Liferay DXPLiferay DXPhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=2559472024-03-28T14:35:39Z2024-03-28T14:35:39ZMarch 2024 FOMC UpdateGary Pzegeo, CFAhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=10112332024-03-20T21:27:16Z2024-03-20T21:01:00Z<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">The Federal Reserve (Fed) left its policy rate unchanged, electing to remain in the range of 5.25% to 5.50% for a fifth consecutive meeting. Interest rate markets spent the better part of the last three months adjusting to a more gradual shift toward lower rates and were not expecting a rate change today. </span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Current Conditions</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – The Fed’s statement recognized an increase in job growth since their last meeting. The Committee’s economic projections confirmed the faster pace of growth and slowing pace of disinflation seen in recent data. The Fed raised its estimate for GDP to 2.1% from 1.4% for 2024. The projected rate of core inflation was also increased for the full year to 2.6% from 2.4%. </span></span></span></span></span></p>
<p style="margin-right:19px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Forward Guidance</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – Powell repeated the Committee’s view that policy rates are currently at a peak for the cycle. The most closely watched data point from the Fed could be the policy rate projection for the current year. The median projected rate from the Fed’s “dot plot” was unchanged, confirming market expectations that the Fed would cut rates by 0.75% by the end of 2024. The Committee did remove a cut from its projections for 2025, but Powell indicated that the Fed would be unlikely to change its shorter-term trajectory based on recent inflation data. </span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Policy/Market Reaction</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – Today’s move was unanimously approved by the Committee. Quantitative tightening (QT) will continue at its previous pace, but Powell noted that the Fed plans to slow the pace of QT “fairly soon”. Following the press conference, shorter-term interest rates fell at the margin and riskier assets rallied on the unchanged 2024 rate projection. </span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"> </p>
<p style="margin-right:19px; margin-left:24px"><cite><a href="https://private-wealth.us.cibc.com/gary-pzegeo">Gary Pzegeo, CFA</a> <em>joined the firm in 2007 as head of fixed income, focusing on portfolio management, trading, policy formulation and client service.</em></cite></p>Gary Pzegeo, CFA2024-03-20T21:01:00ZMoving to a new state? Important factors to considerTheresa Marxhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=10112152024-03-20T20:47:12Z2024-03-20T20:45:00Z<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">As we make our way through another winter in the U.S., the question of how to leave the cold behind for a more temperate climate is a popular question. But, it’s not just the weather that prompts people to move to a different state; some also move for reasons like a new job, to be closer to family or friends, or to lower their cost of living. If you add in a friendlier tax environment — meaning no, or reduced, income tax and/or state estate tax — the pull to move to that new state may be even stronger.</span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">If you are moving from a higher-tax state to a lower-tax state, the state from which you are departing may not be eager to let you go. Because availing yourself of your new state’s tax benefits can be complicated, you should work closely with your attorney or tax advisor to be certain that you have effectively changed your domicile to your new state. </span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">1. Domicile vs. residency </span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">When seeking to change your tax home, it is necessary to distinguish between “domicile” and “residence” because it is your domicile — rather than your residence — that generally determines your tax home. As a person’s domicile and residence are usually the same place, the terms are frequently used interchangeably, but there are differences that must be considered. “Residence” means simply living in a particular locality, but “domicile” means living in that locality with the intent to make it your fixed and permanent home. A person may have more than one residence but can only have one domicile at a time.</span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">It is important to note that even if you change your domicile to a new state, you may still have to file a nonresident tax return in another state. This is because some states require individuals to file a nonresident return under a variety of circumstances — e.g., if they spend a certain number of days in that state, if their employer is located in that state, or if they have real estate or other assets in that state. Each state’s laws are different so it is important to familiarize yourself with the rules specific to any state where you may have a tax connection. </span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">2. Factors that may determine domicile</span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:8px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Although domicile is said to be a matter of the mind or a matter of intention, certain facts and circumstances are often examined when determining which state is a person’s domicile. Below is a list of some of the considerations that may help determine which state is your domicile:</span></span></span></span></p>
<ul>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Why and when did you acquire your home in your new state?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">How much time do you spend there?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Did you retain a home in your previous state?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">What are the comparative sizes and values of each home and the furnishings therein?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where do you work? Where is your business or job actually located?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Do you belong to any professional or trade organizations in your new state?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where does your family visit you?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where are your friends and other social contacts located?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where are you registered to vote?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where are your automobiles registered?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Which state issued your driver’s license?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where are your banking transactions conducted?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where do you file your tax returns?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where are your advisors and health care professionals?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where are the social and/or religious organizations to which you belong located?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Do you qualify for a homestead exemption in any state?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">What addresses were listed on any government forms?</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Where is your mail sent?</span></span></span></span></span></li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">3. Changing domicile to your new state</span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:8px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">The burden of establishing domicile is generally upon the party who asserts it. You might find yourself in the position of asserting domicile if your prior state wishes to tax you. In order to support a change of domicile to your new state, you may consider taking the following steps (among others): </span></span></span></span></p>
<ul>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">File a Declaration of Domicile, if available in your new state</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">File as a nonresident for other state income tax returns</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Move some bank accounts and safe deposit boxes to your new state</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Notify post office, banks, advisors and insurance companies of your new primary residence</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Use your new address in legal documents and applications</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Register your automobile in your new state and obtain a resident driver’s license</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Claim the homestead exemption under your new state’s property tax statutes, if available</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Become socially active in your new state</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Change your status in membership clubs in any other state from resident to nonresident and pay dues accordingly</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="tab-stops:list .5in"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Move your tangible property to your new home</span></span></span></span></span></li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">There are many reasons you may want to move to a different state. If one of those reasons is to take advantage of friendly state tax laws, careful documentation can be a key ingredient to success. <b>For more information on establishing domicile, visit our </b></span><a href="https://private-wealth.us.cibc.com/choosing-your-state-of-residency" style="color:blue; text-decoration:underline"><b><i><span style="font-family:"Arial",sans-serif">Choosing Your State of Residency</span></i></b></a><b><span style="font-family:"Arial",sans-serif"> resource page. </span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:13px"> </p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><a href="https://private-wealth.us.cibc.com/theresa-marx1" style="color:blue; text-decoration:underline"><b><i><span style="background:white"><span style="font-family:"Arial",sans-serif"><span style="color:#c41f3e">Theresa Marx</span></span></span></i></b></a><i><span style="background:white"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"> is a senior wealth strategist for CIBC Private Wealth Management in Chicago, with over 20 years of industry experience. In this role, she is responsible for developing integrated wealth management solutions and providing comprehensive estate and financial planning services to high-net-worth clients.</span></span></span></i><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>Theresa Marx2024-03-20T20:45:00ZJanuary 2024 FOMC UpdateGary Pzegeo, CFAhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9956502024-03-20T21:27:36Z2024-01-31T21:31:00Z<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">The Federal Reserve (Fed) left its policy rate in a target range of 5.25% to 5.50%, as anticipated by markets. At today’s press conference, and in the official release from the Fed, Powell noted that the risk of high inflation is no longer the dominant concern of policymakers. The FOMC now sees the risk of inflation in better balance with the Committee’s risk of achieving maximum employment. The Fed will likely move to lower policy rates at some point during the year, but members of the FOMC would like to see more good news on the inflation front. Specifically, Powell pointed to the services sector as an area where the Fed would like to see a greater contribution to the improvement in broader inflation measures.</span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Current Conditions</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – The Fed’s statement described the economy as expanding at a solid pace despite a restrictive monetary policy. The Fed has been pleased with the improvement in inflation over the previous six months, but the trailing year’s data remains elevated. </span></span></span></span></span></p>
<p style="margin-right:19px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Forward Guidance</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – Powell repeated the Committee’s view that policy rates are currently at a peak for the cycle. The Chairman added that the Fed would likely begin dialing back policy rates at some point this year. Powell noted that March was not the most likely time for a rate cut. The Fed will see one additional data point on its preferred inflation measure prior to the March 20 meeting. Prior to the meeting, markets were split on whether or not March would be the date of the first rate cut. </span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Policy/Market Reaction</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – Today’s move was unanimously approved by the Committee. Quantitative tightening (QT) will continue at its previous pace. The Fed had some further discussion over the balance sheet at this meeting and will have an in-depth discussion over the pace of QT in March. Markets were positive prior to the release thanks to a better than expected report on employment costs. Following the press release, interest rate futures moved to lower the odds of a March cut.</span></span></span></p>
<p style="margin-right:19px; margin-left:24px"> </p>
<p style="margin-right:19px; margin-left:24px"><cite><a href="https://private-wealth.us.cibc.com/gary-pzegeo">Gary Pzegeo, CFA</a> <em>joined the firm in 2007 as head of fixed income, focusing on portfolio management, trading, policy formulation and client service.</em></cite></p>Gary Pzegeo, CFA2024-01-31T21:31:00ZThe Corporate Transparency Act: What to know if you own an LLC, partnership or corporationLeslie Kehoehttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9830012023-12-11T22:10:59Z2023-12-11T20:42:00Z<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">In 2021, Congress enacted the Corporate Transparency Act (CTA) that imposes reporting requirements on certain companies and requires such reports be compiled into a national database. The stated purpose of the CTA is to help law enforcement prevent the use of U.S. companies to hide identities and launder illicit funds. Consequently, certain “reporting companies,” which include limited liability companies (LLCs), limited partnerships (LPs) and corporations, will be required to submit a report (known as the “Beneficial Ownership Information” (BOI report)) to the Financial Crimes Enforcement Network (FinCEN) starting in 2024 disclosing certain information about the company and its owners. </span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">If you own an LLC, corporation, or other entity created by filing papers with a state’s secretary of state (or similar office) — whether for estate planning purposes or as an active business — here is important information to be aware of:</span></span></span></span></p>
<p style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">1. Entities required to file a report with FinCEN include:</span></span></span></span></p>
<ul style="list-style-type:disc">
<li style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">LLCs, LPs, S or C corporations, and other entities created by filing with the secretary of state or other similar office. This includes non-active businesses, such as an LLC formed for estate planning or asset protection purposes.</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Foreign entities that are registered to do business in the U.S.</span></span></span></span></li>
</ul>
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<p><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">NOTE: Certain companies are exempt from these requirements, the most notable include:</span></span></span></span></p>
<ul style="margin-left: 40px;">
<li>Charities</li>
<li>Large companies (20 or more employees<u> and</u> $5 million or more in revenues)</li>
<li>Entities that are already subject to governmental regulation such as banks and insurance companies</li>
</ul>
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<p style="margin-left:8px"> </p>
<p style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">2. Information required to be reported for entities created or registered to do business in the U.S. <b><i>before January 1, 2024: </i></b></span></span></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Company information, including:</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span>
<ul>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Legal name of the entity and any trade names</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Street address for principal place of business in the U.S.</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">State or jurisdiction of formation</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Tax identification number</span></span></span></span></li>
</ul>
</li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Information for each “beneficial owner” including:</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span>
<ul>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Full legal name</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Date of birth</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Home address </span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Identifying number from an identification document (e.g. non-expired U.S. driver’s license, U.S. identification document, U.S. passport, or non-U.S. passport)</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Name of state or jurisdiction that issued the identification document</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">PDF of identification document</span></span></span></span></li>
</ul>
</li>
</ul>
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<p>NOTE: For purposes of CTA reporting requirements, a "beneficial owner" includes:</p>
<ul style="margin-left: 40px;">
<li>Anyone who directly or indirectly owns at least 25% of a reporting company</li>
<li>Anyone who directly or indirectly has substantial control over a reporting company</li>
<li>All senior officers</li>
</ul>
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<p style="margin-left:8px"> </p>
<p style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">3. Information required to be reported for entities created or registered to do business in the U.S. <b><i>on or after January 1, 2024: </i></b></span></span></span></span></p>
<ul>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Company information (same as above)</span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Information for each beneficial owner (same as above)</span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Information for “company applicants”, including:</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span>
<ul>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Legal name of company applicant</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Date of birth</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Applicant’s address </span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Identifying number from an identification document (e.g. non-expired U.S. driver’s license, U.S. identification document, U.S. passport, or non-U.S. passport)</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Name of state or jurisdiction that issued the identification document</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">PDF of identification document</span></span></span></span></li>
</ul>
</li>
</ul>
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<p><span style="font-size:11pt"><span style="font-family:"Segoe UI",sans-serif"><span style="font-family:"Arial",sans-serif">NOTE: For purposes of CTA reporting requirements, a "company applicant" includes up to two individuals who:</span></span></span></p>
<ul style="margin-left: 40px;">
<li><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="font-family:"Segoe UI",sans-serif"><span style="font-family:"Arial",sans-serif">Directly filed the document that created or first registered the company in the U.S.; and </span></span></span></span></li>
<li><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="font-family:"Segoe UI",sans-serif"><span style="font-family:"Arial",sans-serif">Are primarily responsible for directing or controlling the filing of the relevant document</span></span></span></span></li>
</ul>
</td>
</tr>
</tbody>
</table>
<p style="list-style-type: none;"> </p>
<p style="margin-top:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">4. Applicability of CTA reporting requirements to trusts</span></span></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:"Segoe UI",sans-serif"><span style="font-family:"Arial",sans-serif">Trusts generally have no direct reporting requirements because they are not considered a “reporting company”; however, if a trust owns an interest in a reporting company, the following people or entities may also be required to report their information as a “beneficial owner”:</span></span></span>
