Virtually all large corporations, and many mid-sized enterprises as well, know the value of their dedicated Chief Financial Officers (CFOs).

And if they don’t, they ought to! New research (published in October 2024) by OneStream as part of their Finance 2035 initiative, shows that investors consider a CFO’s skills, acumen, and performance even more important than those of a company’s Chief Executive Officer (CEO)!

But what if you are the owner of a smaller, closely held enterprise? Very few such companies have a dedicated CFO – most often, the owner combines the functions of CEO and CFO (and usually wears more hats than those two!).

But under those circumstances – and in the fast-moving business world – it can be difficult, if not impossible, for business owners to give their CFO duties the attention, care and expertise – not to mention the objective view and dispassionate mindset necessary – for a CFO to function at optimal levels.

This can lead to the business being less efficient, less effective and less profitable, than it could be – which obviously isn’t good for the business, the business owner, their clients, or their team members.

So, what is the solution for these business owners? One answer might be:

A Virtual CFO

A virtual CFO (also known as a fractional CFO), can provide your closely held business with all the benefits of a CFO at a fraction of the cost of a full-time, dedicated executive.

In addition, a virtual CFO, being outside your organization, can provide objectivity of observation as well as a dispassionate outlook at all the factors impacting your organization’s profitability.

We are invested, certainly – in your and your business’s long-term success, not just in an individual projected project’s coming to fruition. Some projects you contemplate may not be in your business’ best interests at all. Others may be good ideas, but not for implementation in the near term. Still others may be exactly what you and your business need. Your virtual CFO will help you discern which contemplated project falls into which category.

A good virtual CFO can guide you, gently and in partnership with you, toward the paths that will lead your business to its optimal state – an efficient, profitable concern, and a happy working environment for you and your team. Not to mention happy, well-served clients!

What Can a Virtual CFO Do for Your Business?

Quite a lot – or a minimum. That depends on you, the business owner. Because a virtual CFO is nothing if not flexible and adaptable. And our services are scalable to your business’ changing needs.

At RFG, we begin conversations with potential new virtual CFO service clients by asking questions – and listening carefully to your answers:

• What do you and your business need right now?
• What would you like your business to achieve over the next year? The next 3 years? In the long term?
• What do you envision as the steps to get you to your goals?
• What risks does your business face at present? What risks do you foresee in the long term?
• What are your personal goals, for yourself and your family?

Once the above answers are established, your virtual CFO can help you develop:

• Streamlined financial processes, including a “financial dashboard” which will give you access to your business’ current status at any time.
• Key performance indicators (KPIs) relevant to the success of your individual business (not all businesses, even of the same size and in the same industry, will necessarily have identical KPIs – so much depends on the current state of the business and, most of all, on the owner’s goals).
• Budgets and financial forecasts, and in-depth analyses of results. Because, while budgets and forecasts are and will always need to be dynamic (i.e., subject to change at any time, based on realities), and will therefore be imperfect compared with actual results, it is even more important to understand why results differ from projections than that they differ.
• Plans for capital improvements to the business – or empirically-based counsel on why to postpone facility improvements, strategic new hires, or equipment purchases and upgrades.

In one case, a client of ours who traveled extensively for business-related conferences was frustrated by the long lines, waiting times, and delays of commercial airlines, and wanted to purchase a private plane. We analyzed the financial picture, searched for other potential solutions, and recommended this client band with others in his industry to charter planes together for travel to and from conferences.

By this means, the client was able to bypass the expense of the plane’s purchase price, the costs of maintaining hangar space for it, and the annoyances of commercial air travel.

Your virtual CFO is, in essence, your most trusted business advisor. Someone you can go to with questions, secure in the knowledge that we either know the answer now or can find it faster than you will on your own. We know what questions to ask and who to ask them of, and where to look for further information.

We bring not only our own team of experts, but a network of experts in various fields, built over decades.

When Does Your Business Need a Virtual CFO?

If you’re asking that question, call us and find out whether the answer, for you and your business, is “next year” or “yesterday!”

Some of our virtual CFO clients actually came to us to assist them as they made plans to transition from employees to entrepreneurs.

These start-up businesses varied as to industry, outlook, and owners’ temperaments. But they all followed our advice, their businesses were profitable within 2 years, and are all still profitable, going concerns.

Another client hired us when he and several partners decided to purchase a going business. They have been using our virtual CFO services since before the purchase was complete and are making a very nice success of their endeavor.

Really, is it ever too early to think about making your business efficient, effective and profitable?

Final Thoughts

A virtual CFO can:

• Provide your business with all the benefits of a CFO at a fraction of the cost of a full-time hire.
• Give you a better understanding of where your business is now, and how to get it to where you want it.
• Streamline your financial processes and procedures, providing you with a clear picture of your financial situation.
• Advise on strategic decisions.
• Be your most trusted, your go-to, business advisor.
• Make your business more profitable, more effective, and more efficient.

