2022 FAFSA Updates for Grandparent-Held 529s

With Thanksgiving and Giving Tuesday behind us and the end of the year only a month away, grandparents might be thinking about boosting up their grandchildren’s college savings accounts before 2022. It’s important to know that there are a few exciting changes to FAFSA rules for grandparent-held 529 accounts that will be happening in the near future. 

So what are these changes? The major change is that students will not be required to report any cash support they receive, including funds they receive from grandparent-held 529 accounts. This means that grandparent 529 dollars won’t be counted at all and students will not have to count 529 distributions from grandparents as untaxed student income the next year. This is exciting news for both parties involved, allowing grandparents to contribute to help cover the high costs of higher education without impacting students’ financial aid opportunities. 

Even with this new proposed change in place, grandparent-held 529 dollars are still being used on the CSS profile, another financial aid form used by private institutions. It is unclear how this will play out in the future, so stay tuned for updates. The new FAFSA form is currently being constructed and is said to be released later than the October 1 deadline, so it’s important to keep an eye out for when this new rule will apply to your situation and plan. We will continue to follow the FAFSA changes for you, and be sure to report any further changes as they arise.

At Sherman Wealth, we believe 529 plans are a great way to save for your children’s and grandchildren’s college expenses or K-12 private school tuition, while also receiving favorable tax benefits. If you aren’t quite sure what a 529 is or how to start one, be sure to check out our previous blogs discussing the components of 529 plans, as well as how and why you should start saving for your children’s or grandchildren’s education as soon as possible. If you have any questions about 529 plans and family contributions, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here


Sherman Wealth & Launch Workplace’s Sock & Coat Drive To Support So What Else

Happy Giving Tuesday! Do you have a few old coats and socks laying around the house? If so, let’s do some good with them! Join Sherman Wealth and Launch Workplaces in our Sock and Coat Drive to support So What Else and their wonderful mission.

Drop offs can be made at 9841 Washingtonian Blvd #200, Gaithersburg, MD 20878 from today, November 30th, 2021 til December 17th, 2021, so let’s get donating! If you have any questions on other ways to get involved in giveback opportunities or volunteering at So What Else, email us at info@shermanwealth.com and we are happy to discuss and direct you to the right place.

Improving Your Employee Education As a Small Business Owner

With open enrollment season here and also being a business owner ourselves, we feel that financial education and empowerment of everyone, including your staff, is extremely important. As a small business owner, do you ever feel that there’s more you can be doing to better and further the financial education of your employees? Creating a work environment where your employees are given the proper resources to understand the full scope of their benefits and become financially literate is key to creating a team that can make sensible and educated decisions regarding their financial futures.

It’s easy to let your finances get away from you, especially when you are busy with day-to-day life and feel comfortable paying bills with your current monthly income. However, as a business owner, we encourage you to help your staff see beyond that financial comfortability and challenge them to set themselves up for financial success by contributing to their 401(k) for retirement, seeking financial advice, and asking questions about all the benefits you may offer. 

According to a report by Gallup, “56% of US employees reported themselves as thriving.” But they also found that “workers’ daily stress reached a record high, increasing from 38% in 2019 to 43% in 2020.” Additionally, GoBankingRanks asked respondents about retirement and their savings and “When asked to estimate how much money they had in retirement savings, close to half of all respondents — 45% — claimed they had no money put aside for retirement, while 19% said they’ll retire with less than $10,000 to their name.”

This data clearly proves that a stronger financial education is necessary, especially when it comes to retirement and setting financial goals. As a business owner and entrepreneur, it is easy to get sidetracked with miscellaneous tasks and other aspects of keeping your company running, but The Gallup report examines the importance of “focusing on employee engagement and wellbeing to build organizational resilience for tomorrow’s workplace.” If you find yourself too overwhelmed or don’t feel you have the necessary expertise to educate your employees regarding their finances, consider hiring a financial planner or 401(K) consultant as a guide. At Sherman Wealth, we specialize in 401(k) education and can also serve as a financial fitness coach for your company. If you feel that your staff needs more financial empowerment, coaching and guidance, contact us at info@shermanwealth.com or schedule a complimentary 30-minute consultation to discuss your company’s financial needs here.


The Financial Industry Is Changing, And What You Want Is Too

As generational wealth continues to transfer, we are seeing a shift in the way today’s consumers are wanting to conduct relationships with those who are managing their money. According to a recent WSJ article, rich customers are changing what they want; they are shifting away from these bigger public companies and are seeking niched start-ups and individualized advice and relationships. We are also seeing that those who only offer asset management services are becoming less desirable and holistic financial planners are the future. 