<ul>
<li><span style="font-size:11pt"><span style="font-family:"Segoe UI",sans-serif"><span style="font-family:"Arial",sans-serif">The Trustee(s) of the trust</span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:"Segoe UI",sans-serif"><span style="font-family:"Arial",sans-serif">A trust beneficiary if the beneficiary is either (i) the sole permissible recipient of income and principal or (ii) has the right to demand a distribution of, or withdraw, substantially all of the trust assets</span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:"Segoe UI",sans-serif"><span style="font-family:"Arial",sans-serif">The trust’s grantor, if they retained the right to revoke the trust or withdraw the trust’s assets</span></span></span></li>
</ul>
</li>
</ul>
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<p><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">NOTE: Due to unanswered questions relating to the definition of a beneficial owner, there may be other applications of the CTA reporting requirements to trusts and trust beneficiaries. </span></span></span></span><br />
</p>
</td>
</tr>
</tbody>
</table>
<p style="margin-left:12px; margin-bottom:13px"> </p>
<p style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">5. FinCEN Identifier to reduce the amount of information required in a report</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">The rules allow a beneficial owner or company applicant to obtain an identification number that may be disclosed by a reporting company instead of the multiple pieces of information otherwise required (as discussed above).</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">This “FinCEN identifier” is a unique identifying number issued by FinCEN to an individual after such individual provides the same information that would be required in a CTA report if there was no FinCEN identifier.</span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
<li style="margin-left: 8px;"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">The beneficial owner who obtains a FinCEN identifier will be responsible for keeping their information current. </span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></li>
</ul>
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<tr>
<td><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">NOTE: A FinCEN identifier may be preferred for reporting companies with several beneficial owners or for individuals who own reportable beneficial interests in multiple entities.</span></span></span></span><br />
</td>
</tr>
</tbody>
</table>
<p style="margin-left:8px"> </p>
<p style="margin-left:8px"><span style="font-family: Arial, sans-serif; font-size: 11pt;">6. Deadlines for filing a BOI report</span></p>
<ul>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">For an existing reporting company as of January 1, 2024 — the initial report is due on or before <b><i>January 1, 2025.</i></b></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">For a reporting company created or registered to do business in the U.S. between January 1, 2024 and December 31, 2024 — the initial report is due within <b><i>90 calendar days</i></b> of receiving actual or public notice that the creation or registration is effective.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">For a reporting company created or registered to do business in the U.S. on or after January 1, 2025 — the initial report is due within <b><i>30 calendar days</i></b> of receiving actual or public notice that the creation or registration is effective.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">In addition to the initial reporting requirement, reporting companies must report changes or corrections to any filing within 30 days after becoming aware or having reason to know of any inaccuracy or changes in any prior report. </span></span></span></span></li>
</ul>
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<td><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">NOTE: Updates only need to be reported in connection with changes to beneficial owners and reporting companies, not changes to company applicants. For example, if the manager of a limited liability company moves, this change of address must be reported within 30 days, but a company applicant's change of address would not. </span></span></span></span><br />
</td>
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</tbody>
</table>
<p style="margin-left:8px"> </p>
<p style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">7. Fees and penalties under the CTA</span></span></span></span></p>
<ul style="list-style-type:disc">
<li style="margin-left:12px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">There is no filing fee associated with filing a report under the CTA.</span></span></span></span></li>
<li style="margin-left:12px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Non-compliance with reporting requirements may incur a civil penalty of up to $500/day and a criminal fine of up to $10,000, imprisonment of up to two years, or both.</span></span></span></span></li>
</ul>
<p style="margin-left:100px; margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">The rules and regulations issued in connection with the CTA have broad application and are complex. In addition, some of the original rules have changed recently, and there could be more changes to come. It’s important to consult with a qualified professional to see if and how the CTA requirements apply to you. If you own an interest in a reportable company or are the grantor, beneficiary or trustee of a trust that owns an interest in a reportable company, reach out to your attorney or accountant as soon as possible for guidance on reporting. </span></span></span></span></p>
<p style="margin-bottom:13px"> </p>
<p style="margin-bottom:13px"> </p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><a href="https://private-wealth.us.cibc.com/leslie-kehoe" style="color:blue; text-decoration:underline"><b><i><span style="font-size:10.5pt"><span style="background:white"><span style="line-height:115%"><span style="font-family:"Whitney-Book-Pro",serif">Leslie Kehoe</span></span></span></span></i></b></a><i><span style="background:white"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"> is a senior wealth strategist for CIBC Private Wealth in Atlanta with 25 years of industry experience.</span></span></span></i><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>Leslie Kehoe2023-12-11T20:42:00ZYear-end tax planning checklist for 2023Theresa Marxhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9757392023-11-17T19:45:56Z2023-11-10T21:09:00Z<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Year-end tax planning should be a part of everyone’s financial routine. The checklist below serves as a starting point to think about planning in today’s economic and legislative environment, as well as items that are important to consider every year. As always, we encourage you to speak with your CIBC Private Wealth advisor and outside tax advisors to help ensure that you are taking full advantage of all year-end tax savings opportunities. </span></span></span></span></p>
<p style="margin-bottom: 13px; text-align: right;"><a href="https://view.publitas.com/cibc-pwm/year-end-tax-planning-2023/page/1">View as PDF</a></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Income tax</span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul class="checks">
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider the timing of harvesting capital losses to offset capital gains</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider whether to accelerate or defer income and deductions</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Be mindful of possible Alternative Minimum Tax (AMT) implications, especially if you itemize a lot of deductions or have exercised incentive stock options </span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider the impact of the Kiddie Tax </span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Review the use of your net operating losses </span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">If you are a trustee, consider whether it is appropriate under the terms of the trust agreement to make distributions to current beneficiaries (who may be in a lower tax bracket than the trust)</span></span></span></span></span></li>
</ul>
<p style="margin-left:8px; margin-bottom:13px"> </p>
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<p><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><strong>Planning tip:</strong> As we get closer to 2026 and the potential sunset of the Tax Cuts and Jobs Act of 2017, the acceleration of income may become more important with potentially higher income tax rates on the horizon. </span></span></p>
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<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Lifetime gift planning</span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul class="checks">
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Determine whether to make significant lifetime transfers </span></span></span></span></span>
<ul style="margin-left: 40px;">
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list 1.0in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider taking advantage of current high transfer tax exemptions ($12.92 million in 2023) and potentially lower asset values</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list 1.0in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Evaluate whether flexible planning strategies meet your personal and family needs</span></span></span></span></span></li>
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</li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Review the use of annual exclusion gifts — the current annual exclusion amount per individual is $17,000</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Review the use of the gift exclusion for payment of tuition and medical expenses </span></span></span></span></span></li>
</ul>
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<p><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><strong>Planning tip: </strong>The annual exclusion amount and the gift, estate and generation-skipping transfer tax exemptions will increase again in 2024 to $18,000 and $13.61 million, respectively.</span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Arial,sans-serif">Keep in mind that if the Tax Cuts and Jobs Act of 2017 sunsets in 2026, the federal gift, estate and generation-skipping transfer tax exemptions will be significantly reduced to $5 million, adjusted for inflation. Making large gifts before 2026 may allow you to lock in current historically high exemptions. </span></span></p>
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<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Charitable giving</span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul class="checks">
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider combining multi-year gifts into one year using a donor-advised fund for a potentially larger tax deduction</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider donating appreciated capital gain assets that have been held for more than a year</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider making cash gifts to eligible charities to take advantage of charitable deductions of up to 60% of adjusted gross income (AGI)</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider making a tax-free contribution directly from an IRA to a charitable organization (a QCD)</span></span></span></span></span></li>
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<p><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><strong>Planning tip: </strong>The QCD rule allows individuals who are 70 <span style="font-size:11.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">½ </span></span></span> or older to donate up to $100,000 each year to one or more charities directly from a taxable IRA. This $100,000 amount will be indexed for inflation starting in 2024.</span></span></p>
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<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Retirement planning</span></b><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
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<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Consider a Roth conversion for your IRA</span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Plan for IRA and 401(k) distributions </span></span></span></span></span></li>
<li style="margin-left:8px; margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:list .5in"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Maximize retirement plan contributions</span></span></span></span></span></li>
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<p><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><strong>Planning tip: </strong>With the enactment of SECURE 2.0, individuals must now begin taking required minimum distributions (RMDs) at age 73. If you turned 73 this year, you have until April 1, 2024, to take your first RMD.</span></span></p>
<p>Additionally, the current $1,000 annual maximum IRA catch-up contribution for those 50 and older will be indexed for inflation starting in 2024. </p>
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<p style="margin-bottom:13px"><cite><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><a href="https://private-wealth.us.cibc.com/theresa-marx1" style="color:blue; text-decoration:underline"><b><i><span style="font-size:10.5pt"><span style="background:white"><span style="line-height:115%"><span style="font-family:"Whitney-Book-Pro",serif"><span style="color:#c41f3e">Theresa Marx</span></span></span></span></span></i></b></a><i><span style="font-size:10.5pt"><span style="background:white"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"> is a senior wealth strategist for CIBC Private Wealth Management in Chicago, with over 20 years of industry experience. In this role, she is responsible for developing integrated wealth management solutions and providing comprehensive estate and financial planning services to high-net-worth clients.</span></span></span></span></span></i><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></p>Theresa Marx2023-11-10T21:09:00ZRoad to financial independence: Helping children on their financial journeyLeslie Kehoehttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9741592023-12-06T21:33:49Z2023-11-03T20:04:00Z<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">This is the fourth blog in a four-part series, designed to help you engage your adult children in conversations about financial planning. Read all of our entries in the "Road to financial independence" series:</span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 1: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-budgeting">Budgeting</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 2: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-starting-a-new-job">Starting a new job</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 3: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/a-beginners-voyage-to-wealth-investing-101">Investing 101</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"> </p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">While the first three installments in this series discussed key financial planning concepts to share with your adult children, this fourth installment focuses on more direct financial ways you can provide support. </span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Continuing with our theme that adulthood is a journey rather than a destination, there may be times when you would like to offer additional support as your children secure their financial independence. In fact, clients often ask, “What is the best way to provide financial support to adult children?” Whether you are looking to provide on-going support or assistance on a more limited basis, there are a multitude of strategies to consider that can help your children financially without triggering any transfer tax. By understanding these strategies, you can select the strategy or strategies that work best for you and your family.</span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"><br />
<span style="background:white"></span></span></span></span></span><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"></span></b><b><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">1. Make gifts</span></span></b></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">One of the ways you can help your adult children financially is by making lifetime gifts to them — either outright or in trust. To minimize or avoid gift tax, you may consider annual exclusion gifts or gifts sheltered by your gift tax exemption. </span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Annual exclusion gifts</span></span><span style="font-family:"Arial",sans-serif"><span style="color:#c0504d">:</span></span><span style="font-family:"Arial",sans-serif"> Annual exclusion gifts are a simple but potentially powerful tool to assist the next generation. Each year, you can give up to the gift tax annual exclusion amount ($17,000 in 2023*) to as many recipients as you like. If you are married, you and your spouse together can give twice the annual exclusion amount ($34,000 in 2023). Key characteristics of annual exclusion gifts include: </span></span></span></span></p>
<ul style="margin-left: 40px;">
<li><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Annual exclusion gifts do not count against your gift or estate tax exemption. </span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Annual exclusion gifts allow you the flexibility to gift property when you can afford to do so, without compromising your own standard of living. </span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">If utilized on a regular basis, annual exclusion gifts can provide a significant tax-free revenue stream to the younger generation. </span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">If spouses make one or more gifts to a single recipient and the total amount given exceeds the annual exclusion amount, they may need to file a gift tax return to “split” the gift between them.</span></span></span></span></li>
<li style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Only certain gifts to trusts will qualify for the annual exclusion, so it is important to work with your attorney before transferring any amounts to a trust.</span></span></span></span></li>
</ul>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Gift tax exemption: </span></span><span style="font-family:"Arial",sans-serif">In 2023, an individual can give up to $12.92 million* worth of assets during life and at death to individuals or trusts without incurring transfer tax. If you would like to make gifts to your children (or to trusts for the benefit of your children) over and above the annual exclusion amounts described above, you may use part or all of your gift tax exemption to shelter that gift from any transfer taxes. While no tax will be due, the amount of the gift reduces the amount that may be given tax-free at death, and the gift will need to be reported on a gift tax return for the year of the gift. That return is generally due by April 15 of the following year.</span></span></span></span><br />
</p>
<p><span style="background:white"></span><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"></span></b><b><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">2. Pay medical and educational expenses directly</span></span></b></span></span> </span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Without using your annual exclusion or gift tax exemption, you can pay for educational, dental and medical expenses for the younger generations and incur no transfer taxes as long as you pay the provider directly. Paying these expenses for your children or other family members has the following benefits:</span></span></span></span></span></p>
<ul style="margin-left: 40px;">
<li><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Payments for education can cover any educational stage — from preschool to graduate school.</span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Medical expenses can include not only actual health expenses but also health insurance premiums. </span></span></span></span></span></li>
<li style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">There is no limit to how much you can spend on medical and educational expenses for others.</span></span></span></span></span></li>
</ul>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">It is important to note that if your adult children are relying on you to fund these expenses now and into the future, it’s a good idea to ensure that your estate plan contains provisions covering these expenses in the future.</span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span><br />