If you are serious about your business’ long-term flourishing, we invite you to talk with us – our expert virtual CFOs are as serious about your business as you are!

And we know it all starts, and ends, with you. Not only do we know that, we love it – being all about you is what we are all about!

Please click here to email us directly – Rigby Financial Group’s trusted, expert team are always at your service – that’s what we are here for! And serving you is also our passion.

Until next time –

Peace,

Eric

I was looking up something else entirely when I came across an old Forbes article about multitasking and how it can damage one’s brain. The article was published in 2014; it references a study from Stanford University that attempted to discern what made multitaskers good at what they do. What the researchers came up with surprised them—multitaskers aren’t good at a lot of things. They aren’t even as good at multitasking as those who habitually focus on taking one thing at a time.

Stanford published this study in 2009.

Since then, there has been a growing body of writing promoting focus rather than the embrace of distraction—which is a pretty good description of multi-tasking (and I speak as someone who has to remind myself not to multi-task more often than I’d like). There’s Cal Newport’s Deep Work and Digital Minimalism, both of which have impressed me greatly—my very first blog post (and doesn’t that take me back!) was inspired by Deep Work.

The human brain can truly focus on only one thing at a time. According to another study published in 2015 by the University of London, trying to tackle multiple cognitive tasks at once can actually make us less intelligent—declines in IQ of up to 15 points were seen in some multitasking men.

Multitasking isn’t even efficient from a time perspective. The brain takes time to switch gears—if we’ve been working with numbers and stop rushing off an email, our brains have to shift from math to writing. If we leave a task unfinished while we go do something else and then leave that unfinished as well to move to a third issue, we will have to keep changing those gears, back and forth, and all these gear switches will waste our time.

Think of those incremental time savings, and let’s focus on doing one thing at a time. Focused work on a single project seems to be the way to maintain (maybe improve?) our IQs, save us time and make us more efficient and effective. Let’s take a minute when we’re done—or as far along as we can get now—and breathe, allowing our brains to relax before the next gear change.

Then, let’s tackle the next project—and only that, for as long as we’re working on it.

We can commit to staying focused, keeping our minds on what we’re doing, and not trying to do more than we can at our best. We can decide not to check our phones for email, messages, or the latest news while we’re in a meeting—and we can stick to it.

We can strive for deep focus, deep work, and deep thought, and for living in the present task rather than chasing future tasks. This will put us in a much better position than trying to make our brains do what they cannot accomplish effectively.

What techniques do you use to focus on the one thing you must do now?

Please click here to email me directly – I’d love to hear your strategies!

Until next time –

Peace,

Eric

When it comes to retirement planning, no amount of care can be called too much. And, speaking of “much,” most of us have a number of options on the retirement plans we have available as vehicles for saving.

If your employer offers this, one of these options may be a Roth 401(k). Roth 401(k)s were enacted effective January 1, 2006, and they are becoming more widespread and popular. In 2023, fully 93% of 401(k) plans in the United States offer a Roth option.

But is a Roth 401(k the best fit for you? That’s a discussion you should have with your virtual CFO or your trusted financial advisor, but here are some general notes:

Traditional 401(k) Plans

Initially created as part of The Revenue Act of 1978, signed into law by President Jimmy Carter, and governed by regulations initiated in 1981 and to date, 401(k) accounts held some $8.9 trillion at the close of the third quarter of 2024.

These plans were created as a measure to offer lower-tier employees a retirement savings option – a number of employers had allowed such perquisites only to executives.

Traditional 401(k) plans are funded by employee contributions of effectively deferred earnings since the contributions are made in pre-tax dollars, with tax liabilities imposed upon withdrawal.

Additionally, employers may contribute to their employees’ 401(k)s—in 2024, some 98% of employers offered “matching” contributions, though usually lower than the employees’ own contributions.

In 2023, the average employee contribution to a 401(k) represented 8% of their annual compensation. The average employer matching contribution ranges between 4 and 6 percent.

Participants in 401(k) plans must take required minimum distributions at some point following retirement – but no later than April 1 of the year following the year you turn 73, unless you are still working. In that case, you can defer your withdrawals from the 401(k) plan you have with your current employer.

Withdrawals can be made from a traditional 401(k) plan’s vested balance at any time, but if the participant has not reached age 59½, not only is the withdrawal subject to income tax liabilities but also to a penalty equal to 10% of the withdrawal. This penalty can be abated if the withdrawal is for an allowable purpose—e.g., a first-time home purchase, unreimbursed medical expenses, or the birth or adoption of a child.