At Sherman Wealth, we have noticed similar attitudes amongst prospects and clients, those who are feeling ignored or unheard from their “Wall Street-esq” or parents’ financial advisor that they assumed a relationship with. With this ever evolving bifurcation of financial advice, clients are no longer interested in working with their parents financial advisor they may have an estranged relationship with, but rather are looking for evolved and all encompassing individualized wealth management and financial planning advice delivered at the ease of their fingertips. We’ve been seeing tons of clients and individuals getting organized under COVID-19, stressing to us the importance of finding the right person to walk them through their whole financial life. This is where we come in. 

We have long recognized this shift in financial service needs and are constantly battling financial stigmas and adapting the way in which we deliver unique and customized advice to our clients. We recognize that holistic financial planning is the future. This new way of navigating your financial life encourages those seeking an advisor to look for someone in line with this approach. With a financial concierge such as Sherman Wealth, your advice will stay current and constantly communicated, not getting lost or forgotten.

At Sherman Wealth we can help you with the following 

  • Goal Setting 
  • Cash flow analysis and budget planning 
  • Net worth analysis 
  • Debt strategy 
  • Student loan planning 
  • Retirement planning/projections
  • Work benefits 
  • Rent vs. buy mortgage strategy 
  • Education planning 
  • Investment management 
  • Tax planning 
  • Insurance need analysis 

We are a fiduciary to our clients, but we are also, in some respects, a concierge and a coach. What we mean is that we work with you in an all-encompassing way- ensuring your specific needs are being heard, understood, and proactively addressed. For further details on our philosophy and core values, click here to learn a little more about who we are and what we strive to deliver. If you feel that your financial needs align with our core values and philosophy or your current situation feels stale, email us to inquire about our services at info@shermanwealth.com or schedule a 30-minute complimentary intro call here.

Are You HSA Eligible? If So, Check This Out

Are You HSA eligible? If so, here’s how to take advantage of it during this time of year. As open enrollment is underway, you might have some questions about what benefits you are eligible for, and what those benefits truly mean. Retirement savings and medical coverage are typically a large part of your workplace benefits, which is why it’s so important to take advantage of what’s available to you, such as an HSA.

So, what are HSA’s? An HSA is a tax-advantaged health savings account that allows you to save money to use to pay medical and health care expenses. If you get your insurance coverage through high-deductible health plans, you can qualify for an HSA. Your contributions within the account will grow on a tax-free basis, and any untouched dollars can be rolled over year to year. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs.

For 2022, employees and employers can contribute a total of up to $3,650 for individual coverage and up to $7,300 for family coverage. Be sure to contribute by the end-of-the-year December 31st deadline, so that you can make the most of your yearly contribution. Keep in mind that HSAs are just one of the many benefits that you can take advantage of. Check out our open-enrollment blog to see what else you may be eligible for! For other end of the year tips, check out our financial checklist blog here. If you have any questions about funding your various accounts, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here


Retirement Inflation-Adjustments for 2022

Happy November everyone! New retirement inflation-adjustments for 2022 have been released, and we want to provide you with a quick breakdown. Business owners and employees, this one applies to you, so don’t miss it.

See Below For Retirement Inflation-Adjustments for 2022

  • IRA/Roth IRA contribution: $6,000 (no change)
  • 401k/403(b)/457 deferral: $20,500 ($1,000 increase)
  • 401k/403b/457 catch-up: $6,500 (no change)
  • SEP IRA/PSP: $61,000 ($3,000 increase)
  • SIMPLE deferral: $14,000 ($500 increase)
  • SIMPLE catch-up: $3,000 (no change)
  • Also boosted for 2022: The income ranges for determining eligibility to make deductible contributions to traditional IRAs, Roth IRAs.
  • IRS also issued technical guidance regarding all of the cost of living adjustments

If you have any questions on how these adjustments apply to your financial situation, email us at info@shermanwealth.com.

Maximizing Your Benefits During Open Enrollment Season

We recently posted a video, blog and financial tips regarding the importance of creating and implementing an end of year financial checklist. As part of your annual checklist, a main focus during the month of November should be your employer’s open enrollment period.