<span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"></span></b><b><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41"></span></span></b></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">3. Lend money</span></span></b></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">If you want to boost the financial security of your adult children, but also want them to pay you back for the financial assistance, then you can lend money to them. For example, you may want to lend money to your children to help them start a business or to help them purchase their first home. </span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Under rules set forth in the Internal Revenue Code, an individual can make loans to family members at lower rates than commercial lenders without the loan being deemed a gift. Key characteristics of an intra-family loan include:</span></span></span></span></span></p>
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<li><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">An intra-family loan allows you to assist the younger generation financially without using your annual exclusion or gift tax exemption.</span><b><span style="font-family:"Arial",sans-serif"></span></b></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">A bona fide credit relationship, including formal loan documents and the payment of interest, is established.</span><b><span style="font-family:"Arial",sans-serif"></span></b></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Wealth can be shifted if the loan assets are invested by the borrower and earn a higher return than the required interest rate.</span><b><span style="font-family:"Arial",sans-serif"></span></b></span></span></span></span></li>
<li style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Interest is paid within the family rather than to a third-party lender.</span><b><span style="font-family:"Arial",sans-serif"></span></b></span></span></span></span></li>
</ul>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><i><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Planning note</span></span></i><b><i><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">: </span></span></i></b><i><span style="font-family:"Arial",sans-serif">If you are specifically interested in helping a child purchase a home, listen to our recent </span></i><span style="font-family:"Arial",sans-serif"><a href="https://private-wealth.us.cibc.com/helping-with-a-home-purchase" style="color:blue; text-decoration:underline"><i>Helping with a Home Purchase podcast</i></a><b><i>.</i></b><b><i><span style="color:#8b1d41"></span></i></b></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41"></span></span></b></span></span></span></span></p>
<p style="margin-bottom:11px"> </p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Conclusion</span></span></b><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41"></span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">There are many variations to the strategies outlined above, as well as additional planning opportunities for helping your children financially. This planning can be complex, so it’s important to work with a qualified professional.</span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">We hope you’ve enjoyed our <i><span style="background:white"><span style="color:black">“Road to financial independence” </span></span></i><span style="background:white"><span style="color:black">blog series. In case you missed our earlier pieces, we covered </span></span><a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-budgeting" style="color:blue; text-decoration:underline">budgeting</a><span style="background:white"><span style="color:black">, </span></span><a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-starting-a-new-job" style="color:blue; text-decoration:underline">starting a new job</a><span style="background:white"><span style="color:black"> and </span></span><a href="https://private-wealth.us.cibc.com/blog/-/blogs/a-beginners-voyage-to-wealth-investing-101" style="color:blue; text-decoration:underline">investments</a><span style="background:white"><span style="color:black">. For even more information for you or your children on financial independence or other planning topics, reach out to your CIBC Private Wealth advisor.</span></span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"> </span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"> <span style="font-size:11pt"><cite><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">*The annual exclusion amount is projected to be $18,000 in 2024 and the gift and estate tax exemption is projected to be $13.61 million in 2024.</span></span></span></span></cite></span></span></p>
<p style="margin-bottom:11px"> </p>
<p style="margin-bottom:11px"> </p>
<p style="margin-bottom:11px"> </p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><cite><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><cite><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><cite><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"><a href="https://private-wealth.us.cibc.com/leslie-kehoe" style="color:blue; text-decoration:underline">Leslie Kehoe</a> <i><span style="color:#333333">is a senior wealth strategist for CIBC Private Wealth in Atlanta with 25 years of industry experience.</span></i></span></span></span></span></cite></span><span style="font-size:11pt"><cite><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></span></p>Leslie Kehoe2023-11-03T20:04:00ZMassachusetts tax reforms doubles the estate tax exemption and provides other tax reliefCaroline McKayhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9663312023-10-11T19:28:54Z2023-10-11T19:25:00Z<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">On October 4, 2023, Governor Healey signed into law a $1 billion tax package that will modify a wide range of Massachusetts tax laws, including those related to the estate tax, the so-called “millionaires’ tax” and short-term capital gains rates. Key provisions to be aware of if you live, own real estate, or operate a business in Massachusetts include:</span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000">Estate tax</span></span></b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000"></span></span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Residents</span></b><span style="font-family:"Arial",sans-serif">: There is now a $2 million exemption for every resident of Massachusetts, meaning that only estates that exceed $2 million will be subject to the estate tax and only on the portion of the estate that exceeds $2 million. This is a change from Massachusetts’ previous estate tax law that imposed a “cliff tax” on all estates exceeding $1 million — i.e., estates in excess of $1 million were taxed starting at the first dollar. </span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Non</span></b><span style="font-family:"Arial",sans-serif">-<b>residents:</b> For non-residents who own real or tangible property in Massachusetts, Massachusetts imposes an estate tax based on the proportional value of the property located in Massachusetts to the total gross estate. While non-residents also have a $2 million exemption, there may be instances when a Massachusetts estate tax is due even when the value of all property in Massachusetts is under $2M. </span></span></span></span></li>
<li style="margin-bottom:13px; margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Effective date</span></b><span style="font-family:"Arial",sans-serif">: This law applies for all deaths occurring after January 1, 2023. For estates of decedents who died in 2023 that have already submitted an estate tax return based on the prior law, the personal representative may need to file for an abatement, pending guidance from the Massachusetts Department of Revenue. </span></span></span></span></li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000">Millionaires tax</span></span></b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000"></span></span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Tax return filings: </span></b><span style="font-family:"Arial",sans-serif">Taxpayers must file a joint Massachusetts return in any year they file a joint Federal return. This law aims to close a perceived loophole allowing married couples to file separate Massachusetts returns to reduce or eliminate the impact of the 4% surtax on those with income exceeding $1 million but continue to file jointly for Federal income taxes. </span></span></span></span></li>
<li style="margin-bottom:13px; margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Effective date:</span></b><span style="font-family:"Arial",sans-serif"> Applies to tax years beginning on or after January 1, 2024.</span></span></span></span></li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000">Short-term capital gains</span></span></b></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Reduction in tax rates: </span></b><span style="font-family:"Arial",sans-serif">Tax rates for short-term capital gains, which are gains realized from the sale of capital assets held for one year or less, have been reduced from 12% to 8.5%. The long-term capital gains rate remains unchanged at 5%.</span></span></span></span></li>
<li style="margin-bottom:13px; margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Effective date:</span></b><span style="font-family:"Arial",sans-serif"> January 1, 2023 </span></span></span></span></li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000"></span></span></b></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000"></span></span></b></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif"><span style="color:#c00000">Corporate income tax</span></span></b></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:Symbol"></span><b><span style="font-family:"Arial",sans-serif"><span style="color:black">New tax calculation: </span></span></b><span style="font-family:"Arial",sans-serif"><span style="color:black">The<b> </b>new law replaces an apportionment system that factored in property, payroll and sales when calculating the income tax owed by multi-state corporations doing business in Massachusetts with a simplified version that only considers a company’s sales within the state.<b> </b></span></span></span></span></span></li>
<li style="margin-bottom:13px; margin-left:8px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:Symbol"></span><b><span style="font-family:"Arial",sans-serif"><span style="color:black">Effective date: </span></span></b><span style="font-family:"Arial",sans-serif"><span style="color:black">Takes effect January 1, 2025. </span></span></span></span></span></li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-bottom:13px"> </p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"><a href="https://private-wealth.us.cibc.com/caroline-mckay1" style="color:blue; text-decoration:underline"><b><i><span style="background:white">Caroline McKay</span></i></b></a><i><span style="background:white"><span style="color:#333333"> is a senior wealth strategist representing CIBC Private Wealth in Boston. She has over 15 years of industry experience.</span></span></i></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>Caroline McKay2023-10-11T19:25:00ZRoad to financial independence: Investing 101Sofia Houhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9648392023-12-06T22:11:58Z2023-10-05T14:26:00Z<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">This is the third blog in a four-part series, designed to help you engage your adult children in conversations about financial planning. Read all of our entries in the Road to financial independence series:</span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 1: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-budgeting">Budgeting</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 2: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-starting-a-new-job">Starting a new job</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 4: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-helping-children-on-their-financial-journey">Helping children on their financial journey</a> </span></span></span></span></em></p>
<p><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">As a parent, you may have often told your children to “invest in your education,” “invest in your relationships,” or “invest in your well-being.” While investing in each of these areas requires something different–whether that is focusing on learning, growing networks or simply keeping an active and healthy lifestyle–these actions all share one characteristic: they yield returns over the long run. </span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">When thinking about earnings or savings, it is no different. Investing time and resources into allocating money today can be a key step toward building wealth for the future. Consider sharing with your child the following tips and information to help them understand the benefits and basics of investing as they begin their voyage to wealth.</span></span></span></span></span></span><br />
</p>
<p style="margin-bottom:11px"><strong><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">The case for setting out on the voyage</span></span></span></span></span></span></span></strong></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">If on January 1<sup>st</sup>, 2003, you decided to keep $1 million under your bed, 20 years later, you would have still had that $1 million–assuming no calamity happened to that cash! But because of inflation, which grew roughly at 2.5% over that period, your purchasing power would have been reduced to a mere $610,000. Had you, alternatively, invested that money into the stock markets, you would have made around four times your money.<sup>1</sup> What a difference that makes! </span></span></span></span></span></span></p>
<h4 style="margin-top:3px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Arial;,sans-serif"><span style="color:#2f5496"><span style="font-style: italic;"><span style="font-size: 10pt;"><span style="line-height: 107%;"><span style="font-family: Arial, sans-serif;"><span style="color: rgb(139, 29, 65);"><span style="font-weight: normal;"><br />
Figure 1. Illustrative returns on $1M invested 20 years ago by asset class</span><sup> 2</sup></span></span></span></span></span></span></span></span></span></h4>
<p style="text-align:center"><img alt="" height="309" src="https://private-wealth.us.cibc.com/documents/10184/0/10.2.23.png/648ac14e-ef68-2e7e-68a9-20455f96ff12?t=1696516984718" width="800" /></p>
<p style="margin-top: 3px;"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Figure 1 shows only three ways to invest as illustrative examples: cash, treasuries (U.S. government-issued debt), and the stock market. However, there is a myriad of ways to put your capital to work. </span></span></span></span></span></span></p>
<p style="margin-top:3px"><strong><span style="font-size:11pt"><span style="page-break-after:avoid"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Loading the ship</span></span></span></span></span></span></span></span></strong></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Understanding your options of where to invest can be a great place to start your voyage. These options are the basic building blocks of any portfolio. In investing lingo, they are called <b>asset classes</b>, groupings of investments with similar characteristics and governed by the same laws and regulations. </span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">While stocks and bonds may be some of the most common asset classes, there is a whole world of alternative assets such as private equity, hedge funds and real estate. Each asset class has a different profile of not only risk and reward, but also level of liquidity for the investor. </span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Some of the most common asset classes are shown in Figure 2.</span></span></span></span></span></span></p>
<h4 style="margin-top:3px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:"Arial;,sans-serif"><span style="color:#2f5496"><span style="font-weight:normal"><span style="font-style:italic"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Figure 2. Examples of asset classes</span></span></span></span></span></span></span></span></span></span></h4>
<table align="center" border="1" cellpadding="1" cellspacing="1" style="width:800px;">
<tbody>
<tr>
<td style="text-align: center;"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Asset Class</span></span></b></span></span></span></td>
<td style="text-align: center;"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">What is it?</span></span></b></span></span></span></td>
<td style="text-align: center;"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Investor’s Access to Liquidity</span></span></b></span></span></span></td>
<td style="text-align: center;"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Risk Profile<sup>3</sup></span></span></b></span></span></span></td>
</tr>
<tr>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Stocks</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">A unit that represents an ownership share in a company. Growth stocks can grow fast but can also be risker; income stocks pay consistent dividends; value stocks are perceived to be bargains.</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Generally higher</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Relatively higher</span></span></span></span></span></td>
</tr>
<tr>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Bonds</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Debt instruments issued by governments or companies that pay interest for a set period.</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Generally higher</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Relatively lower</span></span></span></span></span></td>
</tr>
<tr>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Real assets </span></span></span></span></span><br />
<span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">(alternative asset)</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Tangible assets that have intrinsic value such as gold, luxury items and art.</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Varies depending on type of asset</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Varies depending on type of asset</span></span></span></span></span></td>
</tr>
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<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Hedge funds </span></span></span></span></span><br />
<span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">(alternative asset)</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Less regulated pooled investment structure that uses different strategies to generate active return.</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Varies depending on terms</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Varies depending on type of strategy</span></span></span></span></span></td>
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<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Private equity </span></span></span></span></span><br />
<span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">(alternative asset)</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Investment into private companies typically through a fund with a multi-year lock-up period. Returns depend on liquidity events such as IPOs or acquisitions.</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Low</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Varies depending on quality of underlying companies</span></span></span></span></span></td>
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<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Real estate</span></span></span></span></span><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><br />
(alternative asset)</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">The property is not your primary home but is used for investment, such as an office building or rental unit.</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Low</span></span></span></span></span></td>
<td><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Relatively lower</span></span></span></span></span></td>
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<p><br />
<span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Furthermore, you can also choose to invest in many of these asset classes <b>actively</b> (i.e., employing a strategy designed to outperform a given benchmark’s performance) or<b> passively</b> (i.e., employing a strategy designed to match a given benchmark’s performance). </span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">How you choose to invest among various asset classes and in what proportions is called <b>asset allocation. </b>There are pros and cons to electing various asset classes and investing styles, but ultimately your choices should align with and reflect your goals and needs. </span></span></span></span></span></span><br />
</p>