Saving via a traditional 401(k) is at least in part predicated on the idea that following retirement, your income tax bracket will fall, meaning (greatly simplified) that you will pay less in taxes upon withdrawal of your assets than you would have during your working life.

But, as noted, that is, if anything, oversimplified. Tax rates and brackets change over time under new administrations and new Congresses.

You may be in a high tax bracket now and an even higher one later – if tax rates go up, if you expect a significant inheritance after your retirement, a business sale, or another kind of windfall.

In that case, you might consider choosing a Roth 401(k).

Roth 401(k) Plans

As noted, Roth 401(k)s are a relatively new option, compared with traditional 401(k) plans.

Like Roth IRAs, Roth 401(k)s are funded via after-tax contributions. The participant pays taxes on these contributions when earned, not, as with traditional 401(k) plans, when they are withdrawn.

In addition, Roth 401(k) disbursements are not taxable, provided the account has been open for at least 5 years and the participant has reached 59½.

Another benefit of Roth 401(k) plans is that, under the SECURE 2,0 Act of 2022, participants do not need to take RMDs at all. Account holders can pass their accounts to their beneficiaries intact, with withdrawals tax–free.

Before the SECURE 2,0 Act became law, Roth 401(k) participants were subject to the same RMDs that traditional 401(k) plans and IRAs mandate – but no longer.

However, under the provisions of the first SECURE Act, signed into law in December 2019, certain beneficiaries of an inherited Roth 401(k) must take RMDs over a period of 10 years.

Those beneficiaries of an inherited 401(k), whether traditional or Roth, who need not take RMDs are:

• The deceased account owner’s spouse.
• A disabled beneficiary.
• A chronically ill beneficiary.
• A beneficiary not over 10 years younger than the deceased account owner.
• A minor beneficiary who is the child of the deceased account owner (the 10-year distribution rule will only become effective when the beneficiary reaches the age of majority).

 

If your employer’s 401(k) allows it, you can convert a traditional 401(k) to a Roth 401(k), subject to tax liabilities on the amount converted, as with converting a traditional IRA to a Roth IRA. Figure this carefully if you choose conversion – we do not recommend paying the taxes owed on the assets you convert out of your retirement funds. Use another source – such as your non-retirement investments.

So, Which is Right for You?

There is no simple answer to whether a traditional or a Roth 401(k) is your best option.

It depends on too many factors:

• Whether you feel it’s wiser to pay taxes on your retirement savings now or after you retire.
• Whether you want to leave your retirement savings to a beneficiary free of taxes.
• Your current financial picture.
• Your family situation.
• How you see things changing as the years go by.
• What you want out of retirement.

 

We strongly suggest you consult with your virtual CFO or other trusted financial advisor (and at RFG, we’ve been advising our clients on retirement and other financial planning concerns for decades) to determine the best options.

For you. For your family. For your legacy.

If you have any questions about traditional or Roth 401(k)s, IRAs, or other retirement plans available to you, please click here to email us directly. We are here to answer your questions and help you plan your retirement so you can enjoy the assets your efforts have brought you—however you choose to do so.

Until next time –

Peace,

Eric

If you are married, and your spouse is a homemaker, you might think only you can make contributions toward retirement via eligible retirement accounts and plans.

But that isn’t the case! A spousal IRA can allow both partners to save toward their retirement years on a single income.

What is a Spousal IRA?

“Spousal IRA” is a descriptive term, not a true separate type of IRA.

A spousal IRA is an individual retirement account (it can be either a traditional or a Roth IRA), owned by the non-working spouse in whose name it is opened, even as the working spouse makes the contributions.

To open and contribute to a spousal IRA, the couple must file their taxes jointly, and the working spouse must earn at least as much as s/he contributed to both their own and their spouse’s IRA each year.

Contributions made by the working spouse are subject to the rules governing traditional or Roth IRA contributions, as applicable.

These include:

For Traditional IRAs

In brief:

• A traditional IRA is funded via pre-tax dollars, and its investments grow with taxes on both contributions and growth deferred until the account owner makes withdrawals.
• Subject to certain income limits, and whether the account owner (or spouse) is covered by an employer-sponsored retirement plan, contributions to an IRA may be tax deductible in whole or in part.
• Withdrawals, whether via required minimum distributions (RMDs), rollover to another retirement account, or other form of withdrawal, can be made at any time – but if funds are withdrawn prior to the account owner’s reaching age 59½ , they are subject not only to income tax, but also a penalty equal to 10% of the amount withdrawn. There are some specific circumstances and purposes which may eliminate the imposition of the 10% penalty.
• Contributions to a spousal IRA can be made if there is sufficient income from employment, up until RMDs must be taken – the deadline is April 1 of the year following that in which the account owner turns 73 (if you did not reach age 72 before December 31, 2022).

