deposit over $500, however.

Who Is Capital One 360 Best For?

You tend to rack up overdraft fees: If you’re in the habit of withdrawing more than you owe, you know that bank fees make that an expensive habit. Though you should still aim to better track your balance and avoid the situation entirely, Capital One 360’s Overdraft Line of Credit means you’re likely to pay just pennies in interest instead of over $30 in fees.

You’re looking for a lot of services in one spot: A lot of online-only banks focus only on checking and savings to the exclusion of other products, but you have a lot more to choose from with Capital One 360, like mortgages and investments. And 360’s parent bank, Capital One, provides easy access to other products such as auto loans and credit cards.

You’re not that tech-savvy but still wants to start banking online: Opening an account with Capital One 360 is very simple, and the online interface is very streamlined. Several cities now even have inviting brick-and-mortar Capital One 360 Cafes, where you can open an account or speak with an associate in person over a cup of Peet’s coffee.

You have a variety of savings goals and want an easy way to manage them: Capital One is great for savers with a lot of different goals. Because you can have up to 25 different accounts for free, it’s easy to keep your money in different buckets but still manage each account in one spot.

You like the idea of online banking, but lesser-known online banks make you nervous: Capital One 360 is an established brand with all the resources of a major bank, including its huge ATM network — that may mean peace of mind for some people.

Who Might Want to Skip Capital One 360?

While Capital One 360 should have a lot of appeal for the casual saver who wants a convenient venue for their online banking, there are still a few downsides. You may want to look elsewhere if:

You’re chasing the highest interest rate: While Capital One 360 offers solid interest rates that eclipse those offered by traditional brick-and-mortar banks, they aren’t the highest you’ll find online.

You need your money fast: This can be an issue with all online banks, but some online reviewers complain that Capital One 360’s hold times on check deposits are too long. Assuming you’re using mobile check deposit to put funds in your checking account, you’ll only get access to the first $200 of a check over $500 the next business day. You’ll have to wait five business days to access the remainder of the deposit. (Note that direct deposits, if available, are a good way around this, as you can get same-day access to those funds.) For savings accounts, you’ll wait five business days to access any deposit. Since I don’t expect to turn around and immediately access my savings, I’ve been OK with this delay, but I can understand why the checking holds would be frustrating.

You want 24/7 customer service: Disappointingly, Capital One 360 does not staff its call center around the clock. Many may not take issue with this, but it’s worth noting that several competitors do let you talk to a live person, even at 3 a.m.

Compare top bank accounts

Too long, didn’t read?

When it’s all said and done, Capital One 360 is a great option for anyone who wants the convenience of online banking, better-than-average interest rates, and no account maintenance fees. Capital One 360 has extended their current offer – sign up by 11/30 to earn up to $500 when you maintain a certain balance in your new account for 90 days.

If you’re not quite sold, you can check out more of The Simple Dollar’s banking recommendations in our guides to the best free checking accounts, best savings accounts, and best money market accounts to find the right home for your money.

Source: thesimpledollar.com

May 7, 2021

What’s Your Strategy for Maximizing Your Social Security Benefits?

Deciding when to take social security is a bit like playing chess. You’ll need to strategize and think a few moves ahead to maximize your benefit because age and timing matter. Applying at the youngest age possible, 62, reduces a monthly benefit 25% to 30% for the rest of your life than if you had waited until full retirement age. Delay until the latest age possible, 70, and that monthly benefit increases 8% each year you wait past your full retirement age, a bonus of 24% to 32% depending on your birth year.

Your birth year matters because the full retirement age is rising — from 66 for people born between 1943 and 1954, to 67 for those born in 1960 or later. If your birth year falls between 1955 and 1959, the full retirement age rises two months every year.

The retirement age isn’t the only thing that’s changing. The rules for claiming Social Security are different for those born after Jan. 1, 1954. This includes the majority of people filing for benefits today, and the changes especially affect married, two-earner couples.

