Within the $1.7 trillion omnibus bill passed by Congress are a potpourri of sweeping changes to retirement plans–some of the biggest changes made in many years, including increasing the age of Required Minimum Distributions to age 73 starting for tax year 2023. 

Congress continued the trend of delaying Required Minimum Distributions. Many savers don’t like to be forced by the government to take RMDs, instead preferring to see their savings grow, especially given lifespans have increased. During the height of COVID, Congress allowed RMDs to be skipped for 2020 and later increased the RMD age to 72, and now in 2023 the age increases to 73 and will later increase to 75 in 2033. 

Another impactful change to RMDs is the steep penalty for failing to take an RMD has been reduced. Prior to the bill, if an IRA holder failed to take an RMD they were charged a 50% penalty of the RMD. That has been reduced to 25% and can be 10% if corrected in a timely manner. 

Emergency Withdrawal Option

There is a also a new relief for a retirement accountholder in need of emergency cash. Retirement account holders who withdraw funds prior to age 59 1/2 pay a 10% penalty. The bill contains a provision that waives the fee for an $1,000 emergency withdrawal if it is made for the “purpose of meeting unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.”

Charitable Changes

One strategy IRA holders employ to do good and reduce their tax obligation is to make Qualified Charitable Distributions from their IRAs. The bill allows IRA holders 70 1/2 and older to do a one-time $50,000 withdrawal to fund a charitable gift annuity or charitable remainder trust. 

529 Roth Option

The government created 529 plans to help deal with the high cost of higher learning. One of the uncertainties with 529 plans for savers was the prospect of the child not going on to higher learning or having unused money in the 529. Prior to the bill, money in 529s that was not used could be designated to another family member for the purpose of higher learning or the account holder could pay a 10% penalty to withdraw the funds. The bill introduces a new option–allowing up to $35,000 of the 529 to be transferred into a Roth IRA. The 529 must be more than 15 years old under this change. 

Roth 401k Gets Roth IRA Attribute

Unlike Traditional IRAs that require RMDs, Roth IRAs do not require RMDs. Interestingly, Roth 401(k)s, which are not that widespread, did require RMDs, until now. The new law eliminates RMDs for Roth 401(k)s starting in 2024. 

Catch Up Amount Boosted for Older Workers

Prior to the new law, workers over the age of 50 could put an extra $6,500 in their 401(k)–that has been increased to $10,000. 

Tax Advisor Best to Assist

As always, members should consult with their tax advisor when assessing the impacts of any tax law changes. The new law includes a host of other changes around using 401(k)s for paying off student loans, mandating more investment options in 401(k)s, requiring small businesses to offer 401(k)s and more. 

Keeping your details updated means maximizing your ability to take advantage of the credit unions’ available services. Aside from having a reliable means of contacting you, you could also you could be missing out on an email advisory that could prove costly.

Here are 3 reasons why you should update your contact information now.

1. Fraud Protection: We visit a ton of websites a day, make lots of online purchases and transact with countless merchants using our debit and credit cards. Not having to present a physical credit card has opened up an opportunity for fraudsters to exploit on. Give AllCom the tools to protect you! 
2. Current Address for Confidential Information: A change of address with USPS does not mean Account Statements and other confidential information will be forwarded. USPS does not forward financial institution  Your financial institution needs to be notified. Keeping your contact information and your online banking profile updated are the best ways to do this.
3. Important Reminders and Updates: Not updating your contact information means missing out on important reminders and other time-sensitive prompts. Updated contact information is imperative, especially for those who don’t receive a paper statement of account.

If you need to update your contact information come by and see us or give us a call at 888-754-9980!

APY is short for “annual percentage yield.” Almost all savings accounts, and some checking accounts, have one. The higher it is, the faster your money grows. It’s an important term to know for anyone focused on saving more money.

What does APY mean?

APY refers to the amount of money, or interest, you earn on a bank account over one year. Of note, this includes compound interest. An interest rate is similar to APY except it doesn’t factor in compounding.

Simple interest doesn’t compound, so you earn the same amount of interest every month. Compound interest, meanwhile, is the interest earned on both the money you put into the account and the interest you receive over time.

The higher a savings account’s APY, the better. If you’re willing to lock away some of your savings for a set period of time, consider a certificate of deposit, or CD.

How to calculate APY

You can use a formula to manually calculate APY, if you know your account’s interest rate:

APY= (1 + r/n )^n – 1,

In which: r = interest rate n = number of compounding periods (if interest is compounded monthly, this would be 12)

AllCom Credit Union, or any other credit union or bank, will provide you with your APY.

