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The First Quarter Commentary

It’s hard to believe the first quarter of 2021 is nearly over. We have lived through one of the most unprecedented years in history which has required adjustments from all of us. During this past year it has been easy to lose focus on many areas of “life” and feel behind. The good news is that this year is looking to provide a partial closure to the pandemic through the success and deployment of the vaccines across the country. The speed and distribution from the vaccines is certainly something we can all celebrate together!

As we move into the 2nd quarter of 2021 we wanted to take a moment to remind you of some financial planning items that might help you make some personal and family decisions this year.

In regards to your IRA Required Minimum Distributions (RMD) you may want to consider the following:
  • Taking your distribution early rather than later in the year to take advantage of current market levels.
  • If you feel you do not need your RMD, you may want to consider utilizing your IRA for charitable gifting without paying the tax.
Lastly, you must take your RMD for 2021 versus the one year exception that was allowed for 2020.
  • The IRS will still allow the gift tax exclusion of $15,000 per individual per year. There is discussion from Washington to reduce this in the future so this is a good year to take advantage of gifting if you are so inclined.
  • Consider utilizing a Roth Conversion, or partial Roth Conversion of your current IRA. Growth is tax-deferred and qualified withdrawals are tax-free for Roth assets.*
  • Consider funding 529 plans for your children or grandchildren. 529 Plans are a great way to plan for college savings and allow for tax deferred growth as long as dollars are used for education expenses. 529 plans can be used for in-state and out-of-state schools as well as private and public institutions.**
  • Do you have an individual account in your name alone? Consider adding a Transfer on Death or “TOD” designation to the account to avoid probate.
  • After the past year’s market rise, be sure to consider donations of appreciated stock as opposed to using cash. This enables you to gift away the shares and have no capital gains tax obligation. Then you could use the cash to buy back shares and reset the cost basis if you want to continue to hold the position.

March 2021


*Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free, Withdrawals of earnings prior to age 59 1/2 or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
**Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment a the state level may vary. Please consult with your tax advisor before investing.
Ginny Houghton 

Ginny Houghton

Ginny’s love of finance is rooted in a rich family history of financial services as the Allen’s have been setting industry standards since 1932. She received a degree in Finance and Economics from the University of Alabama and has since worked in several capacities within the industry.

Ginny came to Allen & Company from a national banking firm in Atlanta where she served as a Financial Analyst. She joined our firm as a Mortgage Broker for Allen & Company Mortgage Corporation in 2002, before becoming a Financial Advisor with the Allen/Albritton Group.