First, the basics: Individuals pay into Social Security their entire working life in order to receive a steady stream of income in the form of a monthly benefit once they retire. The benefits are based on the person’s 35 highest years of earnings. If you don’t have 35 years of earnings, then zeroes are entered for the remaining years, reducing the monthly benefit.

As pensions disappear and life expectancies rise, a guaranteed lifelong income that isn’t tied to the stock market has tremendous value. “Social Security is the best deal out there,” says Diane M. Wilson, a claiming strategist and founding partner of My Social Security Analyst in Shawnee, Kan. “It’s an annuity that lasts a lifetime, and it’s indexed to inflation.”

Maximizing that benefit has produced a cottage industry of claiming strategists to help retirees determine the best time to start taking benefits, but it’s not a simple calculus. “In the end, it’s a longevity decision,” says Kurt Czarnowski, who counsels clients about Social Security at Czarnowski Consulting in Norfolk, Mass. “If you knew when you were going to die, all this would be a snap.” Instead, people should understand their choices and make an informed decision, he says.

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The Differences Between Restricted Filing and Deemed Filing

For married couples, that decision involves accounting for two people’s earnings and benefits, as well as the likelihood of one spouse outliving the other. Spouses are not only entitled to the benefit based on their own work history, but they also may be eligible for additional money when the spousal benefit is factored in, what Wilson calls “add-ons.” The spousal benefit equals 50% of the higher-earning spouse’s benefit if the lower-earning spouse takes it at full retirement age. The amount is reduced when taken early, and you can’t claim the spousal benefit until your spouse begins taking Social Security. To be clear, you do not get to take two benefits, but rather Social Security increases your benefit to equal half of your spouse’s if the one based on your own work history is smaller.

People born on or before Jan 1, 1954, can maximize benefits while still receiving some Social Security. By taking whichever benefit is lower — their own or a spouse’s — when they first apply, they let the larger benefit grow before switching to it at a later age. That option, known as “restricted filing,” isn’t available for people born after Jan. 1, 1954. For them, there’s no choice. Social Security simply bestows their own benefit and any add-ons the person is eligible for when they file for benefits, a practice known as “deemed filing.”

Let’s say the higher-earning spouse is the husband and the lower-earning spouse is the wife. Under deemed filing, when the wife applies for Social Security at her full retirement age, she is given the highest amount she is eligible for, which in this instance is 50% of her husband’s benefit, assuming he started taking it. If he hasn’t, she will be given only the benefit based on her own work history. Once her husband applies for his benefits, Social Security will increase hers so that it equals half of his. If the wife was the higher earner and her benefit was more than 50% of his, she won’t get any additional money when he starts claiming Social Security. She will simply continue collecting her own higher work benefit.

2 of 6

Maximizing Social Security Benefits for Married Couples

Deemed filers may have fewer options, but there are other strategies to consider, such as when to start claiming and which spouse should file for Social Security first. Those decisions can change cumulative lifetime benefits substantially, sometimes by as much as six figures, says Wilson. When she advises couples affected by the new rules, she generally recommends the higher earner to delay as long as possible, ideally until age 70, while the lower earner can file, giving the retired couple some income.

The couple’s age difference matters, particularly if the younger spouse is also the lower earner, says Jim Blair, co-owner of Premier Social Security Consulting in Cincinnati. In that case, “if they’re five years or more apart in age, you want the younger person filing as early as possible, at 62, and the older person delaying as long as possible,” he says. “Odds are the younger person is going to receive a survivor benefit before they reach their breakeven point, which is about 12 years past retirement age.” The breakeven point is the age when the total value of cumulative benefits, whether taken early or later, is roughly the same.

If the situation is reversed and the younger spouse is the higher earner, “we’ll look at what the younger individual will need in retirement,” Blair says. “If taking that benefit early at age 62 means a 25% reduction, they’re going to have to live with that for the rest of their life.” There will need to be other income to compensate for the reduction, he adds.