If you know your interest rate, you can quickly see what you’ll earn in a certain period of time with our savings calculator. You can simply plug in your starting balance, the amount you’d add each month, the amount of time and the rate.

How compound interest works

Compounding occurs in a set period, usually daily or monthly. Interest compounded daily leads to more money than interest compounded monthly.

But it’s generally too small to worry about unless you’re dealing with large amounts — and even then, it won’t make a significant difference. For example, $100,000 in an account with a 0.50% APY earns only $0.10 more in one year when compounded daily instead of monthly.

Is APY variable?

That depends on the savings product. If you have a savings account, your APY is variable, and may increase or decrease based on market conditions. If you have a CD, the rate you have when you sign up is typically the rate you’ll receive throughout your term. If you sign up for another CD later, you may receive a different rate.

When the Federal Reserve increases its benchmark interest rate, the APYs on savings accounts and new CDs tend to increase as well.

So you’ve decided to buy a new car. Congratulations! Now comes the decision of what to do with your old car. These steps can help you make the choice that’s right for you.

Research Your Car’s True Value
The first bit of research you’ll want to do is establish the current value of the vehicle you are going to sell or trade in. Kelly Blue Book is a good place to start. Many other Internet sites and buying guides are available to assist you in your research. Make sure the information you are looking at is current, as prices can vary greatly from year to year. Don’t forget that other factors, such as mileage, accident history, maintenance records, and general appearance, will factor into the amount a buyer is willing to pay. The sentimental value you place on your car may be just that. “Your baby” may not be as charming to others as you think.

Decide How Soon You Must Sell
Determining your car’s value will help you decide if it is worth the time and effort to sell it yourself. Do you need the money as a down payment before you can buy your new car? Selling on your own may take more time than you think. Making appointments with prospective buyers as well as keeping your car clean and attractive may not be worth the additional dollars you’ll gain from the sale. It can be tempting to trade in your old car for an immediate down payment on your new ride.

Determine What is Most Important to You—Cash or Convenience
Dealers use your trade-in to make money. You’ve already determined the fair market price for your vehicle, but the dealer is going to pay you less. You must decide what price you are willing to pay for convenience. For example, if you believe you can get $5,000 selling the car yourself, and a dealer will give you $3,000, is it worth the $2,000 difference for the immediate gratification of having the cash in hand? For some people, the answer is yes. The hassle of advertising, taking to strangers (and the potential danger of strangers coming to their house to look at the car), and the days or weeks of waiting for the car to sell is enough to convince most people to let the dealer make the profit. But for some, the additional moneymaking potential is worth the additional effort.

Preparing Your Car for Sale or Trade-In
Whether you sell or trade your car, there are few things you can do to increase the perceived value. Make sure the car is very clean and any obvious flaws, such as a cracked windshield, have been repaired. Provide a list of all maintenance records, such as major repairs or recall work, so the buyer will know the history of the car. If necessary, deodorize the interior to remove smoke, pet, or food odors.

Ready to Finance Your New Car?

AllCom Credit Union offers new and used auto loans with rates as low as 3.49% APR* for up to 60 months.

*Learn more and apply today!

Laura Ybarra, President & CEO, AllCom Credit Union announces the recent promotion of Deborah Tilleman to Vice President, Retail. Tilleman joined AllCom Credit Union in April 2021 and has over 20 years of experience in the financial services industry. “Debbi has many strengths in management, lending and marketing and we are excited to have her leading our AllCom team” says Ybarra.

“The members of AllCom Credit Union are unlike any other members,” says Tilleman. “They are all so kind and appreciative of our team. Our staff is dedicated to ensuring each member has a great experience with AllCom. Since joining the team, I’ve received the best welcoming and look forward to the future with AllCom.”

Creating and maintaining a budget is one of the best ways to stay on track with your financial goals. With inflation on the rise, it may be time to take a second look at your budget and make some adjustments. The budget you previously created may no longer be realistic. These tips will put you on your way to staying financially secure during periods of inflation.

Start by tracking your spending

A budget is essential in setting guidelines for how much you should spend on certain categories (housing, food, transportation, etc.) Be sure to actively track all of your spending to see where your money is going. This will allow you to see how well your budget stacks up to the reality of how you actually spend.

This is especially important during periods of high inflation, as the budget you initially created may no longer be realistic. Higher prices of groceries and gas may mean you need to cut expenses elsewhere. See where you have room to give and take within your budget.