<p style="margin-bottom:11px"><strong><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Following your compass</span></span></span></span></span></span></span></strong></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Before you even embark on the voyage of investing and portfolio construction, it is helpful to understand yourself and what you wish to achieve. </span></span></span></span></span></span><span style="font-size:12pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="color:#1f3763"><span style="font-weight:normal"> </span></span></span></span></span></p>
<p style="margin-bottom:11px">1. Desired rate of return</p>
<p style="margin-bottom: 11px;"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">First, asset class selection should match a target level of wealth you hope to achieve by a certain period of your life. When you are young, you may desire higher investment returns to get to financial independence. Or maybe retirement is on the horizon already, so it is preferable to have steady, income yielding instruments that help pay monthly bills. </span></span></span></span></span></span><span style="font-size:12pt"><span style="line-height:107%"><span style="font-family:"Arial,sans-serif"><span style="color:#1f3763"><span style="font-weight:normal"> </span></span></span></span></span></p>
<p style="margin-bottom: 11px;">2. Risk appetite</p>
<p style="margin-bottom: 11px;"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Second, knowing your own tolerance for risk is also important. Even though the stock market could return 10% annualized over the long run, in any given year it could also experience significant declines. Bonds return less because their coupons are fixed or capped, but the risk is also much lower. </span></span></span></span></span></span><span style="font-size:12pt"><span style="line-height:107%"><span style="font-family:"Arial,sans-serif"><span style="color:#1f3763"><span style="font-weight:normal"> </span></span></span></span></span></p>
<p style="margin-bottom: 11px;">3. Liquidity needs</p>
<p style="margin-bottom: 11px;"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial, sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Lastly, it is critical to assess at which periods of your life you need access to your money. Perhaps down the road you need to fund a child’s education or upsize your living arrangements. If you locked up too much capital into very illiquid investments such as private equity or venture capital, you would be stuck – even if they could have yielded higher returns. Instead, to have that flexibility, putting more money into stocks or funds with regular withdrawal allowances would have been more optimal.</span></span></span></span></span></span></p>
<h2 style="margin-top:3px"> </h2>
<p style="margin-top: 3px;"><strong><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Sailing the risk-return spectrum</span></span></span></span></span></span></span></strong></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Of course, there will always be a risk-reward tradeoff with any choice you make. Typically instruments that have the highest expected returns often bear the highest risks. Constructing a balanced portfolio of investments should inevitably reflect these preferences. </span></span></span></span></span></span></p>
<h4 style="margin-top:3px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="color:#2f5496"><span style="font-style: italic;"><span style="font-size: 10pt;"><span style="line-height: 107%;"><span style="font-family: Arial, sans-serif;"><span style="color: rgb(139, 29, 65);"><span style="font-weight: normal;"><br />
Figure 3. Asset class performance over the long-run vs. in bad times</span><sup>4</sup></span></span></span></span></span></span></span></span></span></h4>
<p style="text-align:center"><img alt="" height="454" src="https://private-wealth.us.cibc.com/documents/10184/0/Cropped+10.4.png/32b8162c-8df8-6ac0-65fc-c6f6ccb3e58c?t=1696517040094" width="800" /></p>
<p style="margin-top: 3px;"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><em>Sources: </em>Bloomberg, Ken French's website, Citigroup, Barclays Capital, S & P GSCI, MIT-CRE</span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><br />
More importantly, by having a mix of various types of assets, you can diversify your portfolio, a strategy analogous to not putting all of your eggs in one basket. The right type of <b>diversification</b> not only reduces non-market risk, which can arise when a company’s factory gets flooded or when a product launch fails, but it can also enhance overall returns. </span></span></span></span></span></span></p>
<p style="margin-bottom:11px"><strong><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41"><br />
Charting a course </span></span></span></span></span></span></span></strong></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">While it may seem daunting to navigate the waters of investing, it is nevertheless imperative to take the plunge. The rewards at the end of the voyage are worth it. And should you arrive at an impasse or have questions, you can always seek professional advice. <span style="color:#333333">Reach out to your CIBC Private Wealth relationship manager for more information.</span> </span></span></span></span></span></span></p>
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<p><b><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Treasure trove of knowledge: A curated list of readings</span></span></span></span></b></p>
<p><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">For those who are interested in digging deeper into the world of investing, below is a list of books to get started. </span></span></span></p>
<h3><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Investment fundamentals </span></span></span></span></h3>
<ol>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">The Intelligent Investor, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Benjamin Graham </span></span></span></li>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">The Essays of Warren Buffet: Lessons for Corporate America, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Warren Buffet</span></span></span></li>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">The Little Book that Builds Wealth, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Pat Dorsey</span></span></span></li>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Common Stocks and Uncommon Profits and Other Writings, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Philip A. Fisher</span></span></span></li>
</ol>
<h3><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#8b1d41">Business fun</span></span></span></span></h3>
<ol>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">The Outsiders, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">William Thorndike </span></span></span></li>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Business Adventures, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">John Brooks</span></span></span></li>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley are Changing the World, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Brad Stone</span></span></span></li>
<li><span style="font-size:10.0pt"><span style="line-height:107%"></span></span><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Sam Walton: Made in America, </span></span></span></i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Sam Walton </span></span></span></li>
</ol>
<p> </p>
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<p><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">For more information on helping your children on the road to financial independence, read our first two blogs in this series on <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-budgeting">budgeting</a> </span></span></span></span><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">and <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-starting-a-new-job">starting a new job</a>. </span></span></span></span></p>
<p> </p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"></span></span></span></span></b></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"></span></span></span></span></b></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Arial,sans-serif"><a href="https://private-wealth.us.cibc.com/sofia-hou1" style="color:#0563c1; text-decoration:underline"><i><span style="font-size:10.0pt"><span style="background:white"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif">Sofia Hou</span></span></span></span></i></a><i><span style="font-size:10.0pt"><span style="background:white"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"> is a senior investment analyst for CIBC Private Wealth with ten years of industry experience. In this role, she covers general equity research for the firm’s proprietary investment strategies.</span></span></span></span></span></i><i><span style="font-size:10.0pt"><span style="line-height:107%"><span style="font-family:"Arial",sans-serif"><span style="color:#44546a"></span></span></span></span></i></span></span></span></p>
<p style="margin-bottom:11px"> </p>
<p style="margin-bottom:11px"> </p>
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<div id="ftn1">
<p><cite><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">1 </span></span></sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Unadjusted for inflation, it would be approximately 6 times. </span></span><span style="font-size:12.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></p>
<p><cite><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">2 </span></span></sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Historical data (1928-2022) from <a href="https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html"><span style="color:#0563c1">NYU</span></a>; Bloomberg data. Inflation-adjusted returns is calculated as (1 + asset returns) / (1 + inflation) -1. <i> </i></span></span><span style="font-size:12.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></p>
<p><cite><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">3</span></span></sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"> Risk premia data based on <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2711624"><i><span style="color:#0563c1">Risk and Risk Premia: A Cross Asset Class Analysis</span></i></a><i>, </i>Markus Ebner. Risk profiles are based on historical market averages and can vary significantly even within each asset class. It is up to each individual to understand the risk profile of investment products. </span></span><span style="font-size:12.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></p>
<p><cite><span style="font-size:11pt"><span style="font-family:Arial,sans-serif"><sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">4</span></span></sup><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"> <i>Expected Returns: An investor’s Guide to Harvesting Market Rewards. </i>Antti Ilmanen (2011). Page 12.</span></span><span style="font-size:12.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></cite></p>
</div>
</div>Sofia Hou2023-10-05T14:26:00ZRoad to financial independence: Starting a new job Amanda Regnierhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9642162023-12-06T21:36:30Z2023-10-03T18:32:00Z<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">This is the second blog in a four-part series, designed to help you engage your adult children in conversations about financial planning. Read all of our entries in the "Road to financial independence" series:</span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 1: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-budgeting">Budgeting</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 3: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/a-beginners-voyage-to-wealth-investing-101">Investing 101</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 4: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-helping-children-on-their-financial-journey">Helping children on their financial journey</a> </span></span></span></span></em></p>
<p paraeid="{c9d66093-c31d-4f84-9605-38a82fb6b0a3}{69}" paraid="84527874"> </p>
<p paraeid="{c9d66093-c31d-4f84-9605-38a82fb6b0a3}{69}" paraid="84527874">Continuing our first <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-budgeting" rel="noreferrer noopener" target="_blank">blog</a>’s theme — that adulthood is more of a journey than a destination — we recognize and celebrate a major milestone: your child’s first job (or second, or third). Your child’s accomplishment is also your opportunity to rejoice in your child’s growing independence, both personal and financial. </p>
<p paraeid="{c9d66093-c31d-4f84-9605-38a82fb6b0a3}{150}" paraid="1011334837">As with any new endeavor, your child may feel bewildered by the prospect of completing the new-hire paperwork and benefit selections and may be looking for a roadmap. Consider sharing the following tips and information with your child to clarify the various tax and benefit elections your child may be offered. </p>
<p paraeid="{c9d66093-c31d-4f84-9605-38a82fb6b0a3}{214}" paraid="942677030"><font color="#8b1d41"><strong>Where did my paycheck go? Ah, taxes… </strong></font></p>
<p paraeid="{c9d66093-c31d-4f84-9605-38a82fb6b0a3}{238}" paraid="677784369"><strong>Tax withholdings </strong></p>
<p paraeid="{c9d66093-c31d-4f84-9605-38a82fb6b0a3}{250}" paraid="1508394759">Known as the Form W-4 and titled “Employee’s Withholding Certificate,” this form tells your employer how much to set aside from each paycheck to cover your estimated federal income taxes. While you’ll still be responsible for filing an income tax return every April, accurately filling out the W-4 can help reduce the chance that you’ll overpay your taxes throughout the year or owe a large balance come April. Because income tax rates vary based on the taxpayer’s family structure, pay rate and the availability of deductions, taxation is not one-size-fits-all: the W-4 helps customize your tax withholdings. </p>
<p paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{87}" paraid="776009475">Key information that the IRS requests on a Form W-4 to determine your tax withholding includes: </p>
<ul style="margin-left: 40px;">
<li paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{109}" paraid="1709712940">Personal information, including your social security number and your marital status </li>
<li paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{122}" paraid="773010828">Your expected salary and additional household income (e.g., from a spouse or if you hold more than one job) </li>
<li paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{139}" paraid="2058280466">Number of qualifying children or other dependents in your home </li>
<li paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{146}" paraid="1657651364">Expected tax deductions that may help offset your taxes (e.g., mortgage interest deductions, charitable deductions, etc.) </li>
</ul>
<p paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{173}" paraid="724733433">Keep in mind that you may have to fill out a state-specific version of this form as well, unless you live and work in one of the states that don’t levy a state income tax. </p>
<table align="center" border="1" cellpadding="1" cellspacing="1" style="width:750px;">
<tbody>
<tr>
<td><span style="font-size:14px;"><strong>PRO TIP:</strong> If you find the W-4 overwhelming or confusing, check out the "Tax Withholding Estimator" on irs.gov, which is an interactive tool that indicates what withholdings you should claim by answering questions. </span></td>
</tr>
</tbody>
</table>
<p paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{194}" paraid="1106252400"> </p>
<p paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{194}" paraid="1106252400"><strong>Other paycheck withholdings </strong></p>
<p paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{226}" paraid="453182766">On top of your income tax withholdings, you will typically see the following taxes and deductions taken directly from your paycheck each pay period: </p>
<ul style="margin-left: 40px;">
<li paraeid="{8af03b65-6108-490d-a28f-e8e3634897d1}{250}" paraid="1709791414">Federal Insurance Contributions Act (“FICA”): If you see this acronym on your paystub, it’s a combination of OASDI and Medicare taxes (see the bullets below). </li>
<li paraeid="{3f4a4024-3b2d-4ec0-9b54-af06d0e82d9d}{12}" paraid="1140666121">Old-Age, Survivors, and Disability Insurance (“OASDI”): This amount is your contribution to the social security system. Contributions are mandatory for virtually all working Americans and the contributed amount is calculated as 6.2% of your wages (with the maximum annual contribution capped at $9,932.50). Your employer also is required to make a matching contribution, which is not taxable to you. </li>
<li paraeid="{3f4a4024-3b2d-4ec0-9b54-af06d0e82d9d}{57}" paraid="1661090775">Medicare: The Medicare tax rate is 1.45% of your “Medicare taxable wages” (that is, your wages after some deductions are taken out). You may also be liable for an additional Medicare tax of 0.9% if your income is above certain thresholds. Your employer also is required to make a matching contribution. </li>
<li paraeid="{3f4a4024-3b2d-4ec0-9b54-af06d0e82d9d}{86}" paraid="1740546959">Family leave insurance: Several states and Washington, D.C. have mandatory paid family leave insurance programs. While the costs vary, if your employer is located in one of these states or if you work in a state that has a mandatory program, you may be required to contribute. </li>
<li paraeid="{3f4a4024-3b2d-4ec0-9b54-af06d0e82d9d}{141}" paraid="395680215">State disability insurance: A handful of states also have mandatory disability insurance requirements to replace wages for people who are ill, injured or otherwise unable to work. The benefits and costs vary by state. </li>
<li paraeid="{3f4a4024-3b2d-4ec0-9b54-af06d0e82d9d}{158}" paraid="869857156">Deductions for benefits: You are likely to see deductions in your paycheck for costs associated with employer-provided benefits, including health insurance, retirement contributions, and other benefits (all described below). </li>
</ul>
<p paraeid="{3f4a4024-3b2d-4ec0-9b54-af06d0e82d9d}{195}" paraid="1670187896"><strong>Getting paid </strong></p>
<p paraeid="{3f4a4024-3b2d-4ec0-9b54-af06d0e82d9d}{205}" paraid="1136104541">If you work for an established business, you will most likely be offered the option of having your paycheck deposited directly into a checking or savings account. To set up this “direct deposit” option, you’ll be asked to fill out a form with your bank account and routing numbers, both of which you can find on a standard check or in your online banking app. On pay day, the money will show up in your account as a credit. If you’re working for a family or an individual, direct deposit may not be available; you could be paid via cash, check or electronic transfer. </p>
<p paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{6}" paraid="1835830810">Regardless of payment method, you should receive a paystub reflecting your gross pay (that is, your pay before tax withholdings and other deductions) and your net pay (the amount you actually received). </p>
<table align="center" border="1" cellpadding="1" cellspacing="1" style="width:750px;">
<tbody>
<tr>
<td><span style="font-size:14px;"><font style="arial"><strong>PRO TIP:</strong> Even if the option is available, beware of the temptation of "off-the-books" payments. While avoiding taxes and other withholdings may seem attractive, you'll be forfeiting the opportunity to prove your income in a housing search or when applying for a loan, to save for retirement, to build your social security earnings record and to guard against on-the-job injuries or other disabilities. On top of that, you'll be taking a legal risk by not reporting your income. </font></span></td>
</tr>
</tbody>
</table>
<p paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{35}" paraid="430567406"> </p>
<p paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{35}" paraid="430567406"><strong><font color="#8b1d41">Your (wise) choice: selecting benefits </font></strong></p>
<p paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{75}" paraid="2041226406"><strong>Retirement savings elections </strong></p>
<p paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{93}" paraid="1930277536">If your company offers a retirement savings plan — like a 401(k), Profit Sharing Plan, 403(b) or the like — this is your opportunity to pay your future self by setting aside money for retirement. While retirement may seem like a long way away, the best time to start saving is now. Plus, the amounts you set aside today might help you reduce your current income tax liabilities. </p>
<p paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{164}" paraid="1134725834">Consider a few of the retirement options your employer may offer: </p>
<p paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{182}" paraid="898211633"><strong>1. Pre-tax plans </strong></p>
<ul role="list" style="margin-left: 40px;">
<li paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{182}" paraid="898211633">If your employer offers a traditional retirement plan — usually a 401(k) or a 403(b) (named for the sections of the tax code where they are described) — you’ll need to choose how much of your paycheck you’d like to contribute and how you’d like it to be invested. As of 2023, the IRS allows an employee to save up to $22,500 in this type of tax-deferred employee retirement account (with an additional $7,500 “catch up” contribution allowed if you are over 50 years old). </li>