Couples who straddle the 1954 birth year, with one spouse falling under the old rules and the other under the new, have more ways to move the pieces on the Social Security chess board. For instance, if the wife is the younger, lower earner, she may want to apply early, taking her own reduced benefit. That would allow the husband, who was born before the 1954 cutoff date, to use a restricted application and request only a spousal benefit. Meanwhile, his benefit based on his own work history continues to grow 8% per year from his full retirement age until he turns 70. He can switch to his own higher benefit later, whether at 70 or sooner.

3 of 6

Understanding Social Security Survivor Benefits

Couples should try to postpone taking whichever spouse’s benefit is higher to ensure a larger survivor benefit. This is particularly important when the lower earning spouse is younger and likely to outlive the higher earner by many years. “You want that higher benefit to take care of the survivor,” says Wilson, who warns clients of expenses, like home health aides, that someone living alone will almost certainly have.

A spousal benefit turns into a survivor benefit when a spouse dies, but the benefits are not the same. A surviving spouse who is at least full retirement age can receive 100% of the deceased spouse’s benefit, as opposed to 50% for a spousal benefit. The amount is reduced if the surviving spouse claims the benefit before full retirement age. You can claim a survivor benefit as early as age 60 (50 if you are disabled). But you don’t have to take it early, and you may not want to if you’re still working.

Social Security imposes an annual earnings limit for anyone younger than full retirement age who collects benefits, a rule that also applies to surviving spouses. For every $2 earned above the limit, which is currently $18,960, Social Security will deduct $1 in benefits, with the money restored later in the form of a higher benefit when you reach full retirement age. The earnings rule is more generous the year you reach full retirement age with Social Security deducting $1 for every $3 in earnings above $50,520. There’s no limit on earnings once you are full retirement age.

A widow who is, say, 60 when her husband passes away could hold off and take the survivor benefit when she reaches her full retirement age and stops working. There’s no reason to wait beyond that age because the survivor benefit won’t increase.

A survivor benefit is also not subject to the deemed filing rule. Someone born after the 1954 cutoff date can choose to take either their own or the survivor benefit when applying for Social Security. That opens a whole new avenue of claiming strategies. A widower, for example, could take the survivor benefit first if he needs the income and let his own larger benefit continue accruing delayed retirement credits before switching to it at age 70. If his own benefit is smaller, he could take that early and switch to the larger survivor benefit when he reaches full retirement age. The survivor benefit won’t be reduced because he took his own benefit early. The survivor benefit is only reduced if he takes it before his full retirement age.

4 of 6

How Death, Divorce and Remarriage Affect Social Security Benefits

A divorced spouse is also eligible for benefits based on a former spouse’s earnings history. If your ex is still alive and both of you are at least age 62, you can collect a spousal benefit even if your ex hasn’t started collecting, provided that the marriage lasted at least 10 continuous years, the divorce was two or more years ago, and you haven’t remarried. Your ex won’t know you’re taking the benefit. A divorced spouse who is full retirement age can get 50% of the former spouse’s benefit; it’s reduced if taken early. Deemed filing rules still apply if you were born after New Year’s Day 1954, with only the highest benefit amount given to you.

If your ex has passed away, you can collect a survivor benefit as early as age 60, but the other requirements — a marriage that lasted at least 10 years and a divorce that was finalized two years ago — remain. You also can’t have remarried before age 60.

If you remarry after age 60, you are allowed to keep the survivor benefit from a former spouse whether you were divorced or not, but timing is everything. Wilson had a client, a widower, who was two months away from turning 60 and collecting a survivor benefit. He was also about to remarry. “I told him about the rule, and he said, ‘I can’t reschedule this now.'” He went ahead with the wedding as planned, sacrificing the survivor benefit at the altar. Wilson points out that her client could collect a survivor benefit from his first marriage if the second one ends for any reason.

As with any survivor benefit, there’s no deemed filing. A divorced spouse has the option of choosing which benefit to take first — their own or the survivor benefit — and let whichever is larger continue to grow before switching to it later on.