 

For Roth IRAs

Roth IRAs are different from traditional IRAs:

• A Roth IRA is funded with post-tax dollars, rather than pre-tax.
• Once assets have been held in a Roth IRA for 5 years, the full amount contributed to the account can be withdrawn at any time by the account owner and are not subject to income tax, since tax was paid on the contributions.
• Once the account owner reaches age 59½, investment earnings held in the Roth IRA can be withdrawn tax- and penalty-free, providing the assets have been held at least 5 years.
• Withdrawals made before the Roth account has been held for 5 years or the owner is under 59½ years old may be subject to both income tax and a 10% penalty.
• Roth IRAs are not subject to RMDs – no withdrawals of any kind are required, and a Roth account can be passed along to a beneficiary intact, no matter the age of the account owner at death.
• For 2025, to be eligible to open a Roth IRA, a married joint-filer must have no more than $245,999 in modified adjusted gross income (MAGI), though for contribution of the full amount of the 2025 limit (which is set annually by the IRS), no more than $236,000 can be earned. This threshold is also set by the IRS, usually during the quarter prior to the start of the year for which it will be applicable.

 

Should You Open a Spousal IRA for Your Homemaker Spouse?

A spousal IRA can be a great way to save extra money toward retirement:

• By having IRAs for both spouses, you can contribute the maximum allowable amount to both accounts – twice the retirement savings! If the working spouse has an employer-sponsored retirement plan, that’s an additional avenue for savings, not an “instead of.”
• For 2025, the limit for contributions to a traditional or Roth IRA is $7,000, with an additional $1,000 “catch-up” contribution allowed by those over age 50.

 

If it fits with your family’s current situation, your income, goals, and inclinations, a spousal IRA might be the right move, to protect and enhance your retirement, to protect your spouse’s future – but we urge you to consult with your virtual CFO (if you don’t have one for your business, Rigby Financial Group can help you determine whether that, too, would be a good move!) or other trusted financial advisor. S/he can help you navigate the waters of retirement planning, in light of your own unique family, life, and goals.

Because one size never fits all – and at RFG, we are never looking to offer cookie-cutter solutions – every service we offer is tailored to the individual client’s needs and desires.

So, come to us for bespoke tailoring – of your financial, tax, retirement, and estate plans, of ensuring your company’s financial well-being into the future, of helping you navigate through the complex issues and details arising from the sale or purchase of a business.

If you are wondering whether an IRA for your homemaker-spouse is a good idea for your family, consult RFG. We have the expertise and experience to give you the facts – and counsel – so you can come to a decision you have confidence in.

Please click here to email us directly – let us know how we can help – that‘s what we are dedicated to and passionate about.

Until next time –

Peace,

Eric

President Trump campaigned on a good many issues – but taxes were high on the list. He proposed no income tax on Social Security, overtime pay, or tips. The tax cuts enacted in the 2017 Tax Cuts and Jobs Act (TCJA) would be made permanent or at least extended.

Costly proposals, all of them! And at present, the President and Congressional Republicans, along with the ubiquitous Elon Musk, the unpaid head of the newly created Department of Governmental Efficiency (DOGE) are exploring the ways they might cut – spending cuts in energy, transportation, education, health, welfare, customs, immigration, infrastructure, federal workforce levels are being discussed. So are income taxes and tax breaks.

According to reports, a number of time-honored tax breaks (and some newer ones, too) are under consideration for amendment or elimination.

Among these are:

Home Mortgage Interest Deduction

Prior to enactment of the TCJA, home mortgage interest on mortgage indebtedness for a primary or secondary family home of up to $1,000,000 was tax deductible via itemization on Schedule A of an individual income tax return.

The TCJA pared that back on residences acquired after December 15, 2017 – currently, for these properties, interest on $750,000 is deductible.

If Congress takes no action with respect to taxes, the lower TCJA cap would expire, and interest in $1,000,000 of family home mortgage debt would again be allowed.

However, on Capitol Hill they are discussing further lowering the mortgage debt cap to $500,000.

We can hope they don’t eliminate this deduction altogether – but we don’t think that’s likely.

SALT Deduction

Prior to the TCJA, taxpayers could deduct income, sales, and property taxes paid at the state or local level (state and local taxes = SALT)

The TCJA capped the deduction at $10,000.

The deduction used to have its own line item on individual income tax returns; now, to receive the deduction, the taxpayer has to itemize deductions on Schedule A.

This cap, like many provisions of the TCJA, is set to expire as of midnight, December 31, 2025.

