Kiplinger's Personal Finance April 2022

Ted Benna’s statement that taking a 401(k) loan results in double taxation does not consider that the proceeds of the loan can be used tax-free (“Advice From the Architect of the 401(k) Plan,” Feb.). The dollars were put in the plan before tax and are not taxed when borrowed from the plan. This offsets using after-tax dollars to pay back the loan and makes the loan tax-neutral for the principal portion. It is true that the interest portion of the loan payments will be taxed twice, but this is more than offset by the fact that the interest is paid to yourself rather than a third-party lender. There are many things to consider before borrowing from your retirement account, but double taxation is not one of them. JEFF ROSEN HILLIARD, OHIO Editor’s note:…

With a slew of electric vehicles hitting the market—including the Ford F-150 Lightning pickup truck and, a year from now, the Chevy Silverado—we thought it was time to ask whether it’s time to buy an EV. We tapped Kiplinger.com senior editor (and gearhead) David Muhlbaum to help answer the question and evaluate some of the most popular new models in the story on page 66. The automobile industry is undergoing a revolution the likes of which have not been seen for more than 100 years, when the industry was in a battle over which technology would power cars: batteries or gasoline engines. Then as now, the secrets to success were range, cost and convenience. The Model T went on sale in 1908, and its 10-gallon fuel tank could take the car…

INVESTORS CAN BE FORGIVEN for feeling seasick. Since hitting record highs in late 2021 and earlier this year, major market indexes have been mostly sinking, with small-company stocks and tech shares faring the worst. The market has endured waves of volatility as investors try to balance strong corporate fundamentals against the fear of monetary tightening as the Federal Reserve attempts to contain inflation. From its high on January 3, the S&P 500 fell 9.8% through January 27—technically, just shy of an official correction, considered a 10% drop. The broad market measure tripped the 10% mark intraday, however. It’s not clear whether the market has found a floor. History shows that corrections in volatile election years—as this one promises to be—are often steeper than 10%. But absent a recession, corrections tend to…

Kamila Elliott is the first Black chair of the Certified Financial Planner Board of Standards, a nonprofit that establishes and enforces the requirements for the CFP certification. Elliott is president of GRID 202 Partners, a wealth-management firm. You’ve said one of your key goals as chair of the CFP Board is to increase the number of women and minority planners, along with attracting more young people to the profession. How do you plan to do that? By raising awareness. I didn’t know what a financial adviser was until I was in college. My mom didn’t have a financial planner, and neither did my grandparents. The CFP Board just hired someone whose goal is to work with high schools to create more financial literacy and awareness. At colleges, we have more than…

SOARING INFLATION BRINGS ABOUT A lot of consternation for consumers, but savers can find a bright spot in Series I savings bonds. I bonds issued from November 2021 through April 2022 yield an outstanding composite rate of 7.12%, compared with an average yield of 0.06% for bank savings accounts, according to Bankrate. Even top-yielding accounts typically have rates of less than 1%. The composite rate combines a fixed rate, which stays the same for the life of the bond, and an inflation rate that adjusts every six months and is based on changes in the consumer price index. Each May and November, the Treasury Department’s Bureau of the Fiscal Service announces a new fixed rate and inflation rate. An I bond that you purchase between November 2021 and April 2022, for…

NAVIENT, ONE OF THE LARGEST student loan servicers, will cancel $1.7 billion in private student loans to settle charges that it issued loans to borrowers who couldn’t afford to repay them. Although the settlement impacts only a small percentage of borrowers, a larger group of borrowers may also be eligible to have a portion of their loans forgiven. The federal public service loan forgiveness (PSLF) program, which typically allows public service workers to qualify for forgiveness after 120 loan payments, has become more accessible. After facing criticism for undercounting eligible payments, the Department of Education introduced a temporary waiver that makes partial payments and late payments count toward forgiveness. In addition, if borrowers consolidate their Family Federal Education Loan (FFEL) loans (government-guaranteed loans issued by private lenders before 2010, when the…