<li paraeid="{5a547c59-00f2-4f74-951b-50aab8aad2a1}{182}" paraid="898211633">Money contributed to this type of retirement account comes out of your paycheck pre-tax. Keep in mind, however, that you’ll pay income taxes when you withdraw this money (and its growth) in retirement. </li>
<li aria-setsize="-1" data-aria-level="1" data-aria-posinset="3" data-font="Courier New" data-leveltext="o" data-list-defn-props="{"335552541":1,"335559684":-2,"335559685":1530,"335559991":360,"469769226":"Courier New","469769242":[9675],"469777803":"left","469777804":"o","469777815":"hybridMultilevel"}" data-listid="10" role="listitem">
<p paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{12}" paraid="1062020700">Some employers also add to their employees’ retirement accounts on a matching or non-matching basis. Even if you find it difficult to part with the dollars you’ve just begun earning to save for retirement, consider contributing enough each year to qualify for a matching employer contribution, if it’s offered. Otherwise, you’re leaving free money on the table. </p>
</li>
</ul>
<p paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{12}" paraid="1062020700"><strong>2. Post-tax plans </strong></p>
<ul style="margin-left: 40px;">
<li paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{70}" paraid="1783108190">Your employer’s retirement plan may also offer a Roth 401(k) or Roth 403(b) retirement plan. While you’re still limited to a total contribution of $22,500 (for 2023), you can decide how to allocate that contribution between the traditional options outlined above and Roth options. </li>
<li paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{99}" paraid="181419994">With a Roth plan, your contributions are taxed today, but will grow income-tax free until you’re ready to access it. Even the earnings inside a Roth can be distributed tax-free, assuming you follow certain rules. </li>
<li paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{132}" paraid="406555495">Some employers also allow workers to make post-tax contributions to a regular 401(k), but this is an unusual choice that you should consider only after maximizing your other options. </li>
</ul>
<table align="center" border="1" cellpadding="1" cellspacing="1" style="width:750px;">
<tbody>
<tr>
<td><strong>PRO TIP: </strong>If your employer does not offer a retirement plan, if you want to contribute more to retirement than what you can contribute to your employer's plan, or if you want more control over your retirement investments, you might consider contributing to an Indvidual Retirement Account (aka an "IRA") or to a Roth IRA. You can contribute up to $6,500 per year (as of 2023) to an IRA, Roth IRA or some combination of the two (and another $1,000 if you are over 50 years old), even if you have already contributed to your employer's plan. Your contribution to a traditional IRA can be made on a pre-tax basis as long as your income is not over a certain threshold. Your contribution to a Roth IRA is made on an after-tax basis (and you may not be able to contribute directly to a Roth IRA if your income exceeds certain thresholds). </td>
</tr>
</tbody>
</table>
<p paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{152}" paraid="2041730028"> </p>
<p paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{152}" paraid="2041730028"><strong>Health insurance </strong></p>
<p paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{202}" paraid="432807484">If you are under 26, you may have the option of staying on your parents’ health insurance plan. For everyone else, you may have to make some choices about how to plan for medical expenses. If you are covered under a spouse or partner’s plan, you both should review the offerings at each workplace and decide whether it makes sense to enroll in separate plans or to pick one or the other for both of you to use. </p>
<p paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{228}" paraid="1027959143">Items to consider when evaluating the offerings: </p>
<ul style="margin-left: 40px;">
<li paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{236}" paraid="1867676393">Are your current doctors in network? </li>
<li paraeid="{f6239436-fda9-4df4-9db7-c4eed74f0121}{243}" paraid="1185982076">Do you have the option to choose a high-deductible plan and enroll in a health savings account (HSA)? If you are generally in good health, this can be a great way to reduce your spending and/or save money for future health expenses. </li>
<li paraeid="{5ef7c05b-9885-47b3-8dfb-02198685743e}{13}" paraid="1165978379">If offered, do you want to enroll in dental or vision insurance? Keep in mind that your primary health insurance may offer limited dental or vision care, but if that is not sufficient for your needs, additional dental or vision coverage may make sense. </li>
<li paraeid="{5ef7c05b-9885-47b3-8dfb-02198685743e}{54}" paraid="32485338">Does your company offer a flexible spending account where you can contribute money, pre-tax, to help cover eligible medical expenses not otherwise paid for by insurance (e.g. co-pays, deductibles, pharmacy expenses)? Does your employer contribute to this account? </li>
</ul>
<p paraeid="{5ef7c05b-9885-47b3-8dfb-02198685743e}{89}" paraid="1658824425">Keep in mind that most employers allow you to change your health insurance benefits each year during a re-enrollment period (usually toward the end of the calendar year, but not always) to allow you to switch plans as your needs change. Certain life events can also give you the chance to change your coverage elections. </p>
<table align="center" border="1" cellpadding="1" cellspacing="1" style="width:750px;">
<tbody>
<tr>
<td><strong>PRO TIP:</strong> If you choose a high deductible health insurance plan, you may have the opportunity to open an HSA, which allows you to set aside, pre-tax, an annual amount to help cover health expenses such as your deductibles and co-pays. For 2023, individuals can save up to $3,850 and families can save as much as $7,750. Any amounts that are not needed for current health expenses can be invested and grown (tax-free) for future use. Plus, distributions from an HSA are also received income-tax free as long as they are used to cover qualified medical expenses. It's one of the only savings accounts that offers tax-free treatment of contributions, earnings and distributions and can be very beneficial in saving for future health expenses. </td>
</tr>
</tbody>
</table>
<p paraeid="{5ef7c05b-9885-47b3-8dfb-02198685743e}{126}" paraid="1206890408"> <br />
<strong>Dependent care </strong></p>
<p paraeid="{5ef7c05b-9885-47b3-8dfb-02198685743e}{136}" paraid="1905377493">Some employers may offer a dependent care flexible savings account (aka “dependent care FSA”), which allows you to set aside money from your paycheck on a pre-tax basis to help pay for dependent care services, such as daycare, preschool, summer day camps, before- or after-school programs or adult day care. This is a great option if you have expenses related to the care of younger children (under the age of 13) or a dependent adult living in your home who needs care. Make sure to read the fine print to understand which expenses are covered as any amounts left in this account at the end of year are forfeited. </p>
<p paraeid="{5ef7c05b-9885-47b3-8dfb-02198685743e}{230}" paraid="34402078"><strong>Life and disability insurance </strong></p>
<ul style="margin-left: 40px;">
<li paraeid="{5ef7c05b-9885-47b3-8dfb-02198685743e}{246}" paraid="2013803933">Life insurance:
<ul>
<li paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{2}" paraid="195033619">Your company may provide a small amount of life insurance coverage at no cost to you. If you need additional life insurance, or if your spouse needs insurance, you may be able to get it through your employer and pay the premiums directly from your paycheck. </li>
<li paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{41}" paraid="1161693663">Keep in mind that if you are healthy, you may be able to get additional insurance for a better price by seeking insurance outside of an employer plan. Additionally, you won’t lose your private insurance if you end up changing your employer down the road. </li>
</ul>
</li>
<li paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{76}" paraid="193241350">Disability insurance:
<ul>
<li paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{91}" paraid="767974209">Some small amount (short-term, long-term, or both) may be included in your benefit plan at no cost to you with an option to increase the benefit coverage for an additional charge. Although becoming disabled may seem far-fetched, it’s important to consider this type of insurance to help protect yourself and your family should you be unable to work for a short or extended period of time. </li>
<li paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{122}" paraid="2014150089">As with life insurance, it may be more cost effective to purchase supplemental disability insurance outside of your company’s offering. </li>
</ul>
</li>
</ul>
<p paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{145}" paraid="965186189"><strong>Conclusion </strong></p>
<p paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{151}" paraid="554566238">Understanding and properly completing employment-related tax and benefit elections is a key factor in helping your child attain financial independence. Reach out to your <a href="https://private-wealth.us.cibc.com/contact">CIBC Private Wealth relationship manager</a> for more information. </p>
<p paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{173}" paraid="830311716"> </p>
<p paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{179}" paraid="949776992"><cite><a href="https://private-wealth.us.cibc.com/amanda-regnier1" rel="noreferrer noopener" target="_blank">Amanda Regnier </a>is a senior wealth strategist for CIBC Private Wealth in New York, with over 15 years of industry experience. In this role, she is responsible for developing integrated wealth management solutions and providing comprehensive estate and financial planning services to high-net-worth clients. </cite></p>
<p paraeid="{1c9bfa7a-a42f-4a2a-bbe4-11cfff05443d}{200}" paraid="1370641303"> </p>Amanda Regnier2023-10-03T18:32:00ZRoad to financial independence: BudgetingCaroline McKayhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9505352023-12-06T22:12:59Z2023-08-24T14:22:00Z<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">This is the first blog in a four-part series, designed to help you engage your adult children in conversations about financial planning. Read all of our entries in the Road to financial independence series:</span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 2: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-starting-a-new-job">Starting a new job</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 3: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/a-beginners-voyage-to-wealth-investing-101">Investing 101</a> </span></span></span></span></em></p>
<p style="margin-bottom:11px"><em><span style="font-size:11pt"><span style="line-height:107%"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">Part 4: <a href="https://private-wealth.us.cibc.com/blog/-/blogs/road-to-financial-independence-helping-children-on-their-financial-journey">Helping children on their financial journey</a> </span></span></span></span></em></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:305.35pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">There are certain key milestones that we associate with reaching adulthood, such as turning 18, graduating from college or getting a first full-time job. But, as more experienced adults can attest, there is usually no singular event or milestone that transforms a child into an adult. Instead, becoming an adult is more of a journey than a final destination and our experiences and know-how gained over time help shape our ability to navigate the adult world. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:305.35pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">One of the most common challenges on this journey is balancing spending and savings. It is not unusual for individuals or families, no matter their level of income, to find that their spending exceeds their income or inhibits their ability to save. And, for some, this issue is habitual and ongoing. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:305.35pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Enter a tried-and-true planning strategy designed to help effectively manage finances, save for the future, and ensure financial stability: <b>the budget.</b></span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:305.35pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">While the word “budget” may conjure images of a stern taskmaster withholding the things you want, a budget can actually help you get <i>more</i> of what you want in the long run by guiding you to attentively watch your spending and to set short- and long-term savings goals. Budgeting means creating a unique plan for spending and saving your money: it involves analyzing your income, expenses and financial goals to ensure that your spending aligns with your priorities. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="tab-stops:305.35pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">If you have a child who is interested in budgeting or who could benefit from this process, consider sharing these four key steps to creating a custom budget:</span></span></span></span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:115%"></span></span></b><b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></b></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">1. Understand your financial situation </span></span></span></b></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Before setting a budget, it’s imperative to understand your current financial situation. If you don’t know exactly where your money is going each month, you can’t identify opportunities to redirect that income toward more productive uses or toward savings. To start:</span></span></span></span></span></span></p>
<ul style="margin-left: 40px;">
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Evaluate your income sources: This includes your after-tax income from employment, contract or consulting work as well as investments, gifts and trusts for your benefit.</span></span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Next, categorize your expenses as either non-discretionary or discretionary. </span></span></span></span></span></span>
<ul style="list-style-type:circle">
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><b><i><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Non-discretionary expenses</span></span></span></i></b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"> are those that must be paid to meet your or your family’s<b><i> </i></b>essential living needs, such as rent/mortgage, utilities, car payments, groceries, insurance, and other obligations. These are “needs” rather than “wants.” <b><i></i></b></span></span></span></span></span></span></li>
<li style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><b><i><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Discretionary expenses</span></span></span></i></b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"> are the other expenses that tend to make life more fun and colorful but that aren’t absolutely necessary. These are the “want” expenses, such as dining out, entertainment, subscriptions, club memberships, travel and charitable contributions.</span></span></span></span></span></span></li>
</ul>
</li>
</ul>
<table align="center" border="1" cellpadding="1" cellspacing="1" style="width:800px;">
<tbody>
<tr>
<td>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:106%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:106%"><span style="font-family:"Arial",sans-serif">TIP: </span></span></span></b><span style="font-size:10.0pt"><span style="line-height:106%"><span style="font-family:"Arial",sans-serif">Remember that some of your expenses may <span style="color:black">be</span> billed quarterly, semi-annually or annually, so you may need to review a year’s worth of spending to capture all expenses<span style="color:black">. Then, calculate how much you need to set aside each month to be ready for the periodic bills.</span></span></span></span></span></span></span></p>
</td>
</tr>
</tbody>
</table>
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" style="position:absolute; margin-top:1px; width:521.25pt; height:51.75pt; z-index:251658240; v-text-anchor:top"> <v:textbox> </v:textbox></v:rect></o:wrapblock></span></span></span></p>
<p><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></p>
<ul style="margin-left: 40px;">
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"></span></span></span><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Lastly, determine whether there is a regular shortfall between income and spending. Use the budget models discussed below to identify areas to reduce spending, starting with your discretionary expenses, to increase savings. If you find that you have a surplus, evaluate how that surplus is being saved and whether it aligns with the next step: your savings goals.</span></span></span></span></span></span></li>
</ul>
<p style="margin-left:48px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:115%"></span></span></b><b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">2. Create savings goals </span></span></span></b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Formulate savings goals based on your short-term and long-term financial objectives. Consider the following tips for setting your goals:</span></span></span></span></span></span></p>
<ul style="margin-left: 40px;">
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><b><i><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Prioritize building an emergency fund.</span></span></span></i></b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"> An emergency fund is a savings account with enough money to cover three to six months’ worth of your living expenses. This designated fund ensures that you are prepared for the unexpected curveballs life may throw at you, such as a surprise car repair bill, a medical emergency or a job loss. Your emergency fund is a cushion to protect you from going into debt from unforeseen events. </span></span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><b><i><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Identify your short-term and long-term savings goals</span></span></span></i></b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">: What are your financial aspirations? Do you want to…</span></span></span></span></span></span>
<ul style="list-style-type:circle">
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">buy a new car? </span></span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">go on a vacation? </span></span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">pay down debt? </span></span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">buy a home? </span></span></span></span></span></span></li>
<li style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">retire? </span></span></span></span></span></span></li>
</ul>
</li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">These are just a few prompts to think about. Once you have determined your financial goals, organize them by the length of time you expect it will take to achieve. A vacation goal would most likely fall under a short-term goal (a few months to a few years), whereas retirement most likely will be a long-term goal (5+ years). Think about how much money you need to be saving and investing now to achieve these goals, given their time horizons and a realistic estimate of investment returns. </span></span></span></span></span></span></p>
<p style="margin-left:48px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:115%"></span></span></b><b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">3. Determine your budgeting method</span></span></span></b></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Once you have assessed your present financial situation and created your savings goals, it’s time to create a budget by choosing a budgeting method. There are a variety of budgeting methods to choose from, but one of the most popular is the 50/30/20 method: about 50% of your income should go toward needs, 30% toward wants, and 20% toward savings. </span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Using the 50/30/20 method, review your income and expenses from Step 1 and see how your spending and savings align with these targeted percentages. For example, upon reviewing your spending:</span></span></span></span></span></span></p>
<ul style="margin-left: 40px;">