Options being discussed on this subject include:

• A bipartisan bill to repeal al caps on SALT deductions was introduced in the U.S. House of Representatives just a few weeks ago.
• Total elimination of the deduction is another option under discussion.
• Some proposals would keep or increase the cap – by extending the $10,000 limit, but allowing married taxpayers to deduct $20,000, or increasing the cap to $15,000 for single filers, and allowing deductions up to $30,000 for married joint filers.

 

We consider some version of the last item more likely than either wholesale elimination of the deduction or full passage by both House and Senate of the bipartisan House bill.

Education Tax Breaks

There’s some enthusiasm and momentum behind a push to eliminate several higher-education-related tax breaks and/or credits:

• The $2,000 Lifetime Learning Credit for qualified tuition and related expenses for college and postgraduate students. This credit is available annually, with no limit on the number of years it can be claimed, to eligible students enrolled in an eligible educational institution.
• The American Opportunity Tax Credit (AOTC), a partially refundable $2,500 tax credit to help with tuition and other expenses such as certain required fees and course materials (but not including room and board). This credit is only available during the first four years of a student’s post-secondary education.
• The individual income tax return lime item credit of up to $2,500 for student loan interest.

 

Also being discussed is making grants for scholarships and fellowships taxable.

Whether any of these proposals will become effective is anyone’s guess – but I’d think not all of them, if indeed, any, are likely to survive.

Tax Breaks For Families

Also on the chopping block are some tax breaks targeted to families with dependent children:

• The child and dependent care credit. The child must be under age 13, and the dependent can be a spouse or other dependent of any age who is either physically or mentally unable to care for themselves, or who is a full-time student and also disabled. Taxpayers who pay outside caregivers while working or looking for work can claim this credit, but earned income of some amount is necessary.
• The head-of-household filing status – individuals now qualifying for this status would have to file as ordinary individuals. This would mean they get a lower standard deduction (in 2025, the individual standard deduction is $15.000, while the head-of-household’s is $22,500), and loss of the special tax brackets for current head-of-household filers.

 

There’s also discussion of requiring social security numbers for parents claiming the $2,000-per-child tax credit. At present, social security numbers are only required for the child or children.

But this last is certainly revenue neutral.

Other Tax Breaks Under Review

Other proposals concerning tax breaks which are being scrutinized for possible elimination include:

• Green energy initiatives enacted as part of the Inflation Reduction Act of 2022 might well vanish.
• Changes to the Affordable Care Act’s healthcare insurance premium subsidies are being looked at.
• The employee tax exclusion for employer-paid meals, transportation, and other perquisites could be eliminated.
• Private colleges currently pay a 1.4% excise tax on net investment income of private colleges; on the table is an increase to 14%.
• The exclusion of private individual donations to non-profit healthcare organizations, including hospitals, from the list of deductible charitable contributions.

 

We don’t know what is going to happen with all of this – or any of it. As Yogi Berra famously said,

“It’s tough to make predictions, especially about the future.”

 

These discussions are unusual – it’s more common – with both parties – to put forth proposed tax cuts or tax breaks of other kinds than to propose eliminating them once they are part of the tax code.

But we will certainly keep our ear to the ground, and what we hear we will report to you, our faithful readers.

If you have, or develop, any concerns about your tax situation, please call Rigby Financial Group. We have an expert tax team ready to help answer any questions and resolve any concerns you have.

Please click here to email me directly – I and my team are always here for you!

Until next time –

Peace,

Eric

When did you last take a careful review of your retirement planning?

Have you even started making plans – beyond saving, which we assume you are all doing?

Because retirement can be an extraordinary opportunity to live your dreams – but only if you’ve funded those dreams!

In our latest whitepaper, we offer suggestions on making the most of your retirement income – and if you need to plan, reach out to us – we are experts at retirement planning, and will be delighted to help assure you can reach every goal and aspiration you desire,

To help you start planning, Rigby Financial Group is delighted to offer you a free copy of our latest whitepaper – 5 Tips to Make the Most of Your Post-Retirement Income!

Find out more – click here to get your free copy!

Until next time –

Peace,

Eric

Seneca wrote, “There is no more stupefying thing than anger, nothing more bent on its own strength. If successful, none more arrogant, if foiled, none more insane—since it’s not driven back by weariness even in defeat, when fortune removes its adversary, it turns its teeth on itself.”

As a person of Irish descent, I know a little bit about anger, and it can really a short-term motivator, can’t it? Anger can make us feel powerful and impatient for action – and this has to be a good thing, right?

Or is it? Remember that anger is an emotional state, which releases epinephrine, also known as adrenaline, mainly from the medulla of the adrenal gland into the body, which impedes reasonable thought. Now, acting from such a state, surely, is not a good thing under most circumstances.

If I act out of anger, I’m not rationally arriving at the practical solutions. I’m not calmly addressing a team member’s needs and concerns – in fact, my anger is almost certainly counterproductive.