For many employers, open enrollment runs through early December. This year, as a result of the pandemic, there are some new offerings aimed at mental, physical and financial health. Here are some things to revisit during your open enrollment period this month:

  1. Health Insurance

When reviewing your health insurance options during your open enrollment period, you should consider what your health coverage costs you now that premiums and deductibles are changing. Annual family premiums for employer-sponsored health insurance will likely be about 3% lower in 2022, after factoring in subsidies enacted under the American Rescue Plan Act. However, more workers have a deductible — the amount you pay before insurance kicks in — and that deductible is rising. In 2020, the average single deductible was $1,945, roughly twice what it was a decade ago. If you are shopping for a plan, make sure to not only focus on the premium, but also the total out of pocket

  1. Health Savings Accounts

As discussed in a prior blog, using tax-advantaged accounts for medical expenses, specifically, health savings accounts or flexible spending accounts, is one way to help with health care costs.

To be able to use an HSA, you need to be enrolled in what’s called a high-deductible health plan, or HDHP. Contributions grow on a tax-free basis, and any unused money can be rolled over year to year. For 2022, employees and employers can contribute a total of up to $3,650 for individual coverage and up to $7,300 for family coverage.

Health Flexible Savings Accounts (FSAs) have lower contribution limits ($2,750 for 2021) and you don’t need to have a high-deductible plan in order to be eligible. You don’t need health coverage at all to sign up for an FSA. There are also dependent care FSAs, which allow employees to pay for eligible childcare expenses using funds on a pre-tax basis.

Generally, you must use the FSA money by year-end or you lose it. However, recent legislation could also allow you to roll over any unused funds from 2021 to 2022 for use at any time next year if your company has opted in.

  1. Life Insurance

According to a recent survey, nearly 45% of U.S. workers don’t have or don’t know if they have life insurance. Due to the pandemic, people are now interested in life insurance policies more than ever. Since most employer-issued life insurance policies typically amount to a year’s worth of salary or less, it’s important to consider what’s the right amount for you and your family. You can then decide if you want to buy additional coverage, or supplemental insurance, through your workplace group plan or shop for your own individual term life insurance policy, which many advisors recommend.

  1. Disability Insurance

Disability insurance is often the most overlooked employee benefit. These plans can help replace a portion of your paycheck if you get sick or injured and are unable to work. Short-term disability generally replaces 60% to 70% of your base salary and premiums are often paid by your employer. Long-term disability, which ordinarily kicks in after three months to six months, typically replaces 40% to 60% of your income. If your employer offers some kind of disability insurance, you should consider enrolling. 

  1. Wellness Initiatives

The pandemic has many Americans turning to their companies for help dealing with work-life stressors and personal issues. Due to increased demand, many companies are now offering a variety of financial wellness benefits. Some of the wellness resources available this year include financial coaching, stress management classes, web-based resources for healthy living and even discounts on gym equipment. There could also be tuition assistance, student loan repayment programs, backup child care, tutoring services for older children and stipends for enrichment programs and camps. Companies that understand the importance of their employees’ well being often have a more productive and successful workforce.

If you have any questions about your company’s open enrollment options, you should contact your human resources department. If you are interested in having us help you create your end of year financial checklist, please contact us for a free 30 minute consultation.

Potential Implications of the Tax Change Proposal

As we head into November, with only two months left in the year, the Democrats have just edited the Tax Proposal we have been discussing since March. Back door Roths were one of the few things that survived the new tax change proposal, even though they were in talks to be eliminated. Check out the vlog below for more details on what survived and what was eliminated in the tax change proposal. While there is no bill in place officially, listed in the video below are just a few of the major changes on the financial planning side we want you to be aware of.  While we are on the topic of end of the year financial planning, be sure to check out our end-of-year checklist that will provide you with some useful financial tips before the new year.  If you have any questions about the proposed tax changes or financial planning, please email us at info@shermanwealth.com or schedule a 30-minute complimentary intro call here.


Fiduciary Rule Enforcement Delayed Until February

On Monday October 25th, the Department of Labor delayed implementation of an investment advice rule that was supposed to be set in December, which is now allowing the financial industry additional time before having to implement these new changes into their compliance routines. The new fiduciary rule for retirement accounts that was approved by the Trump administration last year will not be enforced until February 2022.  

This regulation will “impose a fiduciary duty on most rollovers from 401(k) plans to individual retirement accounts.” In regards to the recommendations made, advisers will need to document and disclose costs, benefits, and conflicts of interests. 

In a field assistance bulletin released Monday, the DOL said it would “extend from Dec. 20 until Jan. 31, 2022, a temporary enforcement policy that allows retirement account fiduciaries to receive prohibited transactions — such as commissions or revenue-sharing — as long as they follow impartial conduct standards, which include acting in a client’s best interest, charging a reasonable fee and not making misleading statements.”