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Is your overall spending putting you into debt? </span></span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Do your discretionary expenses (the “wants”) exceed 30% of your available income on a regular basis? </span></span></span></span></span></span></li>
<li style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"></span></span><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Are you saving at least 20% of your income toward your savings goals? </span></span></span></span></span></span></li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Use this rubric to identify opportunities to reduce spending, starting with discretionary expenses, to meet your savings goals. When possible, prioritize paying yourself first! This means filling the 20% savings bucket before allocating money to the 50% and 30% categories. A helpful way to think about this is:</span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span></p>
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<p align="center" style="text-align:center"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#76923c">Right way</span></span></span></b><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></b></span></span></span></p>
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<p align="center" style="text-align:center"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#c0504d">Wrong way</span></span></span></b><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></b></span></span></span></p>
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<p align="center" style="text-align:center"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Income – Savings = Funds available for expenses</span></span></b></span></span></span></p>
<p><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></p>
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<p align="center" style="text-align:center"><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Income – Expenses = Funds available for savings</span></span></b></span></span></span></p>
<p><span style="font-size:11pt"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></p>
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<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">4. Track and monitor your budget</span></span></span></b></span></span></span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></b></span></span></span>Once you have the basics down, continue to track your spending and savings to ensure that your actions are aligned with the priorities you’ve set in your budget. It may not be exciting, but it’s a necessary part of the process for financial stability. Regularly sit down and review your budget. Understand where your money is going each month. Continue to reduce unnecessary spending when you can. Check to see whether you are on track to achieve your financial goals, or whether your goals have changed. Monitoring your budget and adjusting it when necessary is essential to your financial health.</span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Conclusion</span></span></span></b></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif">Budgeting is a powerful tool to clarify finances, maximize dollars, achieve financial aspirations and navigate the transition into financial independence. Reach out to your CIBC Private Wealth relationship manager for more information. </span></span></span></span></span></span></p>
<p style="margin-bottom:13px"> </p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><cite><a href="https://private-wealth.us.cibc.com/caroline-mckay1">Caroline McKay</a> is a senior wealth strategist for CIBC Private Wealth in Boston, with over 15 years of industry experience. In this role, she is responsible for developing integrated wealth management solutions and providing comprehensive estate and financial planning services to high-net-worth clients.</cite></p>Caroline McKay2023-08-24T14:22:00ZRMD relief for certain individuals in 2023Caroline McKayhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9463632023-08-03T19:52:41Z2023-08-03T19:45:00Z<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">On July 14, 2023, the Internal Revenue Service (IRS) issued Notice 2023-54, providing relief related to required minimum distributions (RMDs) for certain individuals. The Notice is intended to address administration concerns following the passage in 2022 of SECURE 2.0<sup>1</sup> and proposed regulations related to inherited individual retirement accounts (IRAs) issued in 2022. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">The Notice provides relief for taxpayers in two key areas:</span></span></span></span></span></span></span></p>
<ul>
<li style="margin-bottom:13px; margin-left:8px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:Symbol"></span></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">For IRA owners born in 1951: Distributions received in 2023 mistakenly characterized as RMDs can be contributed back to a retirement account, if done so by September 30, 2023; and</span></span></span></span></span></span></span></li>
<li style="margin-bottom:13px; margin-left:8px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:Symbol"></span></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">For certain inherited IRA beneficiaries: No penalty will be incurred for failing to take a “specified RMD” (defined below) in 2023.</span></span></span></span></span></span></span><br />
</li>
</ul>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">Background</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"></span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">At the end of 2022, President Biden signed the Consolidated Appropriations Act, 2023 into law. Among other things, the Act incorporated several provisions affecting retirement plans (commonly referred to as SECURE 2.0). In particular, SECURE 2.0 increased the age at which individuals must start taking RMDs from 72 to 73, starting in 2023, and further increased this beginning date to age 75, starting in 2033. Consequently, for those born in 1951 and turning 72 years old in 2023, no RMD would be required for 2023. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">Because SECURE 2.0 was enacted at the end of 2022, plan administrators voiced concern that their automated payment systems may not get updated in time to reflect the increase in the RMD age from 72 to 73, resulting in the possible mischaracterization of distributions to account owners born in 1951 as an RMD. Because a payment characterized as an RMD is not eligible to be rolled over tax-free into a retirement plan under the typical 60-day rule, the account owner receiving this mischaracterized payment would have no choice but to keep the distribution and pay taxes—unless the IRS provided relief.</span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">Also in 2022, the Treasury Department issued proposed regulations requiring beneficiaries of an inherited IRA who are subject to a 10-year withdrawal period to take RMDs in years one through nine, with full distribution by year 10 (referred to collectively as “specified RMDs”), in the event the account owner died after their required beginning date. Because the RMD requirement under the 10-year rule was a departure from how the IRS had previously explained the rules, a subsequent notice released in October of 2022 provided relief for inherited IRA beneficiaries who did not take a specified RMD in 2021 or 2022, but indicated that a specified RMD would be required in 2023 if the proposed regulations were finalized. </span></span></span></span></span></span></span><br />
</p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:normal"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">RMD guidance for 2023</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"></span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><b><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">For retirement account owners born in 1951. </span></span></span></i></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">For account owners born in 1951, no RMD is required until April 1, 2025 (i.e., April following the year in which the owner turns 73). However, should such an account owner mistakenly receive a distribution in 2023 characterized as an RMD, the IRS is allowing the mischaracterized amounts to be rolled back into an eligible retirement account up until September 30, 2023. This relief is provided as an exception to the typical 60-day rule, which generally limits tax-free rollover distributions to a 60-day period and does not apply to RMDs. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">For example, if an account owner born in 1951 received a single-sum distribution in January 2023, part of which was mischaracterized as an RMD, that owner will have until September 30, 2023, to roll over that mischaracterized part of the distribution into a retirement account without having to pay taxes. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><b><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">For inherited IRA beneficiaries subject to a 10-year distribution period. </span></span></span></i></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">Although the IRS indicated in its October 2022 Notice that specified RMDs would be required starting in 2023, the recently released July Notice relieves IRA beneficiaries of such requirement by waiving the excise tax typically associated with not taking an RMD. Consequently, for beneficiaries subject to the 10-year rule (applicable if the account owner died after 2019 and on or after his or her required beginning date), no RMD will be required until 2024. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">To understand how this latest relief from the IRS may apply to your particular situation, please consult with your CIBC Private Wealth team as well as your legal and tax advisors. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">To learn more about other retirement changes enacted under SECURE 2.0, you can read our summary </span></span></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"><a href="https://private-wealth.us.cibc.com/blog/-/blogs/secure-2-0-recent-changes-to-retirement-plans" style="color:blue; text-decoration:underline">here</a></span></span></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333">. </span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"> </p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"></span></span></span></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="background:white"><span style="line-height:15.0pt"><span style="font-family:Calibri,sans-serif"><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"><a href="https://private-wealth.us.cibc.com/caroline-mckay1" style="color:blue; text-decoration:underline">Caroline McKay</a></span></span></span></i><i><span style="font-size:10.0pt"><span style="background:white"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"> is a senior wealth strategist for CIBC Private Wealth in Boston, with over 15 years of industry experience. In this role, Caroline is responsible for developing integrated wealth management solutions and providing comprehensive estate and financial planning services to high net worth clients.</span></span></span></span></i><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:#333333"></span></span></span></i></span></span></span></span></p>
<p style="margin-bottom:13px"><span style="font-size:11pt"><span style="line-height:115%"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="line-height:115%"><span style="font-family:"Arial",sans-serif"></span></span></span></span></span></span></p>
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<p class="MsoFootnoteText"><span style="font-size:10pt"><span style="font-family:Calibri,sans-serif"><sup>1</sup> SECURE 2.0 builds on the Setting Every Community Up for Retirement Enhancement Act of 2019.</span></span></p>
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</div>Caroline McKay2023-08-03T19:45:00ZFOMC UpdateGary Pzegeo, CFAhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9443002023-07-26T21:37:45Z2023-07-26T21:36:00Z<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">The Federal Reserve (Fed) raised its policy rate to a target range of 5.25% to 5.50%. The Fed briefly paused its rate hiking program in June with a message that it expected to deliver two additional 0.25% increases before the end of 2023. The Fed paused in order to assess the impact of rate hikes on economic and credit conditions. Recent strength in the economy and relative stability within the banking system appear to have given the Fed enough comfort to resume tightening.</span></span></span><strong><span style="font-weight:normal"></span></strong></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Current Conditions</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – The Fed’s statement regarding economic conditions was broadly similar to their June release. The economy is expanding at a moderate pace and core inflation remains high despite a better than expected June Consumer Price Index (CPI) release. Powell noted that a stronger economy could lead to higher inflation.</span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Forward Guidance</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – Today’s rate increase does not indicate a predetermined round of hikes similar to last year’s aggressive tightening. Powell stated that the Committee would take a “meeting by meeting” approach to policy and could hike or pause in September depending on the data. Powell added that the Fed has a long way to go on inflation and that they would not be cutting rates this year. </span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Policy/Market Reaction</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – Today’s move was unanimously approved by the Committee. Quantitative tightening will continue at its previous pace. Bond market volatility was uncharacteristically low following the meeting with short-term yields marginally lower. Futures markets currently place a 20%-25% probability on another rate increase at either the September or November Fed meeting.</span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"> </p>
<p style="margin-right:19px; margin-left:24px"><cite><a href="https://private-wealth.us.cibc.com/gary-pzegeo">Gary Pzegeo, CFA</a> <em>joined the firm in 2007 as head of fixed income, focusing on portfolio management, trading, policy formulation and client service.</em></cite></p>Gary Pzegeo, CFA2023-07-26T21:36:00ZEconomic Update: Employment ReportGary Pzegeo, CFAhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9394822023-07-07T20:05:08Z2023-07-07T20:02:00Z<p style="margin-right: 19px;">The U.S. economy added 209,000 jobs in June. The increase was lower than market expectations for a gain of 230,000. Job gains in the prior two months were revised lower by 110,000. Markets were building in higher expectations based on surprising strength in economic data in recent days. June’s increase was the lowest since December 2020, but the pace of deceleration remains slow. The three-month average increase of 244,000 is just 34,000 below the six-month average. The Bureau of Labor Statistics (BLS) Establishment Survey noted mixed results by economic sector. Government, Health and Education sectors added a total of 133,000 jobs while the Retail and Transport/Warehousing sectors lost a total of18,000.</p>
<p>The slower pace of job gains remains in-line with trends in labor force growth, which leads to little change in the unemployment rate derived from the BLS’s Establishment Survey. June’s rate of 3.6% is equal to the level from a year earlier and the rate has moved in a narrow range of 0.3% for the last 16 months.</p>
<p>Average hourly earnings – a proxy for wage growth – rose 0.4% for the month and 4.4% vs. a year ago. The monthly data was 0.1% higher than consensus expectations and the prior two months were revised higher. The 3-month annualized rate of growth accelerated to 4.7%. Average weekly hours worked – a proxy for economic growth – rose for the month, but the quarterly average is slightly lower than the previous quarter’s average.</p>
<p style="text-align:center"><img alt="" height="292" src="https://private-wealth.us.cibc.com/documents/10184/0/7.17.23.png/9999c25b-eee1-8705-0398-bb077c964026?t=1688760283573" width="825" /></p>
<p style="margin-right: 19px;"><em><span style="font-size:9px;">Source: Bloomberg, US Bureau of Labor Statistics.</span></em></p>
<p>Bottom line: Labor market strength may be waning, but the pace of growth is not slow enough to bring wage growth to a non-inflationary rate. The Federal Reserve (Fed) will likely see today’s report and other recent releases as signals to proceed with another rate increase of 0.25% at their next meeting on July 26. Markets have been preparing for another Fed hike in recent days and short-term yields were little changed in response to the report. <br />
</p>
<p><cite><a href="https://private-wealth.us.cibc.com/gary-pzegeo">Gary Pzegeo, CFA</a> <em>joined the firm in 2007 as head of fixed income, focusing on portfolio management, trading, policy formulation and client service.</em></cite></p>Gary Pzegeo, CFA2023-07-07T20:02:00ZRetirement doesn’t mean the end of financial planningHalsey Schreierhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9352322023-06-20T21:05:24Z2023-06-20T21:03:00Z<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Congratulations! You’ve made it to retirement. All the working, planning and saving you’ve done over the last 30, 40 or even 50 years has led up to this moment.</span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">But just because you’ve reached retirement age doesn’t mean you can stop planning. Instead, it becomes even more important to continuously evaluate how your plan is working and adjust for life changes, market shifts and other events that could impact your cash flow and your portfolio. Without ongoing preparation, you could find yourself or your beneficiaries left short financially – especially when retirement can last two or three decades.</span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:14px;"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Financial planning during your retirement years</span></b></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Let’s take a look at some of the planning tasks you’ll need to tackle once you’re living in retirement, as well as some of the events that could lead to regular adjustments in your financial plan in your later years.</span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">1. Plan for required minimum distributions and sources of cash flow</span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><br />
If you own a qualified retirement account, such as a 401(k) or traditional IRA, you must begin taking required minimum distributions (RMDs) from your account starting at age 73. These distributions are counted as taxable income in the year in which you take them.</span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Since RMDs are taxable, any changes to when you must take them or how they are taxed could impact your retirement income, both positively and negatively. It’s a good idea to review your RMDs annually to see what adjustments you may need to make to your financial plan. These adjustments include assessing what accounts will fund your cash flow. Withdrawals from retirement accounts are taxable income, while withdrawals from accounts that were funded with after-tax dollars are not always taxable income. Working with your financial advisor and accountant will allow you to properly assess which source makes the most sense in any given year.</span></span></span></span><br />
</p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">2. Adjust for inflation</span></span></b><br />
<span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">The only constant over the years is change. That includes inflation, which needs to be accounted for in retirement. Because inflation is ever present, regular review of your cash flow model and retirement plan are key, especially in the early years of retirement. You never really know what the actual costs of retirement will be until you have settled into the new routine. Therefore, periodically looking at an updated cash flow model will ensure that your retirement is on the correct path. </span></span></span></span><br />
</p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">3. Manage market shifts</span></span></b></span></span><br />
<span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Economic environments constantly evolve – and when they do, it can lead to a big impact on your retirement income. If the market drops, inflation rises or the economy slows, you could end up with lower investment returns than expected. You may need to adjust your portfolio or your budget to make up for losses or slower-than-planned-for growth. Your financial advisor might also recommend altering your asset allocation to address unnecessary risk due to shifting market conditions.</span></span></span></span><br />