Anger, in fact, can blind us to the path we need to take to get out of the situation or problem which angered us.

It’s a fuel, all right, but toxic fuel, and if we make that fuel our go-to, we’re going to find ourselves with burned out motors.

Those angry brain chemicals leave a bad taste in the soul. An unwholesome feeling in the heart and mind.

Ambrose Bierce wrote:

“Speak when you are angry and you will make the best speech you will ever regret.”

It’s akin to hate, and, in the words of Dr. Martin Luther King, Jr.:

“Hate is too great a burden to bear.”

So is anger.

Let’s jettison our anger. Restrain ourselves—take a few minutes to breathe, pray, or meditate until we are cool-headed and can address whatever problems face us from a place of reason, calm, and strength.

How do you counter anger, when you feel it looming?

Please click here to email me directly – I’d love to know your strategies.

Until next time –

Peace,

Eric

The SECURE 2.0 Act, signed into law on December 29, 2022, built on the foundational changes to retirement plans enacted in the Setting Every Community Up for Retirement Enhancement Act (SECURE) in December of 2019, made a few significant changes to the rules governing the administration of and contributions to retirement plans.

Initially planned to be effective beginning January 1, 2025 or later, the IRS has postponed some of these changes’ effective date until January 1, 2026.

Some of the changes will be newly effective; whether in 2025 or 2026; these include:

401(k) Plans

As we noted in December of last year, the 2025 contribution limit for 401(k), 403(b), and most 457 plans will rise from $23,000 in 2024 to $23,500 for employees under 50. For those over 50, a catch-up contribution of up to $7,500 annually is permitted – no change from 2024 – allowing you to contribute up to $31,000, assuming your employer-sponsored retirement plan is structured to allow catch-up contributions.

In addition, starting this year, for employees between ages 60 and 63, an additional catch-up of the greater of $10,000 or 150% of the 2024 catch-up limit of $7,500, or $11,250. This bring the total contribution permitted for those ages 60, 61, 62, and 63 to $34,750, or the base contribution limit of $23,500 plus the maximum catch-up for those ages of $11,250.
A further change for 2025 is that, for 401(k) plans established on or after December 29, 2022, employees must be automatically enrolled in the plans. Initial automatic contribution levels must represent at least 3% of compensation, but not more than 10%, with a 1% increase annually until the contribution level reaches at least 10% but not more than 15%.

Employees are required to be automatically enrolled but are not required to participate or to contribute – they can change their contribution rate to 0% if they choose.

SIMPLE IRAs

For SIMPLE IRAs (Savings Incentive Match Plan for Employees) the 2025 maximum contribution will rise to $16,500, up from $16,000 for 2024. If you are over 50, a catch-up contribution of up to $3,500 – unchanged from 2024 – is permitted.

In addition, beginning in 2025, SIMPLE IRA account owners between the ages of 60 and 63 can make catch-up contributions of the greater of $5,000 or 150% of the over-50 catch-up, which would be $5,250. For 2025, those aged 60-63 can make total contributions of $21,750 ($16,500 basic contribution limit plus $5,250 catch up for those 60-63) to SIMPLE IRAs. Cost of living adjustments will be made to this catch-up limit starting in 2026.

10-Year Rule for Inherited IRAs to Become Effective in 2026

The SECURE Act of 2019 initially established a rule whereby inherited IRAs, unless inherited by certain “eligible designated beneficiaries,” must be fully paid out within 10 years of the original account owner’s death. Previously, beneficiaries of inherited IRAs could withdraw the account’s funds over their lifetimes.

However, the new 10-year payout rule created significant confusion, resulting in appeals to the IRS, which has not been rigorously enforcing this provision and, indeed, has been forgiving some penalties for not withdrawing inherited IRA funds.

But this can has almost reached the end of the road. Inheriting owners of IRAs must begin taking their required minimum distributions by December 31, 2026 and, if they do not, a penalty of 25% of the RMD not taken will be imposed.

Eligible designated beneficiaries, who need not take distribution of inherited IRAs within 10 years are:

• The deceased account owner’s spouse.
• A disabled beneficiary.
• A chronically ill beneficiary.
• A beneficiary not more than 10 years younger than the deceased account owner.
• A minor beneficiary who is the child of the deceased account owner. The 10-year rule will become effective when such a beneficiary reaches majority.

 

Final Thoughts:

The changes impacting RMDs on inherited IRAs are postponed until January of 2026, though taxpayers are exhorted to “apply a reasonable, good-faith interpretation of the statutory provisions underlying the amendments.”

However, the special catch-up contribution allowance for those between ages 60 and 63 is effective for 2025., as is the requirement that all eligible employees be automatically enrolled into an employer’s 401(k) plan, if that plan commenced on or after December 29, 2022.