Remarriage brings other claiming strategies, such as applying for a spousal benefit based on the new spouse’s work record, but there is a waiting period. To collect a spousal benefit, you generally need to be married one year, Czarnowski says. An exception is made for someone who is already collecting a Social Security benefit and remarries. Then the waiting period is waived, he says. For example, a widow over age 60 who is collecting a survivor benefit and remarries is “immediately eligible to collect 50% of the new husband’s benefit, assuming he is collecting his benefit,” Czarnowski says. You will need to choose which benefit you want — the survivor benefit from an earlier marriage or the new spousal benefit.

5 of 6

When Singles Should File for Social Security Benefits

For single people who never married, there’s no survivor to consider so the decision of when to claim is based on the need for income and how much they’ll get at any given age between 62 and 70. “It’s really which point along this continuum makes sense,” Czarnowski says. You can get an idea of how much your benefit will be at different ages based on your current earnings by using Social Security’s quick calculator. You can also enter your earnings history for a more precise figure.

Most of Wilson’s single clients start claiming at full retirement age so that their benefits aren’t reduced. Should they wait until age 70 to get the highest possible benefit? “They may want to if they’re still working and they don’t need Social Security,” Blair says. “The flip side is when they pass away, the benefits end. If they pass away at 72, they didn’t collect very long.”

6 of 6

You Can Pause Your Social Security Benefits

Someone pushes a red button that is labeled "No!"

Social Security also gives people who regret taking a benefit early the chance to reverse that decision. If you change your mind within the first 12 months of claiming your benefit, you can withdraw the application. All the benefits you received will need to be repaid, including any spousal benefits based on your work record, but you’ll get a higher monthly benefit when you restart later on.

The second way is to suspend your benefit, which you can only do once you reach full retirement age. You won’t need to repay the benefits you’ve received, and you earn delayed retirement credits of 8% per year until age 70, enabling you to reverse some of the damage from claiming early. Keep in mind, however, that when you suspend a benefit, you also suspend any other benefits based on your work record, such as a spousal benefit. If your spouse was getting $1,500 per month and $500 was based on your work record, she’ll only get her own $1,000 benefit when you suspend.

Source: kiplinger.com

May 7, 2021

7 Things to Do After College Besides Work

Numerous college students have a trajectory in mind for navigating life after college. For some, getting a job is their top goal. But, are there other things to do after college besides work?

Beyond looking for a traditional entry-level job, there are alternative choices for new grads—including internships, volunteering, grad school, spending time abroad, or serving in Americorps.

Naturally, the options available will differ depending on each person’s situation, as not all alternatives to work come with a paycheck attached.

Here’s a look at these seven things to do after college besides work.

1. Pursuing Internships

One popular alternative to working right after college is finding an internship. Generally, internships are temporary work opportunities, which are sometimes, but not always, paid.

Internships may give recent grads a chance to build up hands-on experience in a field or industry they believe they’re interested in working in full time. For some people, it could help determine whether the reality of working in a given sector meets their expectations.

Whatever grads learn during an internship, having on-the-job experience (even for those who opt to pursue a different career path) could make a job seeker stand out afterwards. Internships can help beef up a resume, especially for recent grads who don’t have much formal job experience.

A potential perk of internships is the chance to further grow your professional network—building relationships with more experienced workers in a particular department or job. Some interns may even be able to turn their short-term internship roles into a full-time position at the same company.

Starting out in an internship can be a great way for graduates to enter the workforce, “road testing” a specific job role or company.

2. Serving with AmeriCorps

Some graduates want to spend their time after college contributing to the greater good of American society. One possible option here is the Americorps program—supported by the US Federal Government.

So, what exactly is Americorps? Americorps is a national service program dedicated to improving lives and fostering civic engagement. There are three main programs that graduates can join in AmeriCorps: AmeriCorps NCCC, AmeriCorps State and National, and AmeriCorps Vista.

There’s a wide variety of options in AmeriCorps, when it comes to how you can serve. Graduates can work in emergency management, help fight poverty, or work in a classroom.

However graduates decide to serve through AmeriCorps, it may provide them with a rewarding professional experience and insights into a potential career.

