New Washington Long Term Care Trust Act

Washington State recently passed the Long Term Care Trust Act. Starting January 1, 2022, all W-2 income in WA State will be taxed at 0.58% to fund this new program. Prompt attention may be required for those who are working and already have a private Long Term Care Insurance policy or those who are working and are interested in purchasing long term care insurance. Please read below for additional information.

As of 4/12/2021, this is what we know:

Who will pay?

  • The LTC Trust will be funded by a 0.58% payroll tax on all W-2 income beginning 1/1/2022.
  • There is no cap on wages used to calculate the tax.
  • W-2 income includes company stock awards.
  • Self-employed persons and independent contractors are excluded, but can “opt-in”.
Hypothetical W-2 Income0.58% Tax
$100,000$580
$150,000$870
$250,000$1,450
$500,000$2,900

What are the benefits of the WA LTC Trust Plan?

  • Beginning 1/1/2025, eligible WA residents may receive up to $100 per day for long term care services. Maximum lifetime benefit is $36,500 (365 days).
  • Current daily cost in Seattle – Home care (8hrs) ~$220, Assisted Living ~$224, Nursing Home ~$400.

Who will benefit from the Plan?

  • Only qualified Washington residents1 who, at the time of the claim2, paid the tax for either a) 3 years within the last 6 years, or b) for a total of 10 years, with at least 5 years uninterrupted.

What can you do (e.g. how to opt-out of the tax)?

  • For those with an existing private long term care insurance policy:
    • Apply for an exemption from the payroll tax with the employment security department (“ESD”) from October 1, 2021 – December 31, 2022.
    • Provide the approval letter from ESD to your employer.
  • For those without an existing private long term care insurance policy:
    • Purchase a qualified long term care policy by November 1, 2021.
    • Apply for an exemption from the payroll tax with the employment security department (“ESD”) from October 1, 2021 – December 31, 2022.
    • Provide the approval letter from ESD to your employer.

Sample premiums for a private policy

Coverage includes $3,000 per month, 2 year benefit period, 3% compound inflation rider:

Private Policy PremiumsAge 30Age 40Age 50
Male$845$881$1,045
Female$1,254$1,292$1,597
Married CoupleDiscounts may be available

If you are interested in exploring your options for a qualified long term care policy, or a hybrid long term care / life insurance policy, please start by contacting an insurance professional (see our Recommended Resources) to determine your eligibility, and to obtain a quote. If you still have questions on whether a private policy is right for you, contact Arrivity Financial Planning to set up a consultation.

1 Must reside in the State of Washington. Any person that moves out of the State of Washington for 5+ years will forfeit all benefits and taxes paid.
2 A qualifying claim requires that an individual needs assistance with a minimum of 3 of 10 Activities of Daily Living (“ADLs”): medication management, personal hygiene, eating, toileting, transferring, body care, bathing, ambulation/mobility, dressing, and cognitive impairment.

By |2021-04-16T18:17:59+00:00April 16th, 2021|Categories: News|0 Comments

Goddard Financial Planning is now Arrivity Financial Planning

Your financial plan is a roadmap for achieving your personal goals. As you follow your plan, making adjustments along the way, you may one day decide to head in an exciting new direction. That is all part of the journey.

As a company, we have reached a similar intersection – a time for our firm to forge a different path. Today, we are announcing our new name and logo:

Arrivity™ Financial Planning

Since 2004, Goddard Financial Planning has helped hundreds of people like you plan their financial futures. Now, with more planners to serve the Pacific Northwest and beyond, we are changing our name to Arrivity Financial Planning – a reflection of our commitment to the very best client-centered services.

Whether you have had a financial plan for a few months or a few years, whether it was created under the name Goddard or Blue Canoe, you remain a valued client. Take a look at our new website: www.arrivity.com and let us know if there is anything we can do for you or a friend.

We will be in touch with more information over the coming weeks, including our new email addresses. Our current Goddard email addresses will remain active for some time, so rest assured that you will still be able to contact us when you are ready for an annual review or a plan update.

By |2021-07-13T21:58:17+00:00February 17th, 2021|Categories: News|0 Comments

CARES Act Commentary

Goddard Financial Planning remains “open for business” albeit in new configurations with the team working remotely. We are busily working with clients who need help navigating the current landscape. Note that currently e mail is our preferred means of communication. While we strive to respond to client inquiries within 24 hours, that is not always possible based on our workloads. We appreciate your patience and understanding in this unique time.