</p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">4.</span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"> <b> Address health care needs</b></span></span></span></span><br />
<span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">We never know when a medical issue may arise or how severe it may be. An unexpected health challenge could mean more of your retirement resources are directed toward current and future health care costs. It could also mean a change in plans for how you spend your retirement days. For example, if you’re working part-time in retirement, a health issue could result in giving up that job – and the income it brings in – earlier than expected.</span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">During your annual review, it’s a good idea to reassess your health situation and review how you will pay for medical costs when they arise. You may also want to review potential long-term care and Medicare coverage options (if you’re age 65 or older).</span></span></span></span><br />
</p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">5. Refresh your legacy plan</span></span></b></span></span><br />
<span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">A well-thought-out estate plan becomes even more important in the later part of life. But this isn’t a one-and-done task. Review trusts, wills and beneficiary designations at least annually to make sure your assets will be distributed according to your wishes. It’s also wise to establish a power of attorney and review it regularly to make sure it’s up to date.</span></span></span></span></p>
<p style="margin-bottom:11px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Let your loved ones know where they can find all important documents related to the handling of your estate. We also recommend introducing your grown children or grandchildren to your team of professionals, such as your financial advisor, attorney, accountant and insurance agent. Facilitating a relationship between your beneficiaries and your advisors can help ensure your legacy lives on long after you’re gone.</span></span></span></span><br />
</p>
<p style="margin-bottom:11px"><span style="font-size:14px;"><span style="font-family:Calibri,sans-serif"><b><span style="font-family:"Arial",sans-serif">Stay on track with a trusted financial partner</span></b></span></span><br />
<span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Creating your ideal retirement lifestyle starts by working with a trusted financial partner, no matter where you are in your journey to retirement. From investing and saving to future income and legacy planning, CIBC works with retirement savers of all ages and backgrounds. Visit our <a href="https://us.cibc.com/en/private-wealth.html" style="color:blue; text-decoration:underline">Private Wealth</a> page to learn more.</span></span></span></span></p>
<p style="margin-bottom:11px"> </p>
<p style="margin-bottom:11px"><span style="font-size:10pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><a href="https://private-wealth.us.cibc.com/halsey-schreier1" rel="noopener noreferrer nofollow" target="_blank"><strong><em>Halsey Schreier</em></strong></a> <em>is a senior wealth strategist for CIBC Private Wealth U.S. with more than 10 years of industry experience. In this role, he works closely with high net worth clients in New York, the Mid-Atlantic and the Southeast to provide integrated wealth management services, including comprehensive estate and financial planning solutions, multi-generational legacy planning and fiduciary administration for trusts and probate estates.</em></span></span></span></span></p>Halsey Schreier2023-06-20T21:03:00ZKeeping the peace: planning for cherished or valuable personal possessionsLeslie Kehoe and Theresa Marxhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9341862023-06-15T21:00:45Z2023-06-15T20:54:00Z<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">No matter what your net worth, you likely have tangible personal property that is important to you. While such a term typically does not elicit much emotion, the items that constitute tangible personal property — jewelry, artwork, collectibles, family heirlooms, antiques, household furniture, photos and the like — are often collected over a lifetime and represent a family’s story. In some instances, these items might also have tremendous financial value. Because of the sentiment these items represent, the potential market value and inability to easily divide certain pieces, personal items in your estate can often create the greatest source of conflict among those inheriting these assets.</span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Disputes over tangible personal property often arise when an owner has not left sufficiently detailed instructions for how these items should be divided or has not carefully considered an item’s value. For example, tangible personal property may pass under a will or revocable trust using a simple bequest that leaves “all items of personal tangible property, wherever located, to my children in equal shares” without specifying what should happen if an item is desired by more than one child and the children cannot agree to a resolution. Alternatively, an owner may have left a specific item to an individual without realizing the item’s value has appreciated significantly, unintentionally leaving other family members with much less.</span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">To help you try to avoid or at least minimize conflict over personal property, here are some important considerations:</span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">1. Have a clear plan:</span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"> Letting your loved ones know your wishes for your tangible personal property — during your life and at your death — may help prevent some disagreement among them. A good way to get started is to create a list of your personal items, particularly those that have the most sentimental value to you or your family and those that have the most market value. Then, working with your estate planning attorney, address the following questions:</span></span></span></span><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><img alt="" src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABAQAAAAA3bvkkAAAAAmJLR0QAAd2KE6QAAAAMY21QUEpDbXAwNzEyAAAAB09tt6UAAAAKSURBVBjTY2gAAACCAIGnAboQAAAAAElFTkSuQmCC" style="width:1px; height:1px" /></span></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Do you have certain items that you want specific individuals to receive? If some of these items are of great value, do you want to equalize the inheritance among your beneficiaries with other assets?</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">If some items should be divided as the beneficiaries agree, how should a conflict be resolved?</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">What should happen to the property if a particular beneficiary is not living or is a minor at the time of the transfer?</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Who should pay for appraisals, taxes, transport, insurance and other expenses related to the transfer of the property?</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><img alt="" src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABAQAAAAA3bvkkAAAAAmJLR0QAAd2KE6QAAAAMY21QUEpDbXAwNzEyAAAAB09tt6UAAAAKSURBVBjTY2gAAACCAIGnAboQAAAAAElFTkSuQmCC" style="width:1px; height:1px" />Do you have any unique assets, such as firearms, wine collections or reproductive property, that create special issues?</span></span></span></span></li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">2. Create a personal property memorandum:</span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"> One option for communicating your wishes for your tangible personal property may be a memorandum separate from your will that lists certain items of tangible personal property and the intended recipients. This is often a way to make sure your beneficiaries know exactly what your intentions are. If using such a memorandum, consider the following:</span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Many states allow residents to prepare a personal property memorandum that is legally binding, while other states provide that the memorandum is merely guidance to the executor and family.</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">A memorandum can be more convenient than putting specific bequests in your will because you can typically change the memorandum without observing the formalities of a will.</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">It is important to consult with your attorney to ensure the memorandum is consistent with applicable state law.</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Your memorandum should also be as specific as possible to avoid any questions or disagreements later.</span></span></span></span></li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">3. Remember all family members</span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">: Blended families may bring additional considerations for how you plan for your tangible personal property. While many people think the simplest approach is to leave all tangible personal property to their partner for distribution consistent with their intentions, that does not always work out as intended for a variety of reasons. For example:</span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Your partner may not have the capacity to carry out your intentions.</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Your partner may have (or may later develop) intentions contrary to yours.</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Your partner may pass away soon after you without having the opportunity to carry out your intentions.</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Instead of relying on your partner, you can prepare legally binding instructions in your will or in a personal property memorandum (as described above) as to which personal items should be given to your family members at your death.</span></span></span></span></li>
</ul>
<p style="margin-left:48px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><strong>4. Consider charitable beneficiaries: </strong>In addition to individual recipients, you can also specify one or more charities to receive certain items of your tangible personal property. Designating a charitable recipient can be desirable under many circumstances, including the following:</span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">To fulfill philanthropic goals</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">To avoid favoring one individual over another</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">To avoid disagreements over a particular item</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">To dispose of an unwanted item</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">To obtain a tax deduction</span></span></span></span></li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">5. Timing of transfer:</span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"> While many think of giving away their tangible personal property at death, it may also be beneficial to transfer certain items of personal property during life. The benefits of lifetime giving include:</span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Experiencing the joy that the item brings to the recipient</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Potential to avoid future conflicts over ownership and ability to equalize among family members by transferring multiple items</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Ability to transfer ownership without incurring a gift tax liability if the gift’s value is within the donor’s annual exclusion and/or lifetime gift tax exemption. Note that the recipient will have the same basis in the asset as the donor.</span></span></span></span><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> </span></span></li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">All is not lost for those who wish to hold onto all or some of their valuable personal property until death. Benefits of making a transfer at death include:</span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Ability to use and sell items, as necessary, for personal lifestyle and enjoyment</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Having more time to decide how items should be divided among beneficiaries</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:10pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Recipients receive a step-up in basis for income tax purposes, helping to eliminate or minimize income taxes if the asset is later sold</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:10pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Items may be able to pass free of federal estate tax depending on the size of the overall estate and the available estate tax exemption at death</span></span></span></span></li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Developing and documenting a clear plan regarding your tangible personal property helps to ensure that your wishes will be fulfilled and more likely that your beneficiaries remain harmonious.</span></span></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p> </p>
<p><cite><a href="https://private-wealth.us.cibc.com/leslie-kehoe">Leslie Kehoe</a> is a senior wealth strategist for CIBC Private Wealth in Atlanta, with more than 25 years of industry experience. </cite></p>
<p><cite><a href="https://private-wealth.us.cibc.com/theresa-marx1">Theresa Marx</a> is a senior wealth strategist for CIBC Private Wealth in Chicago, with 20 years of industry experience.</cite></p>
<p><cite>Reprinted with permission of Private Wealth magazine, 2023.</cite></p>Leslie Kehoe and Theresa Marx2023-06-15T20:54:00ZFOMC meeting updateGary Pzegeo, CFAhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9341712023-06-15T20:52:11Z2023-06-15T20:50:00Z<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">The Federal Reserve (Fed) left its policy rate unchanged at the target range of 5.00% to 5.25%. Markets have expected no change in rates at this meeting for the better part of the last two months. If there is a surprise in yesterday’s release it is in the Fed’s projection for an additional 0.50% of tightening by the end of 2023. Market pricing prior to the meeting discounted slightly better than 50/50 odds of one additional 0.25% rate increase in July.</span></span></span><strong><span style="font-weight:normal"></span></strong></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Current Conditions</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – The Fed described the economy in the same way they did following the March and May meetings. Growth has moderated from last year in response to higher rates. The labor market remains very tight despite recent signs of improved balance. Inflation remains well above the Fed’s goal. Credit conditions have been tightening. Banking system conditions have improved since the March meeting, but the impact of credit tightening remains uncertain.</span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Forward Guidance</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – The Fed’s statement notes that a pause in hiking should allow the Committee to assess additional information on the effects of the cumulative 5% increase in short-term rates. Rate projections released in the Fed’s Summary of Economic Projections (SEP) were increased by 0.50% in 2023, 0.38% in 2024 and 0.25% in 2025 when compared to March’s estimates. The economic assumptions supporting this change in rate projections include faster growth, lower unemployment and higher core inflation than previously expected for the current year.</span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"></span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:12pt"><span style="font-family:"Times New Roman",serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">Policy/Market Reaction</span></span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black"> – Yesterday’s move was unanimously approved by the Committee. Quantitative tightening will continue at its previous pace. The short-end of the U.S. Treasury curve pushed yields higher and flattened the yield curve to reflect the change in Fed rate projections. </span></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><cite><a href="https://private-wealth.us.cibc.com/gary-pzegeo">Gary Pzegeo, CFA</a> <em>joined the firm in 2007 as head of fixed income, focusing on portfolio management, trading, policy formulation and client service.</em></cite></p>Gary Pzegeo, CFA2023-06-15T20:50:00ZInflation report: Consumer Price Index (CPI) Gary Pzegeo, CFAhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9337142023-06-15T20:53:37Z2023-06-13T21:51:00Z<p style="margin-right:19px; margin-left:24px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">The Consumer Price Index (CPI) rose 0.1% in May from the prior month. The core CPI (ex food & energy) rose 0.4%. Both measures were in line with consensus expectations. Compared to a year ago, the total CPI was up 4.0%, while the core rate rose 5.3%. The annualized six month rates of change were 3.2% for the total and 5.1% for core. </span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif">According to the Bureau of Labor Statistics, the index for shelter was the largest contributor to the overall monthly increase in the CPI. Housing inflation increased by 0.6% in May but the sector has begun to decelerate as measured by the CPI. The large rental components are higher by over 8% compared to a year earlier and the annualized pace of gains over the last 3- and 6- months were down to +6.4% and +7.7%, respectively. Energy prices were lower by 3.6% in the month and are down over 11% over the past year, contributing to the disconnect between the headline and core measures. Core services inflation excluding housing, more commonly known as “super-core” inflation increased by 0.2% in May and is up by 4.7% over the prior year. This measure is seen as a proxy for service sector wages and has been slowly decelerating over the last few months.</span></span></span></p>
<p style="margin-right:19px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><u><span style="font-family:"Arial",sans-serif"><span style="color:#c00000">Bottom line</span></span></u><span style="font-family:"Arial",sans-serif">: The year-over-year headline CPI is running at less than one-half the pace of a year earlier but core inflation remains well above the Federal Reserve’s (Fed) long-term target. The pace of deceleration in headline inflation and concerns over general credit conditions should give the Fed enough reasons to keep rates steady at this week’s meeting. The slow pace of change in core inflation, however, may keep them from closing the door on further rate hikes later in the year. Stock and bond markets responded favorably to the release. Interest rate futures markets discount a small chance for a 25 basis point rate hike from the Fed at its June 14 meeting and have also removed most of the rate easing expectations built-in following the banking sector crisis in March. </span></span></span></p>
<p style="text-align:center"><img alt="" height="348" src="https://private-wealth.us.cibc.com/documents/10184/0/6.13.23.png/3c49cbf1-ecfa-b63a-f238-54b0d1182966?t=1686693451142" width="700" /></p>
<p style="margin-right:19px; margin-left:24px"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Source: Bureau of Labor Statistics</span></span></span></span></p>
<p style="margin-right:19px; margin-left:24px"> </p>
<p style="margin-right:19px; margin-left:24px"><a href="https://private-wealth.us.cibc.com/gary-pzegeo">Gary Pzegeo, CFA</a> <em>joined the firm in 2007 as head of fixed income, focusing on portfolio management, trading, policy formulation and client service.</em></p>Gary Pzegeo, CFA2023-06-13T21:51:00ZIs my money safe?Dan Sullivanhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9291042023-05-25T13:49:55Z2023-05-25T13:48:00Z<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Recent upheaval in the banking industry brought new attention to the safety and security of deposits and investments. </span></span></i><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">This blog is the first in a two-part series about the ways that bank and brokerage accounts are protected. <span style="color:black"></span></span></span></i></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Over the last several weeks, we’ve heard more questions about the safety and security of banks, and bank deposits than any time since the Great Recession in 2008 and 2009. While many of us take for granted that the deposits in our bank will be there when we need them, bank failures remind us that there are limits to those guarantees. The questions we were asked generally fall into three categories:</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<ul>
<li style="margin-left:8px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Do I need to be concerned about my deposits?</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">How does deposit insurance work?</span></span></span></span></li>