Practically, Americorps members may also qualify for benefits such as student loan deferment, a living allowance, education awards (upon finishing their service), and skills training.

It may sound a bit dramatic, but AmeriCorps’ slogan is “Be the greater good.” Giving back to society could be a powerful way to spend some time after graduating—supporting organizations in need, while also establishing new professional connections.

3. Attending Grad School

When entering the workforce, graduates may encounter job postings with detailed employment requirements.

Some jobs require just a Bachelor’s degree, while others require a Master’s–think, for instance, of being a lawyer or medical doctor. Depending on their field of study and career goals, some students may opt to go right to graduate school after receiving their undergraduate degrees.

The number of jobs that expect graduate degrees is increasing in the US. Graduates might want to research their desired career fields and see if it’s common for people in these roles to need a master’s or terminal degree.

Some students may wish to take a break in between undergrad and grad school, while others find it easier to go straight through. This choice will vary from student to student, depending on the energy they have to continue school as well as their financial ability to attend graduate school.

Graduate school will be a commitment of time, energy and money. So, it’s advisable that students feel confident that a graduate degree is necessary for the line of work they’d like to end up in before they apply or enroll.

4. Volunteering for a Cause

Volunteering could be a great way for graduates to gain some extra skills before applying for a full-time job. Doing volunteer work may help graduates polish some essential soft skills, like interpersonal communication, interacting with clients or service recipients, and time management.

Another potential benefit to volunteering is the ability to network and forge new connections outside of college. The people-to-people connections made while volunteering could lead to mentorship and job offers.

Volunteering is something graduates can do after college besides work, while still fleshing out their resume or skills.

New grads may want to volunteer at an institution or organization that syncs with their values or, perhaps, pursue opportunities in sectors of the economy where they’d like to work later on (i.e., at a hospital).

On top of all these potential plus sides, volunteering just feels good. It makes people feel happier. And, after all of the stress that accompanies finishing up college, volunteering afterward could be the perfect way to recharge.

5. Serving Abroad

Similar to the last option, volunteering abroad can be attractive to some graduates. It may help grads gain similar skills they’d learn volunteering here at home, while also giving them the opportunity to learn how to interact with people from different cultures, try to learn a new language, and see new perspectives on solving problems.

Though it can be beneficial to the volunteers, volunteering abroad isn’t always as ethical as it seems. And, not all volunteering opportunities always benefit the local community.

It could take research to find organizations that are doing ethically responsible work abroad. One key thing to look for is organizations that put the locals first and have them directly involved in the work.

6. Taking a Gap Year

According to the Gap Year Association , a gap year is “a semester or year of experiential learning, typically taken after high school and prior to career or post-secondary education, in order to deepen one’s practical, professional, and personal awareness.”

While a gap year is generally taken after high school or after college, one common purpose of the gap year is to take the time to learn more about oneself and the world at large—which can be beneficial after graduating from college and trying to figure out what to do next.

Not only might a gap year help grads build insights into what they’d like to do with their later careers, it may also help them home in on a greater purpose in life or build connections that could lead to future job opportunities.

Graduates might want to spend a gap year doing a variety of activities—including:

•   trying out seasonal jobs
•   volunteering
•   interning
•   teaching or tutoring
•   traveling

A gap year can be whatever the graduate thinks will be most beneficial for them.

7. Traveling Before Working

Going on a trip after graduation is a popular choice for graduates that can afford to travel after college. Traveling can be expensive, so graduates may want to budget in advance (if they want to have this experience post-graduation.

On top of just being really fun, travel can have beneficial impacts for an individual’s stress levels and mental health. Research from Cornell University published in 2014 suggests that the anticipation of planning a trip might have the potential to increase happiness.

Traveling after graduation is a convenient time to start ticking locations off that bucket list, because graduates won’t be held back by a limited vacation time. Going abroad before working can give students more time and flexibility to travel as much as they’d like (and can afford to!).

With proper research, graduates can find more affordable ways to travel—such as a multi-country rail pass, etc. It doesn’t have to be all luxury all the time. Budget travel is possible especially when making conscious decisions, like staying in hostels and using public transportation.