Research inflation rates per category

Inflation is often discussed in a broad sense, in terms of the overall amount all goods and services are going up in price. While this number can be useful, it’s not always meaningful when it relates to your personal finances. Inflation often varies significantly across different categories.

What matters is the inflation rate of what you personally spend money on. For example, if you have children that are getting ready to go off to college, the inflation rate of higher education is extremely relevant to you, whereas it’s not relevant to someone without children.

Other spending categories are relevant to everyone. Rising food prices is going to impact your budget, regardless of your personal situation. Some inflation can also cause a ripple effect as well, regardless of your personal use. For example, increasing gas prices will cause many other price increases due to higher transportation costs.

Assess your needs vs wants

If inflation is making money tight, evaluate your spending to determine what can be considered a need versus a want. While you can’t cut out clothing out of your budget entirely, you can evaluate whether a purchase is being made out of a practical need for that item or as a fashion statement.

One popular method of allocating spending towards needs and wants is the 50/30/20 budget. Aim to spend about 50% of your income on needs (housing, food, transportation, etc.), 30% on wants (entertainment, travel, etc.) and 20% on savings. Keep in mind these are general guidelines, not hard rules. If you aren’t able to keep needs under 50%, that’s okay!

Prepare for inflation

While inflation is inevitable, the impact it has on your financial goals is all a result of how you prepare for it! Taking steps to reduce the impact inflation will have on you for the years to come is a great way to set yourself up for financial success. Here are a few of the top ways to do that.

Focus on the big expenses
Housing, food, and transportation are typically the biggest expenses in people’s budget. Finding ways to reduce those is going to help the most.

Housing: Becoming a homeowner is a great way to prepare for inflation in the long-run, but isn’t a feasible immediate solution for everyone. Finding a cheaper apartment, finding roommates, or reducing utility usage are all great options as well.

Food: We all need food, and neglecting your nutritional needs should never be considered a viable option. Instead, pay close attention to where your meals are coming from and see if there are ways to cut back on costs. Perhaps you can shop at a more affordable grocery store, buy store-brand ingredients, and eat out less.

Transportation: Going car-free and using public transportation to get around is a great cost-saving idea in theory, but that may or may not be realistic, depending on where you live. If it’s not, you can still shop around for cheaper car insurance and refinance your auto loan. It might even make sense to switch to a hybrid or electric vehicle to reduce fuel costs long-term.

Start buying in bulk

For a less drastic step, buying in bulk is a great way to save. This works well for non-perishable consumables that you know you’re going to use up eventually: Toilet paper, paper towels, laundry detergent, dish soap, etc. When you add up the potential savings of buying all these items in bulk, the total amount saved ends up being a lot higher than you might expect!

Buying groceries in bulk is also something to consider. Even if you don’t have a large family, many ingredients and meals can be frozen for later use or leftovers. Items like beans, rice and canned goods can be safely stored in your pantry for a long time.

Buy reusable and well-made goods

Not only are reusable and well-made goods better for the environment, they’re better for your wallet too! While it’s sometimes more expensive to purchase these types of goods upfront, the payoff is you don’t have to replace them nearly as often. For example, a $100 pair of shoes that lasts for over a year is better than a $30 pair of shoes that only lasts a couple of months.

Don’t forget the income side of the equation

Discussions around budgeting and inflation naturally revolve around expenses – how to reduce them, how much more you’ll need to pay for items, etc. While this is all important, sometimes it’s not enough. Thankfully, periods of inflation can also be great opportunities to increase your income.

Increasing your income is more easily said than done, but staying on the lookout for new opportunities and ways to earn additional income on top of your regular job can go a long way to reducing the financial stress inflation can bring.

If you’re buying a home, you’ll probably hear the word “escrow” used in a few different contexts. Learn what escrow is, how it works and how it can benefit you as a home buyer, seller or homeowner.

What Is Escrow?

Escrow is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met (such as the fulfillment of a purchase agreement).

How Does Escrow Work?

It’s used in real estate transactions to protect both the buyer and the seller throughout the home buying process. Throughout the term of the mortgage, an escrow account will hold funds for taxes and homeowner’s insurance.

What Is An Escrow Account?

In real estate, escrow is typically used for two reasons:

• To protect the buyer’s good faith deposit so the money goes to the right party according to the conditions of the sale.
• To hold a homeowner’s funds for property taxes and homeowners insurance.

Escrow Accounts For Home Buying

When you’re buying a home, your purchase agreement will usually include a good faith deposit (also known as earnest money). This deposit shows that you’re serious about purchasing the home. If the contract falls through due to the fault of the buyer, the seller usually gets to keep the money. If the home purchase is successful, the deposit will be applied to the buyer’s down payment.