<li style="margin-left:8px"><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Are there alternatives to deposits that still give me quick access to cash?</span></span></span></span></li>
</ul>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Understanding what makes a bank stable and secure</span></span></b></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><br />
During the Great Recession, it was a credit crisis that toppled many banks. Specifically, easy access to credit for borrowers and lax underwriting standards for banks drove a housing bubble that, when it burst, collapsed several banks.</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">In March this year, the first bank to fall suffered a so-called “run on deposits” that had depositors seeking to withdraw more cash than the bank had on hand. This was fueled by the bank’s high concentration of deposits from one industry. The collapse of the first bank created a domino effect that led to two other large failures — together making up three of the four largest U.S. bank failures in history.</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Understanding this is important when considering the stability of your bank. At CIBC Bank USA, for example, we have a diverse deposit portfolio. While we do hold significant deposits from commercial clients, we manage our exposure to avoid concentration in any industry or geography.</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Banks like ours invest excess deposits to maximize our return. In at least one of the failures, the unrealized losses in the securities investments were significant, which contributed to sizable losses when the bank had to liquidate those holdings to respond to deposit withdrawals. In our case, unrealized losses in our securities portfolio are modest.</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">The benefits </span></span></b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">—<b> and limits </b>—<b> of deposit insurance</b></span></span></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><br />
Most banks in the U.S. are insured by the Federal Deposit Insurance Corporation, commonly known as the FDIC. In general, the FDIC insures up to $250,000 per customer, per lending institution, and the coverage applies to deposit accounts — checking, savings, money market and certificates of deposit, for example.</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Many of our private banking clients hold significantly greater than $250,000 in deposits with us, so we are often asked if there are ways to extend deposit insurance coverage. </span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">There are ways to maximize your deposit insurance within a single institution by leveraging different deposit categories such as single accounts, joint accounts, trusts or retirement accounts. It’s important to speak with your private banker to discuss your options and to ensure your accounts are set up appropriately. </span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Knowing your options</span></span></b></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><br />
There are ways to extend your deposit insurance even further. Our bank participates in a network of banks that spreads your deposits across insured institutions, up to allowable limits per institution. This is helpful because your CIBC banker manages the process for you. In some cases, clients chose to open accounts at multiple banks on their own, but that can be time consuming.</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">For some clients, another option is investing in Treasury bills — often called T-Bills — which are short-term debt obligations backed by the US Treasury Department. T-Bills have a maturity of 12 months or less, so while they don’t provide immediate access to cash, they are more liquid that other options. T-Bills also typically earn higher interest than basic deposit accounts.</span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">The bottom line</span></span></b></span></span><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><br />
Overall, the U.S. banking industry is solid. However, we recognize the uncertainty the recent upheaval brings. If you are concerned about your deposit strategy, please reach out to your CIBC Private Banker or ask your CIBC Relationship Manager for an introduction to a Private Banker today.</span></span></span></span></p>
<p> </p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><a href="https://private-wealth.us.cibc.com/daniel-sullivan-jr.">Dan Sullivan </a>is Head of U.S. Personal, Private and Digital Banking. With 25 years of experience, he has helped clients navigate through various opportunities and challenges. Dan and his team leverage a full suite of deposit and lending solutions as part of their clients’ overall financial strategy.</span></span></i><i><span style="font-family:"Arial",sans-serif"></span></i></span></span></p>Dan Sullivan2023-05-25T13:48:00ZWhat do you want for your retirement? If you’re in the latter part of your career, it’s time to start thinking about that question.Halsey Schreierhttps://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9153632023-04-17T19:00:29Z2023-04-17T18:56:00Z<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">The latter part of your career — in your 40s, 50s and early 60s — is the prime time to position yourself for a successful retirement. While your “post-work” years may still seem a long way off, the time will pass quickly. For some, retirement may come sooner than expected as layoffs, illness or the responsibility of caring for another may cause you to leave the workforce earlier.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">As a result, it’s important to start your retirement planning as early as possible. We previously discussed the <a href="https://private-wealth.us.cibc.com/blog/-/blogs/saving-for-retirement-in-your-20s-and-30s-your-future-self-will-thank-you" style="color:blue; text-decoration:underline">planning steps for your 20s and 30s</a>, including five actions you can take in your early career to set up “future you” for retirement success. Now let’s look at some things to consider as retirement draws closer and becomes a more tangible reality.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><b><span style="font-family:"Arial",sans-serif">Steps to take as you get closer to retirement</span></b><span style="font-family:"Arial",sans-serif"></span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><b><span style="font-family:"Arial",sans-serif">#1. Visualize your ideal retirement.</span></b><span style="font-family:"Arial",sans-serif"></span></span></span><span style="font-size:10pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Arial",sans-serif"><br />
Many people have a vague idea of what they want from their later years but no specific plans. People are far more likely to be able to enjoy their retirement years if they take the time to visualize and plan for it earlier in their working years. Sure, planning for the future is no guarantee that will go as you envisioned. However, answering a few questions can provide clarity and serve as a jumping-off point for the planning process.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Here are a few questions to ask yourself as you’re thinking about your ideal retirement:</span></span></span></p>
<ul>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">When do I want to retire?</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Where do I/we want to live?</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Will I continue working in some capacity? If so, do I want to work fewer hours or in a different capacity?</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">How do I want to spend my time in retirement and with whom? </span></span></span></li>
</ul>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Keep in mind that your answers to these questions may shift over time, particularly as you get older and your life circumstances change. We recommend asking yourself these questions every few years, writing down your answers each time so you can see how they evolve through the years.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><b><span style="font-family:"Arial",sans-serif">#2. Create a financial plan to match your goals.</span></b><span style="font-family:"Arial",sans-serif"></span></span></span><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif"><br />
Once you have a clear picture of what you want retirement to look like, you can begin to determine how much cash flow you’ll need to make it happen. This starts with a thorough assessment of the amount necessary to cover your fixed and variable expenses in retirement. These will likely include costs such as:</span></span></span></p>
<ul>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Housing, including mortgage or rental payments, insurance and repairs</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Transportation</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Food</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Clothing</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Taxes</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Medical and insurance premiums</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Travel</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Hobbies</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Gifts</span></span></span></li>
</ul>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">It’s not easy to anticipate how much you’ll spend in the future, especially if retirement is still 20 years off. However, you can use your current spending as a guide. Don’t forget to think about which expense categories might increase or decrease in your retirement years. For example, your housing expenses might decrease, especially if you downsize or pay off a mortgage. However, your medical costs will likely go up as you age.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><b><span style="font-family:"Arial",sans-serif">#3. Evaluate your current assets and future income.</span></b></span></span><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif"><br />
Now that you know how much money you’ll need to cover expenses in retirement, it’s time to assess potential gaps between those expenses and expected cash flow from your asset base. When planning with a client, we generally ask three questions as part of the evaluation process:</span></span></span></p>
<ol>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">How much cash flow will you need in your 60s, 70s and beyond to support your desired lifestyle?</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Are your projected assets sufficient to provide the necessary cash flow?</span></span></span></li>
<li style="margin-bottom:26px; margin-left:8px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">What steps could you take to address current or future gaps?</span></span></span></li>
</ol>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Gaps in your retirement plan occur for several reasons. Sometimes, they’re due to shifting market conditions, resulting in an underperforming portfolio. Or maybe you put a plan in place years ago, and it hasn’t been updated to reflect significant life changes. No matter why the gaps exist, there are usually some options for rectifying them.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">First, you may need to reallocate assets to realign with your risk tolerance and timeline. We often see this happen with clients who have been saving and investing for a long time, but haven’t adjusted their strategy as they’ve grown older. A second method to address gaps is to consider redistributing income into different “buckets,” utilizing a mix of tax-free and tax-deferred accounts. One example would be converting tax-deferred accounts (such as a traditional 401(k) or IRA) to a Roth IRA. By paying the taxes on the conversion now, you won’t pay taxes on distributions from a Roth account during retirement, but may have a greater tax burden during your working years. You want to discuss any potential Roth conversions with your financial and tax advisors</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><b><span style="font-family:"Arial",sans-serif">#4. Organize your financial life.</span></b><span style="font-family:"Arial",sans-serif"></span></span></span><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif"><br />
Other actionable items you can do as you draw closer to retirement include maxing out plan contributions as much as possible. If you’re age 50 or older, you can take advantage of higher “catch-up” contribution limits for employer-sponsored plans, IRAs and Roth IRAs. Now is also a good time to work on reducing or eliminating large monthly expenses, such as mortgage payments or credit card debt.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Your insurance needs likely will also change during this time. If your children have reached adulthood, you may no longer require life insurance and may be able to eliminate premium payments. However, your 40s and 50s are an ideal time to evaluate your potential need for long-term care insurance because premiums are typically lower when you buy a policy at a younger age and while you’re still healthy.</span></span></span></p>
<p style="margin-bottom:26px"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Evolving family dynamics may mean it’s time to update important legal documents, especially if you no longer have minor children or recently added new branches to your family tree. If you haven’t already, your 40s and 50s are ideal for establishing trusts, wills and powers of attorney. It’s best practice to review these documents on a regular basis, ensuring beneficiaries are up-to-date and your assets will be distributed according to your wishes.</span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Finally, we recommend establishing a relationship with a financial advisor if you haven’t done so already. You’ll be required to make many decisions as you journey through the second half of your career, and a financial advisor can help you understand the pros and cons as you weigh each decision and navigate the path to retirement.</span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif"></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-family:"Arial",sans-serif">Creating your ideal retirement lifestyle starts by working with a trusted financial partner, no matter where you are in your journey to retirement. From investing and saving to future cash flow and legacy planning, CIBC Private Wealth works with retirement savers of all ages and backgrounds. Visit our <a href="https://us.cibc.com/en/private-wealth.html" style="color:blue; text-decoration:underline">Private Wealth</a> page to learn more.</span></span></span></p>
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<p><cite><a href="https://private-wealth.us.cibc.com/halsey-schreier1" rel="noopener noreferrer nofollow" target="_blank"><strong><em>Halsey Schreier</em></strong></a> <em>is a senior wealth strategist for CIBC Private Wealth, US, with more than 10 years of industry experience. In this role, he works closely with high net worth clients in New York, the Mid-Atlantic and the Southeast to provide integrated wealth management services, including comprehensive estate and financial planning solutions, multi-generational legacy planning and fiduciary administration for trusts and probate estates.</em></cite></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><i><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></i></span></span></p>Halsey Schreier2023-04-17T18:56:00ZUncertainty in the fight against inflationBruce Katz, CFP®https://private-wealth.us.cibc.com/c/blogs/find_entry?p_l_id=255947&entryId=9144272023-04-20T16:23:13Z2023-04-13T18:55:00Z<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif">Higher rates were cooling prices — and then things got complicated</span></span></p>
<p style="text-align:center"><img alt="" height="303" src="https://private-wealth.us.cibc.com/documents/10184/0/MicrosoftTeams-image+%282%29.png/17f7ef47-420a-4439-038b-1f0e91f2566b?t=1682000972084" width="650" /></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><i>Source: US Bureau of Labor Statistics, 12-month percentage change, Federal Reserve Bank of St. Louis, as of April 2023.</i></span></span></span></span></p>
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<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">On <i>That ‘90s Show,</i> as Red and Kitty’s computer dials the internet — screeching and hissing toward a connection — the characters slump back on the couch to wait. That’s how the fight against inflation has felt, too — like it’s taking a long time and there is little we can do but wait for the Federal Reserve’s actions to have an effect. Now, with the closure of Silicon Valley Bank and Signature Banks , the Fed’s job has become more complicated.</span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">When inflation began to rise in 2021, Fed officials didn’t think inflation would stay above their 2 percent target for long. They believed prices would naturally drop as pandemic-related supply chain issues were resolved. However, by December of that year, inflation had become stickier. Prices paid for goods and services that are normally slow to respond to inflation — rent, medical care, and home goods — began to move higher. </span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">That forced the Fed to act. In 2022, it stopped buying bonds and began to reduce its balance sheet, a process known as quantitative tightening. In addition, the Fed began to raise rates. Since March 2022, the Fed has raised the federal funds rate nine times, increasing rates from near zero to 4.83%.<sup>1</sup></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><b><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Rate increases take 12 to 18 months to affect the economy</span></span></b></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">The federal funds rate is an important weapon in the war on inflation. When the Fed pushes the federal funds rate higher, it influences the economic cycle. Borrowing becomes more expensive as rates on credit cards and loans increase. Then, people and businesses begin to spend less, pushing demand for goods and services down. Often, lower demand for goods leads to layoffs and that means even less spending, which causes prices to drop.</span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">While rising rates are expected to drive inflation down, there is a lag time between the Fed’s actions and inflation moving lower. It usually takes 12 to 18 months for Fed actions to work their way through the economy. In this case, the United States economy has proved to be quite resilient despite the Fed’s efforts. While economic data suggests those actions have had some effect, inflation remains well above the Fed’s 2% target. </span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">The Fed’s efforts have been complicated by fears that were triggered by the collapse of </span></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><span style="color:black">SVB and Signature Banks. In addition to balancing persistently high inflation against economic growth, the Fed must now factor in financial stability concerns. </span></span></span><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"></span></span></span></span></p>
<p><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif">Uncertainty about future of rate increases and upheaval in financial markets have created opportunities for investors who embrace risk, while rising interest rates have created opportunities for investors who are risk averse. If you would like to talk about opportunities that might benefit your portfolio, contact your CIBC Private Wealth professional. </span></span></span></span></p>
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<p><em><span style="font-size:10t"><span style="font-family:Arial,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Arial",sans-serif"><a href="https://private-wealth.us.cibc.com/bruce-katz">Bruce Katz</a> is the chief growth officer, with more than 30 years of industry experience. In this role, he works to strengthen existing relationships and identifies and develops new opportunities for business alliances with external partners. Bruce is also a managing director responsible for numerous client relationships throughout the firm.</span></span></span></span></em></p>
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<p class="MsoEndnoteText"><span style="font-size:10pt"><span style="font-family:Arial,sans-serif"><sup>1</sup> “<a href="https://www.newyorkfed.org/markets/reference-rates/effr" style="color:#0563c1; text-decoration:underline">Effective Federal Funds Rate</a>”. Federal Reserve bank of New York. NewYorkFed.org. Cited April 12, 2023.</span></span></p>
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</div>Bruce Katz, CFP®2023-04-13T18:55:00Z