If graduates are determined to travel before working, they can accomplish this by saving money and budgeting well.

Navigating Post Graduation Decisions

Whether a recent grad opt to start their careers off right away or to pursue one of the above-mentioned things to do after college besides work, student loans are something that millions of university students have taken out.

After graduating (or if you’ve dropped below half-time enrollment or left school), the reality of paying back student loans sets in. The exact moment that grads will have to begin paying off their student loans will vary by the type of loan.

For federal loans, there are a couple of different times that repayment begins. Students who took out a Direct Subsidized, Direct Unsubsidized, or Federal Family Education Loan, will all have a six month grace period before they’re required to make payments. Students who took out a Perkins loan will have a nine month grace period.

When it comes to the PLUS loan, it depends on the type of student that’s taken one out. Undergraduates will be required to start repayment as soon as the loan is paid out. Graduate and professional students with PLUS loans will be on automatic deferment while they’re in school and up to six months after graduating.

Some graduates opt to refinance their student loans. What does that mean? Well, refinancing student loans is when a lender pays off the existing loan with another loan that has a new interest rate. Refinancing can potentially lower monthly loan repayments or reduce the amount spent on interest over the life of the loan.

Both US federal and private student loans can be refinanced, but when federal student loans are refinanced by a private lender, the borrower forfeits guaranteed federal benefits—including loan forgiveness, deferment and forbearance, and income-driven repayment options.

Refinancing student loans may reduce money paid to interest. For graduates who have secured well-paying jobs and have improved their credit score since taking out their student loan, refinancing could come with a competitive interest rate and different repayment terms.

Graduating from college means officially entering the realm of adulthood, but that transition can take many forms. There are various financial tips that recent graduates may opt to look into.

Thinking about refinancing your student loans? With SoFi, you could get prequalified in just two minutes.

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Source: sofi.com

May 7, 2021

IRS offers new COVID-19 flexibility for employee healthcare benefits – Lexington Law

Disclosure regarding Lexington Law’s editorial content.

As COVID-19 swept the globe and the country, it put stress on all types of supply chains and industries. It has also put stress on the financial and health situations of many Americans.

If you’re looking back to whenever your last healthcare benefits enrollment period was and grimacing at the choices you made, you’re in luck—you might have the chance to change them. In addition to extending the tax deadline for 2020, the IRS has issued a rule modification in light of the pandemic that might allow you to change your elections mid-year instead of waiting for the next open enrollment period.

Find out more about these changes and what they might mean
for you here.

Key Points

You may be able to switch to a different healthcare
plan if your employer allows it.
You may be able to drop employer-sponsored
coverage if your employer allows it.
You may be able to change contributions to a
flexible spending account (FSA) if your employer allows it.
Employers may voluntarily extend the grace
period for using 2019 FSA funds.

A Potential Mid-Year Open-Enrollment Period

The IRS rule change allows mid-year enrollment in a
different plan that your employer offers. This means employees may be able to
make new elections to better use their income and protect themselves against healthcare
expenses.

However, employers are being given the choice of whether
they want to offer these options. The answers to the questions below all depend
on whether your employer elects to allow changes.

Can I drop my healthcare insurance altogether?

Yes, you can elect to end healthcare insurance coverage through your employer. The caveat is that you must replace that coverage with a qualifying plan through the health insurance marketplace, a spouse’s benefits or another option.

Can I switch healthcare plans?

If the employer allows it, yes, you can switch healthcare
plans outside of the normal open enrollment. This is true even for people who
have not had a qualifying event such as a job loss or a change in marital
status.

Can I get health insurance if I didn’t have it before?

Yes, if your employer allows an open enrollment period mid-year, you can elect benefits even if you previously declined them. This allows more people to get insurance that they may now want or need in light of the pandemic.

If I change plans, will I lose what I’ve paid toward my out-of-pocket deductible?