Escrow Accounts For Taxes And Insurance

After you purchase a home, your lender will establish an escrow account to pay for your taxes and insurance. After closing, your mortgage servicer takes a portion of your monthly mortgage payment and holds it in the escrow account until your tax and insurance payments are due.

The Benefits Of An Escrow Account

The biggest benefit of having an escrow account is that you’ll be protected during a real estate transaction – whether you’re the buyer or the seller. It can also protect you as a homeowner, ensuring you have the money to pay for property taxes and homeowners insurance when the bills arrive. You’ll find that there are a few other great benefits for home buyers, owners and lenders, too.

The Disadvantages Of An Escrow Account

When it comes to the disadvantages of an escrow account, it’s the homeowner who encounters most of the burden. Here are some examples:

• Higher monthly mortgage payments: An escrow account is funded through your monthly mortgage payment, making your monthly bill higher than it would be without escrow.
• Incorrect estimates: The amount needed for your escrow depends on your property taxes and homeowners insurance costs, which can change from year to year. 
• Changes to your monthly payment: Escrow is reassessed each year and, depending on if you were short or had excess money, your servicer will come up with a new estimate for the year. 

When it’s difficult to make all your payments on time, or interest rates on your current lines of credit are draining your checking account, consider debt consolidation. This smart financial move may help you get back on track with your monetary responsibilities, may boost your credit score and ease the mental stress of paying multiple bills every monthly.

What is Debt Consolidation?

Put simply, debt consolidation is when you get a loan to pay off various high-interest debts. You become responsible for one payment to the loaning institution, generally at a lower average interest rate than your previous commitments. Debt consolidation is often a good choice for people with high credit card balances and interest rates, student loan debt, unexpected home or car repair bills, medical expenses or other unsecured loans.

You have options when it comes to debt consolidation. AllCom Credit Union can help you discover the best method of consolidating your current debt to make paying bills more streamlined and affordable. Here are four options we often discuss with our members.

Home Equity Line of Credit (HELOC): If you are a homeowner, you can use up to 80% of the paid-off value of your home, or equity, to your advantage. A revolving line of credit uses your home as collateral. You can then withdraw funds as needed — once or multiple times — over a 10-year period to pay down debt.

Home Equity Loan: This option is for homeowners. A Home Equity Loan is similar to a HELOC in that it draws from the equity in your home. However, with a Home Equity Loan, you receive the loan funds in one lump sum payment. You can then use the money to pay off your debts.

Credit Card Balance Transfers: If you’re having trouble staying ahead of your credit card payments, consider transferring all of the balances to one new, lower-interest-rate card. This type of consolidation allows you to pay down your debt faster because less money is going to interest fees, card membership fees and late fees across several cards. AllCom Credit Union offers Visa credit cards with a great low rate, even on balance transfers.

Personal Loan: This option is great for paying down other types of debt, such as an unexpected car repair bill, medical expenses or a loan you need to repay to a friend. A personal loan is set up with a fixed interest rate, fixed monthly payments and a payment schedule so you know exactly how much you will pay each month and when your loan will be paid back in full.

Are you ready to improve your financial situation? AllCom would love to assist you with your next steps. Check out available options and contact us with your questions about debt consolidation today.

The Zelle / P2P fraud scam is widespread and has been making local and national news as the social engineering tactics used by fraudsters in this scam continue to evolve. A newer version of the scam has fraudsters, impersonating a Zelle user’s financial institution, conning the user into using Zelle to transfer funds to themselves using their mobile phone number under the guise that it will replace funds stolen from their account. However, the Zelle transfers go to the fraudsters.

AllCom continues to urge you to be wary of texts or calls appearing to come from the credit union. Never use Zelle, or any other P2P service, to transfer funds to yourself and to call the credit union using a reliable phone number to question any text message or phone call that seems to be received from the credit union.