We wanted to communicate with clients about the recent Coronavirus Aid Relief and Economic Recovery Act (CARES), which was passed into law on March 27, 2020. While the changes cover a broad array of topics, here are several items we think could have the largest impact on our clients:

Required Minimum Distributions (RMDs) Waived for 2020

We expect this provision to impact a significant number of clients. 2020 RMDs are waived for IRAs and most 401(k)/403(b)/457 plans. This also applies to Inherited IRA RMDs. If you have already taken your 2020 RMD from an employer-provided plan, it may be possible to roll back the distribution if you don’t need the money. This roll back feature does not apply to an inherited IRA Required Minimum Distribution.

Small Business Owners may be eligible for loans through the Paycheck Protection Program

If you qualify as a small business owner, you may be eligible for various programs including the Paycheck Protection Program. A business is eligible if it has less than 500 employees and it can also include independent contractors and sole proprietors. The maximum loan amount is 2.5 times your average monthly payroll costs for the previous year. If you are interested in learning more, visit the Small Business Association website or inquire with your current bank. This provision is time-sensitive, and we encourage you to apply as soon as possible.

Stimulus payments

Stimulus payments will be coming to some of our clients and are based on the adjusted gross income on your most recent tax return. Payments of $1,200 (single/head of household filers) and $2,400 (joint filers) will be sent to eligible taxpayers. An additional $500 payment is made for each dependent child. Payments begin decreasing if the AGI on your tax return exceeded $75,000 (single), $112,500 (HOH), or $150,000 (joint). The payments will be sent automatically, so if you are eligible, there is nothing you need to do in order to receive the payment.

Some retirement plan distributions for COVID-19 related reasons are not subject to penalty

Distributions from qualified retirement plans (such as IRAs, 401(k)s, 403(b)s and 457s) received during 2020 of up to $100,000 for COVID-19 related purposes are allowed without a 10% penalty for pre-59 ½ distributions. These distributions will be taxed evenly over 3 years beginning with year of distribution and may be recontributed within 3 years. Related purposes include a COVID-19 diagnosis for you, your spouse or dependent, and financial hardship as a result of business closures, reduced work hours, lay off, furlough, lack of childcare or other factors as determined by the Treasury.

To evaluate whether any of these changes might impact your plans immediately or as part of your next Annual Review meeting. Consider the information in this newsletter to be an initial interpretation of the CARES law and not personalized advice.

If you have any questions or would like to set up a meeting, please reach out to info@arrivity.com.

By |2021-02-09T14:53:07+00:00April 13th, 2020|Categories: News|0 Comments

SECURE Act Commentary – January 29, 2020

While most of the country was enjoying the holidays in late December, Congress was busy putting the final touches on the Setting Every Community Up for Retirement Enhancement Act, better known by its acronym of the SECURE Act. After being signed into law, the new provisions went into effect January 1st , 2020, marking the most notable changes to retirement accounts in several years. While the changes cover a broad array of topics, here are three items we think could impact the highest number of our clients:

Required Minimum Distribution (RMD) Age Increasing From 70 ½ to 72

It all comes down to one important date: June 30, 1949

If you were born on or before June 30, 1949, the RMD start age is still 70 ½. If this applies to your situation, it is likely you have already taken your first RMD.

If you were born after June 30, 1949, the age at which you must take your first RMD from a retirement account is now 72.

For our retired clients who haven’t reached RMD age yet, this change could extend the window for performing partial Roth IRA conversions or harvesting long-term capital gains while in a lower income tax bracket, or it could simply extend the period of tax-deferred growth for your retirement assets by another 18 months.

For those clients who make direct charitable contributions from an IRA, the minimum allowable age for making Qualified Charitable Distributions from an IRA remains age 70 ½, even though the age at which you must begin RMDs may increase to age 72.

Non-Spouse Inherited IRA Distribution Rule Changes

For those who might pass away on or after January 1, 2020 with non-spouse beneficiaries (i.e. children who inherit from a deceased parent), there are new Inherited IRA distribution rules. While there will no longer be annual RMDs, the new rules will require the Inherited IRA to be fully distributed by the end of the 10th year. This has the potential to cause unexpected tax consequences for a beneficiary in prime working years who might inherit a sizable IRA from a deceased parent.

Please note that for non-spouse beneficiaries who inherited IRAs prior to January 1, 2020, there is NO change to your previous distribution schedule (which allowed clients to “stretch” distributions using annual RMDs over their own life expectancy).

Age Limitation Removed for Traditional IRA Contributions

For clients over age 70 ½ and still working, the maximum age limit on Traditional IRA contributions has now been removed. Previously the limit was age 70 ½ for making Traditional IRA contributions.

We’re happy to evaluate whether any of these changes might impact your plan as part of your next Annual Review meeting.

By |2021-02-09T14:52:27+00:00January 29th, 2020|Categories: News|0 Comments