It’s probable that changing plans will reset all
benefits-related counters. That includes deductibles and out-of-pocket
expenses. If you’re considering making a change, weigh how much you’ve already
contributed toward your deductible and out-of-pocket maximum. In some cases, it
might be more financially beneficial to stick with the plan you have if you’re
close to or have already met your maximum.

Changes to FSAs

The IRS also provides a rule change that addresses flexible spending accounts. Again, these changes are dependent upon the employer choosing to participate.

If the employer does choose to participate, employees can make mid-year changes to their FSA elections. For example, you might have elected not to fund an FSA or to fund it very minimally. But in light of the health crisis, you may now want to put more money into your account to cover medical expenses. You may be able to do so.

Alternatively, perhaps your spouse lost his or her job due to COVID-19, and you’d previously elected to fund your FSA with a large amount. You might now need that money to pay for non-FSA-approved expenses. You may be able to elect to reduce your contributions.

Changes to Dependent Care Assistance Programs

The same rule change applies to section 125 cafeteria
plans used to help cover the cost of childcare programs. If your employer
allows it, you can elect to increase or decrease the contributions you’re
making to these programs.

For example, you might have previously elected to contribute enough money to pay for your children’s daycare expenses. This allows you to pay those costs with pretax dollars.

However, during the pandemic, your daycare might have closed, leaving your kids at home with you. Those contributed dollars are going nowhere and you risk losing them. If your employer allows it, you can change your contribution to stop adding money into your cafeteria plan. You can then use those funds to cover expenses related to your children being home.

Healthcare Coverage for COVID-19

The Coronavirus Aid, Relief and Economic Security Act instituted some exemptions to help ensure high-deductible plans and other insurance plans covered more services related to COVID-19. For example, the plan includes a specific exemption for telehealth services to help allow insurance providers to cover necessary telehealth treatments and appointments.

The IRS rule change allows those exemptions to be applied
retroactively up to January 1, 2020. That means if you sought telehealth or
other COVID-19-related care in the past months, you may be able to have those
claims adjudicated by your insurance plan at this time.

Reach Out to Your Employer’s Benefits Office

Understanding benefits and how they can impact your entire financial life can be difficult. Start by reaching out to your employer’s HR or benefits office to understand whether they’re going to offer the option for mid-year elections and whether they can provide information about how the options work.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

May 7, 2021

IRS offers new COVID-19 flexibility for employee healthcare benefits

Disclosure regarding Lexington Law’s editorial content.

As COVID-19 swept the globe and the country, it put stress on all types of supply chains and industries. It has also put stress on the financial and health situations of many Americans.

Find out more about these changes and what they might mean
for you here.

Key Points

You may be able to switch to a different healthcare
plan if your employer allows it.
You may be able to drop employer-sponsored
coverage if your employer allows it.
You may be able to change contributions to a
flexible spending account (FSA) if your employer allows it.
Employers may voluntarily extend the grace
period for using 2019 FSA funds.

A Potential Mid-Year Open-Enrollment Period

However, employers are being given the choice of whether
they want to offer these options. The answers to the questions below all depend
on whether your employer elects to allow changes.

Can I drop my healthcare insurance altogether?

Can I switch healthcare plans?

Can I get health insurance if I didn’t have it before?

If I change plans, will I lose what I’ve paid toward my out-of-pocket deductible?

Changes to FSAs

The IRS also provides a rule change that addresses flexible spending accounts. Again, these changes are dependent upon the employer choosing to participate.

Changes to Dependent Care Assistance Programs

For example, you might have previously elected to contribute enough money to pay for your children’s daycare expenses. This allows you to pay those costs with pretax dollars.

Healthcare Coverage for COVID-19

Reach Out to Your Employer’s Benefits Office

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Source: lexingtonlaw.com

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2. Keep Your Credit Cards Active

3. Always Pay Bills On Time

4. Dispute Errors On Your Credit Report

5. Reduce The Number of Credit Inquiries

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When Singles Should File for Social Security Benefits

You Can Pause Your Social Security Benefits

1. Pursuing Internships

2. Serving with AmeriCorps