Here’s a reminder of ways to protect yourself:

1. Pay it safe: Many P2P apps don’t let you cancel a transaction once you’ve sent it to another user. With that in mind, avoid sending or requesting money from anyone you don’t know and trust.
2. Take your time: Try not to rush when you’re using a P2P app to send money. If someone is pushing you to act quickly, it could be a red flag.
3. Treat payments like cash: Money moves quickly when you use P2P apps. Once you hit send, money doesn’t take long to reach its destination. It’s a good idea to double check you have the correct info to make sure your money goes where you intended.
4. Use your security settings: P2P apps have measures in place to help keep your account secure. Two-factor authentication requires you to provide multiple pieces of information to access your account. The first is typically your username and password. The second step might require you to enter a numeric code you’re given in an email or text. Or you might use fingerprint or facial recognition.
5. Be aware of phishing: One way fraudsters might try to access your account is by posing as your bank or a P2P company. They may try to contact you through emails, calls or texts. Avoid clicking links and sharing personal information. They may also claim you need to download another app or give them remote access to transfer money. Never give remote access to a third party.
6. Keep your personal information private: If you use social media, avoid sharing things like your address, phone number and other personal details. And ignore friend requests from people you don’t know.
7. Protect your passwords: Use different passwords for P2P apps and other sites. If you’re worried about remembering them all, there are tools available that might be able to help. And like the tip about your personal information, don’t share your passwords with others.

It has never been easier to transfer money quickly than with peer-to-peer (P2P) payment platforms. The increased convenience has made it easier to order services, shop online and support friends and family members with little to no lag time. Still, there is always someone looking to de-fraud your hard-earned money through fraud, a scam or a security attack. COVID-19 has created new opportunities for fraud and scam attempts, including those related to P2P payments. Taking time to understand potential threats and how to navigate them will give you an added layer of protection from fraud.

An increase in peer-to-peer payments

As P2P payments increase in popularity, it’s become important to know how they work. P2P payments are instant digital transfers that make it simple and secure to send money to friends, family, trusted businesses and professionals without a card, check or traditional multi-step wire transfer process. Similar to a debit card, they eliminate the need to have cash on hand by initiating a payment directly from an associated bank account. In real-time, money can be pulled from your bank account and sent to another P2P account. It’s a secure way to send money and digitize day-to-day transactions—unfortunately, if you’re unprepared, this added speed and convenience can open an opportunity for fraudsters. Some of the most used P2P options include:

• Zelle
• PayPal
• Venmo
• Cash app
• Square
• Apple Pay
• Google Pay

While these platforms are technologically secure, there are still many scams centered on using P2P services. Of particular concern are confidence schemes targeting P2P services. Confidence scams prey on a person’s emotions, wants and needs to gain sensitive personal information or convince the victim to send money to the scammer willingly. You should always be sure that you know and trust any person you are paying.

How do fraudsters commit P2P fraud? 

Criminals are using several methods to commit P2P fraud. Some use “friendly fraud” social engineering tactics, like messaging a user requesting that they deposit the fraudster’s check in their account and then send the funds back to the requester via a P2P app. The fraudster then promises to send the victim $500 as “payment” for the transaction. Of course, the fraudster never sends the payment and the original check bounces, leaving the member (and the credit union) on the hook for the funds. 

Another popular scam is where a fraudster advertises items for sale, like concert or sporting event tickets, and requests payment to be made via a P2P app. Once the funds are received, the fraudster disappears without ever delivering the requested item to the unwitting consumer. 

Unfortunately, with P2P fraud, fraudsters no longer need to obtain a user’s card number to steal funds. If they are able to hack into a member’s smartphone or mobile device, they can easily gain access to the user’s digital wallet app and transfer funds in their name. 

How can you protect yourself?

1. Pay it safe: Many P2P apps don’t let you cancel a transaction once you’ve sent it to another user. With that in mind, avoid sending or requesting money from anyone you don’t know and trust.
2. Take your time: Try not to rush when you’re using a P2P app to send money. If someone is pushing you to act quickly, it could be a red flag.
3. Treat payments like cash: Money moves quickly when you use P2P apps. Once you hit send, money doesn’t take long to reach its destination. It’s a good idea to double check you have the correct info to make sure your money goes where you intended.
4. Use your security settings: P2P apps have measures in place to help keep your account secure. Two-factor authentication requires you to provide multiple pieces of information to access your account. The first is typically your username and password. The second step might require you to enter a numeric code you’re given in an email or text. Or you might use fingerprint or facial recognition.
5. Be aware of phishing: One way fraudsters might try to access your account is by posing as your bank or a P2P company. They may try to contact you through emails, calls or texts. Avoid clicking links and sharing personal information. They may also claim you need to download another app or give them remote access to transfer money. Never give remote access to a third party.
6. Keep your personal information private: If you use social media, avoid sharing things like your address, phone number and other personal details. And ignore friend requests from people you don’t know.
7. Protect your passwords: Use different passwords for P2P apps and other sites. If you’re worried about remembering them all, there are tools available that might be able to help. And like the tip about your personal information, don’t share your passwords with others.