While the IRS will be penalizing those beneficiaries of inherited IRAs for not taking required minimum distributions from these accounts starting in 2026, confusion on this issue has yet to be entirely dispelled.

If you have any questions about an inherited IRA, or about leveraging these new contribution limits to maximize your retirement assets, reduce your tax liabilities, and plan for a secure and happy retirement, our vCFOs / financial planners are always here to help.

Please click here to email us directly – let us help you navigate the new changes – that’s what we are here to do!.

Until next time –

Peace,

Eric

For more on the SECURE and SECURE 2.0 acts, see:

SECURE 2.0 Enacted – Key Highlights

Payout Rules for Beneficiaries of Inherited IRAsHow the SECURE Act Changed Retirement Plans

The SECURE Act of 2019

While we at Rigby Financial Group advise all our clients to have wills drafted and to update them regularly for any life-changing event (e.g., the birth of a child or grandchild, divorce, marriage or remarriage, the death of a loved one), not everyone has a will in place.

In fact, some 43% of people aged 50 and older are on track to die intestate (i.e., the State will step in to divvy up the assets left behind). For those over 50 who live alone and are childless, the percentage is even higher, at 50%.

This can have surprising results – surprising, at least, for recipients who may be relations, however distant, but have never met – or, in some cases, even heard of – the relation from whom they are inheriting.

Since people cannot be expected to feel much grief at the passing of someone they have never known, and since everyone can be expected to react happily to an unexpected windfall, such beneficiaries are called “laughing heirs.” And why not? They are, after all, laughing – all the way to their bank!

However, it’s easy enough to avoid enriching those distant relations and/or connections you have no acquaintance with (such as your fifth cousin’s adopted son’s widow, perhaps).

Here are some suggestions:

Make a Will!

It’s of first importance to make your will. Have an experienced estate attorney draw it up for you – if you don’t have one, let us make a recommendation; we work with a number of excellent estate attorneys.

Choose your heirs carefully – if you are married and have children, that’s where you start. But there are other bequests – to charity, to friends, etc., which you may want to specify as well.

Keep your will up to date. Review it carefully on a periodic basis, even if you think nothing in your situation or wishes has changed. You may surprise yourself and want to make changes without having realized it before you actually look at your will.

In addition, review your will upon:

• The birth of a child or grandchild
• Divorce (yours or one of your beneficiaries’)
• Marriage, or remarriage (again, whether it’s your own or a beneficiary’s)
• The death of a loved one, whether they were one of your chosen heirs or not. Sometimes the death of someone close can change the way you want your assets handled when you are gone.

 

Designate Beneficiaries Wherever Possible

For many assets, including insurance policies, retirement accounts and many non-qualified investment accounts, you can designate beneficiaries. Appropriate beneficiary designations should be in effect for any asset that allows such designations (even some bank accounts can have beneficiaries designated for them).

Having designated beneficiaries (provided you keep such designations up to date, and avoid having accounts designated for beneficiaries who have either pre-deceased you or are no longer the people you want to inherit the account or insurance proceeds removes these assets from probate – and the courts governing estates concern themselves only with probate assets.

But accounts and insurance policies which can, but do not, designate beneficiaries must go through probate.

So, make sure you have your beneficiary designations in place and up to date at all times. Review them (along with all components of your estate plan) periodically, and upon life-altering events such as those listed above.

Have a Comprehensive Estate Plan

Especially if you have substantial assets to leave, we strongly urge you to have an estate plan (if you don’t already), and again, to ensure it is kept up to date.

An estate plan is the best way to ensure that all your assets are designated to those you want them to go to.

Begin with your virtual CFO, or other trusted financial advisor. We at RFG have been advising on estate and financial planning for many years and would be delighted to be your first step on your own estate planning journey.

Your estate attorney, too, is invaluable in ensuring your wills, powers of attorney, and any trusts you want set up are exactly as you want them.

Final Thoughts

While life will always be unpredictable – that’s part of its beauty – not everything needs to remain uncertain.

We highly recommend avoiding uncertainty as to where your assets will end up when you no longer have use for them.

Please – we urge you – make 2025 the year you visit your financial advisor and your estate attorney, draw up your will, your powers of attorney, and any trusts advisable for your unique, individual situation.

And if you already have these in place, make this the year you review them very thoroughly to ensure they are still as you need and want them to be.

Please click here to email us directly – Rigby Financial Group’s trusted financial and estate advisors are always at your service – that’s what we are here for!.

Until next time –

Peace,

Eric

Well, here they are – and maybe there they go, at least a couple of them. Tariffs figured significantly in President Trump’s campaign, and he wasted little time in springing them.