Even though this fiduciary rule is set to start on February 1, 2022, the DOL will not enforce documentation and disclosures prior to June 30th. Obviously this change will require some adaptation, so the DOL understands that this implementation might take longer than expected for fiduciaries to respond and make changes. 

Why wait to work with a government mandated fiduciary when you can find one that already is operating in that capacity. Sherman Wealth is a fee only registered investment advisor that always acts in a fiduciary capacity. We will continue to follow any updates on this new fiduciary rule as new updates arise. If you have any questions for us, email us at info@shermanwealth.com


End Of The Year Financial Checklist

It’s hard to believe, but the final quarter of the year is now upon us. As 2021 comes to a close, here are some key money moves you can make to finish the year off strong and set yourself up for success in 2021.


As we head into the final months of the year, it may be a good time to gather your important financial documents, preferably into once place such as an automated financial planning software. Once your financial data is organized, analyze it, take a look at your spending, budgets, and cash flow, to make sure you are on track to reach your financial goals for the year. Then, implement any necessary changes. Additionally within this process, take some time to set new financial goals for you and your family for the upcoming year.


Even if you’ve found the perfect asset allocation for your investment portfolios, its important to revisit your allocations periodically and do a portfolio review. Overtime, your investments may perform differently than you expected, which will change your intended allocation. So in this instance, make sure to go back and double check you are happy with your current asset allocation and that you have no intended alterations.


If you’re planning to max out your 401(k) for 2021, mark your calendar for Dec. 31, as this is the last chance to do so. If you receive an end-of-the-year bonus, you may want to consider putting as much of it toward your 401(k) plan as you are able to. Additionally, if your company offers a match that you haven’t maxed out, now is the time to do so.


If you have young children, hopefully you are already contributing to a 529 plan to help pay for college when the time arrives. If not, now is the time to set one up. If you already have an account set up, make sure you remember to make your annual contribution. 529 plans have varying deadlines set by the state, but many have a December 31 cut-off. If you miss the end-of-year deposit deadline for your plan, you could be missing out on significant state tax savings. These tax deductions reduce your taxable income, giving you a percentage reduction in taxes owed reflective of your tax bracket. Lots of states offer a state income tax deduction or tax credit so make sure to do some research to see if you qualify for one! 


If you have an HSA, now is the time to make appropriate changes or contributions to your plan. Every year , the IRS creates a contribution limits for health savings accounts and this year the limits have increased by $50 dollars for individuals and $100 for families. Check this out for other HSA contribution limits. 


A Roth IRA conversion involves transferring retirement funds from a traditional IRA or 401(k) into a Roth account. Since the former is tax-deferred while a Roth is tax-exempt, the deferred income taxes due must be paid on the converted funds at that time. There is no early withdrawal penalty. Inquire about whether a Roth conversion is right for you. 


Donor-advised funds are tax-deductible financial accounts provided by 501c3 nonprofits who are approved, donor-advised fund sponsors. The funds are opened in the donor’s name, and they enable a donor to donate funds and get a tax-deduction immediately while deciding later which organization those funds will support.

After you set up a DAF, you can add money or appreciated assets into one of these funds and get the full tax deduction for the money or assets on the day you put them in the fund. And then, any time in the future — whether one day or ten years later — you can give the money out to any charity of your choosing. 

If a DAF isn’t for you, many people look for ways to combine their desire to help the causes they believe in—including COVID-19 pandemic relief efforts—with their desire to save on taxes. Generally, if you itemize your deductions, making charitable contributions can decrease your tax bill, and since high‐income earners generally pay tax at higher rates, they may enjoy a particularly large tax benefit from charitable contributions. Check out our podcast with Elizabeth Goldstein regarding Donor Advised Funds and how to get involved.


Now is a good time to make sure you are actually using all of those annual subscriptions you are paying for. Do you really need Netflix, Hulu, Apple TV and other streaming services at the same time? You might be able to cut down on some of your monthly expenses by taking a good look at what you are actually using vs. what you are paying for. You’d be surprised at how these services add up so it’s a good time to assess what you might be able to save money on in the upcoming year.

Finally, now is a great time to schedule a meeting with your financial advisor to review your year-end financial planning. It’s important to have that meeting before year-end to set the stage for a financially successful year in 2022. Besides the list mentioned above, there are tons of other tasks you may need to check off your list before the end of the year so let us know if you need any help!  If you don’t currently have a financial advisor and would like some help with your year-end planning, please contact us for a free 30-minute consultation today!