Kiplinger's Personal Finance March 2021

Written to help you do a better job of managing your personal and family financial affairs and to help you get more for your money. You get ideas on saving, investing, cutting taxes, making major purchases, advancing your career, buying a home, paying for education, health care and travel, plus much, much more. Special issues cover the latest information about car buying (December) and Mutual Funds (March and September).

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3 min
roth ira conversions

I think making a Roth conversion in a down market, paying taxes on the funds’ depressed value and allowing those funds to recover tax-free, is a win-win (“Your Guide to Roth Conversions,” Jan.). I’m 63 and retired. Knowing that my 2020 income was going to affect my Medicare premium in two years, I was able to convert $60,000 in funds in the second quarter and stay safely below the Medicare income surcharge. My main reason for doing the Roth conversion was the pandemic-induced market decline. I looked at the massive and sudden drop in the market as an opportunity to maximize the amount of the conversion. As it turns out, the $60,000 I converted is now worth $75,000, tax-free, in my Roth. JAMES HANLEYRIVERVIEW, MICH. Every article on Roth conversions should begin…

3 min
stimulus surprises

Now that Joe Biden is in the White House and Democrats narrowly control both houses of Congress, some agenda items the new president is promoting—including infrastructure and climate change initiatives, tax relief, and changes to health care—have a greater chance of seeing daylight. We go into more detail on Biden’s plans in “Ahead,” on page 9. It remains to be seen how much collaboration Washington can muster under the new regime. But a glimmer of bipartisan spirit was on display over the holidays, in the form of the ginormous, $1.4 trillion spending and $900 billion relief package. You know about the $600 payments distributed in early January. The legislation also bore a number of small gifts that could buoy your personal finances. Tax break bonuses. The pandemic relief bill contained some provisions…

4 min
washington’s plans for your finances

IN EARLY JANUARY, A MUCH anticipated runoff election in Georgia answered the question of which political party would control the Senate for the next two years: Democrats Jon Ossoff and Raphael Warnock clinched the two seats up for grabs, delivering the Senate a 50-50 split between Democrats and Republicans. Vice President Kamala Harris casts tie-breaking votes on legislation, giving Democrats an effective majority. Senate Majority Leader Chuck Schumer determines the schedule for votes on legislative proposals. With President Joe Biden in the White House and a narrow Democratic majority in the Senate and House of Representatives, Democrats have a clearer path to enact their agenda. In the near term, Biden and Congress are expected to focus on urgent matters of the economy and the pandemic, such as stimulus aid for struggling…

2 min
the case for diversity on corporate boards

Stephanie Creary is assistant professor of management at the Wharton School at the University of Pennsylvania, where she is an identity and diversity scholar. She has researched workplace diversity practices at a variety of organizations, including corporations, hospitals and the U.S. Army. Why should investors care whether a company has a diverse board of directors? McKinsey & Co., a management consulting firm, has found that companies with diverse boards outperform their peers. There’s also a lot of academic research that has analyzed the relationship between the composition of top management teams and financial performance. For example, a recent study from the University of Texas at Dallas found that firms that were diverse in upper and lower management performed better than other firms. Their workers were more productive, too. That’s good for…

3 min
prepare to resume paying student loans

THANKS TO LAST YEAR’S economic stimulus bill, borrowers with federal student loans have gotten a welcome reprieve from payments and interest. The moratorium was extended twice, and the last extension was scheduled to expire January 31 (after we went to press)—though President Joe Biden has indicated a willingness to extend it once again. Biden has also proposed forgiving some federal student loans. But forgiveness proposals face opposition in Congress, and the payment suspension won’t last forever. If you have student loans, you should have a plan to resume payments you can afford. If you were having payments automatically withdrawn from your bank account, start by making sure your bank account information hasn’t changed since the moratorium began last spring. Besides running the risk of a late payment, you’ll miss out on…

1 min
the financial aid form gets a makeover

AMONG THE NUMEROUS PROVISIONS BURIED in the 5,000-plus-page Coronavirus Response and Relief Supplemental Appropriations Act that was enacted late last year are measures designed to streamline the Free Application for Federal Student Aid, or FAFSA. The form is used to determine how much financial aid a student will receive from federal and state governments, colleges and universities. The changes will also expand eligibility for Pell grants and subsidized student loans for low-income students. Starting with the FAFSA available for filing in October 2022, the number of questions will be reduced from 108 to 36, and they’ll be better aligned with information on federal tax returns. That means families will be able to use the IRS data-retrieval tool to answer more questions, which could save time and reduce errors. Separately, the coronavirus relief…