Of course, we’ve been hearing about them in prospect, and since President Trump announced, on February 1, 2025, which was a Saturday, that tariffs of 25% would be imposed on Canadian and Mexican imports, and of 10% on Chinese imports, effective at 12:01 AM Tuesday, February 4, we might be forgiven for channeling our inner Jan Brady (it dates, us, but don’t most of us remember, “Marcia, Marcia, Marcia!”).

We might also be forgiven for feeling a touch of mental whiplash. By the end of Monday, February 3, announcements from President Trump, Mexico’s President Claudia Sheinbaum, and Canada’s Prime Minister (still, if temporarily) Justin Trudeau confirmed that, following negotiations, concessions from Mexico and Canada on border issues, and agreements between these countries and the U.S., that the tariffs imposed on these countries have been paused for 30 days.

During that time, working groups on both sides, in each case, will work toward a more permanent agreement to avoid the imposition of these tariffs.

Predictably, China is another cup of tea entirely. More on that below.

However, there is much that needs to be hammered out, and 30 days is a short window of time.

And we strongly recommend you take precautions now to protect your business as much as possible:

How Can I Protect My Business Against Tariffs’ Impacts?

You may know, or you may not, whether your suppliers rely on Canadian, Mexican, or Chinese imports.

Find out.

Review all contracts carefully – if you have any questions, run them by your virtual CFO or other trusted business advisor.

This is especially critical to those with long-term pricing commitments.

Check the provisions in your contracts on force majeure and any other provisions which might open up the possibility of re-negotiation.

Get in touch with your suppliers:

• Discuss any options for sourcing products or raw materials either domestically or from countries not subject to tariffs.
• Negotiate with those suppliers affected by the tariffs – can they perhaps absorb the increased cost? Possibilities include price concessions and/or volume discounts.
• Discuss potential timing and logistical concerns (think increased U.S. Customs scrutiny) with your suppliers.
• Be in contact with logistics providers to ensure you dot every ‘i” and cross every “t” you can.

 

Cultivate and discuss your concerns and issues with transfer pricing experts, consultants with expertise in tariffs, and international tax professionals. Do this as soon as possible. They can potentially help you with rules on:

• Country of origin
• Product classification
• Exemption requests.

 

All these were critical in developing effective strategies for businesses back in 2018, when then-and-now President Trump imposed tariffs before.

Last, but not least in importance, ensure you have a consistent communication strategy – with your suppliers, your customers / clients, and your team. Every stakeholder concerned in this issue should have the same clear understanding of your stance and strategy.

Now, what response to President Trump’s tariffs did each country make? What concessions, if any, were offered?

Mexico

President Scheinbaum has announced the dispatch of 10,000 Mexican National Guard members to the U.S. border.

They will be charged with helping curb both illegal immigration and the inflow of fentanyl across the border.

Mexico has also agreed to accept reinstatement of the “Remain in Mexico” policy which requires asylum seekers to apply for that privilege from a nation outside the U.S., waiting there until their case has been adjudicated.

Canada

Prime Minister Trudeau is implementing a $1.3 billion border-security effort. This project was announced in December of 2024.

Canada has also promised to create a “fentanyl czar” to develop policies to address the drug’s impact, both internally and in regard to smuggling operations which send the dangerous substance across the U.S. border.

Canada has been ramping up efforts to increase border security over the past year (give or take a few months), and has shown significant progress with respect to illegal border crossings – the findings were shared with the new Administration here in the U.S.

China

China, of course, is a notorious non-appeaser. They hit back – and hard.

In response to the imposition of the new tariff, which did go into effect at 12:01 AM on Tuesday, February 4, 2025, the ruling Chinese Communist Party (CCP) announced that they will challenge this new tariff with the World Trade Organization.

In addition, China has imposed a retaliatory tariff of 15% on coal and liquified natural gas imported from the U.S.

New restrictions on exports to the U.S. of certain minerals used in manufacturing high-tech products have been imposed as well.

And China is initiating an investigation into Google, ostensibly in connection with concerns over its supposed “monopoly.”

We believe President Trump is playing a potentially dangerous game; we will not attempt (certainly not at this point!) to predict long-term “winners” and / or “losers.”

But tariffs so often result in higher prices that the real losers may be American businesses and consumers – at least in the short-term.

We urge you to work as diligently and swiftly as possible to “tariff-proof” you business, to the degree that is feasible.

If you have any questions on how tariffs might impact your bottom line, please give us a call – Rigby Financial Group is here to help you answer those questions and provide expert guidance.

But don’t neglect your other consulting needs with respect to tariffs – and we may be able to help you find the right contacts, too!

Please click here to email me directly – I and my team are always here for you!

Until next time –

Peace,

Eric