Markus Andrews

In this photo illustration a Kao Corporation logo seen displayed on a smartphone. 
Igor Golovniov | SOPA Images | Lightrocket | Getty Images

Company: Kao Corp (4452.T)

Business: Japan-based Kao Corp manufactures and sells consumer and chemical products. It operates in five business segments. The hygiene and living care segment provides fabric, kitchen, home, sanitary and pet care products. The health and beauty care segment offers facial, body, hair, oral care, hair styling and color products, as well as salon, in-bathroom health care and warming products. The life care business offers health drinks and hygiene products for commercial use. The cosmetics business provides counseling and self-selection cosmetic products. Finally, the chemical business segment features oleo chemicals, fat and oil derivatives, surfactants, fragrances and other specialty chemical products.
Stock Market Value: 2.92 trillion Japanese yen (6,273 yen per share)

Activist Commentary: Oasis Management is a global hedge fund management firm headquartered in Hong Kong with additional offices in Tokyo, Austin and the Cayman Islands. Oasis was founded in 2002 by Seth Fischer, who leads the firm as its chief investment officer. Oasis is an authentic international activist investor, doing activism primarily in Asia (and occasionally Europe). The firm has an impressive track record of prolific and successful international activism. It has as many arrows in its quiver as any activist and has been successful in getting seats on boards, opposing strategic transactions, advocating for strategic actions, improving corporate governance and holding management accountable.

What’s happening

On April 8, Oasis Management announced that it owns over 3% of Kao Corp. Days earlier, the firm rolled out its “A Better Kao” presentation, proposing an overhaul at the company.

Behind the scenes

Kao Corp is a global fast-moving consumer goods company with a diversified portfolio of products spanning from hair and skin care to cosmetics and chemicals. The company operates across five segments, but hygiene and living care (33%), health and beauty (25%), cosmetics (15%) and chemicals (23%) are their four key segments generating nearly all of Kao’s 1.53 trillion yen in revenue in 2023. The company has a stable of brands (including Curél, freeplus, Jergens, Bioré, Oribe and Molton Brown) that has deeply underperformed its peers. As of the issuance of its campaign presentation, Oasis points out that Kao shares were down 22.9% since 2021 while peers were up between 1.7% to 100.4% during the same period. In addition, while peers have recovered their consumer products sales, Kao has failed to return to pre-pandemic levels and has some of the worst operating profit margins in the industry. Despite the push from the Tokyo Stock Exchange for companies to improve return on equity, Kao’s ROE has been on a steady decline to sub-5% in 2023 from approximately 20% in 2017. Operating margins are on a similar trajectory as well, declining to 4% in 2023 from 14% in 2019.
Oasis details what it thinks are the company’s issues in its “A Better Kao” campaign presentation. Oasis thinks the company: (i) is too reliant on Japan, generating 65% of revenue in its domestic market and 35% in the rest of the world, which is a distribution nearly inverse to their peers, (ii) is not in the optimal distribution channels, (iii) is not focused enough on marketing – while peers spend between 20% and 35% of its revenue on marketing and advertising, Kao has consistently only paid 10% to 11% of its consumer goods revenue. Oasis also said that Kao has a bloated brand portfolio with too many subscale domestic brands; the company has nearly 80 brands, but generates the same revenue as peers with 10 to 30.
Oasis does offer several solutions to the company to jumpstart growth such as: (i) reversing its opposition to international expansion and distribution in order to unleash the potential of its stable of globally beloved brands, which have been artificially constrained to domestic and regional markets; (ii) reviewing its brand portfolio, prioritizing focus and investment in high-growth areas, expand gross margins through product premiumization, streamline its bloated brand and SKU portfolio and focus particularly on rationalization in its cosmetics and health and beauty segments; and (iii) embracing marketing by onboarding a CMO with global experience as well as refreshing the board with similarly experienced directors. These are wholesale changes to Kao’s business, geographical footprint, distribution channels and product mix that would usually require an in-depth analysis of costs, demand, competitive landscape and chance of success. Oasis provides none of that.

Oasis does cite Beiersdorf’s turnaround as the analog for what is possible at Kao. Suffering many of the same problems, Beiersdorf had underperformed peers, poorly allocated marketing spend and lagged on premiumization. Investors had also lost confidence in management. The company refreshed its CEO overhauled its corporate culture and growth strategy and refocused on key brands and gross margin expansion. Since doing so, Beiersdorf’s share price has outperformed the rest of its European consumer goods peers. However, Oasis had absolutely nothing to do with that turnaround and is not recommending any of the executives from Beiersdorf for positions at Kao. It is hard to see what relevance Beiersdorf has here besides just being a peer.
Oasis states that the board has no directors with expertise in international consumer goods marketing or branding, and the firm makes good points regarding gender and demographics of the board. Oasis has proven to be a value-creating activist in many situations and would likely be a valuable board member here, but this is not a typical Oasis activist campaign. First, until 2023, the firm had never engaged a cosmetics company. Since then, this is Oasis’ third engagement of a Japanese company in the cosmetics, health and consumer goods category. The other two have not gone so well. Kusuri No Aoki and Tsuruha are both drugstore operators, engaged in the sale of pharmaceuticals, cosmetics and other consumer goods. At both companies, Oasis ran proxy fights and was defeated by management. Second, if Oasis is even remotely correct about the issues at Kao, fixing them would require a total reconstitution of the board and replacement of management. That is not something that is typically done at Japanese companies nor something Oasis has a lot of experience in. In Japan, Oasis and other activists have been successful in creating shareholder value just by engaging companies without getting their activist agenda implemented. That is something that can happen in Japan, but generally when the recommendations are minor such as capital allocation, selling down cross-shareholdings and corporate governance improvements. In this case, Oasis would have to implement its activist agenda and do some heavy lifting to create value at a company with the issues it claims this company has.
That does not seem to be part of the Oasis plan here. Oasis CIO Seth Fischer did not rule out submitting shareholder proposals to Kao, but even that seems like using a flyswatter on an elephant. Additionally, a settlement here is very unlikely. Oasis had been privately meeting with management since 2021, so if management was inclined to work with them, it would have happened already, and Oasis would not have had to go public with its campaign. On the contrary, the day after Oasis launched its campaign, Kao stated that the firm lacked sufficient understanding of its portfolio management and restructuring plans. 
As of the date of its presentation, Oasis projected between 76% to 97% upside for the stock, or nearly 10,000 yen per share if their proposals are adopted. However, the investor has also been engaging privately with the company since June 2021 during which time growth has slowed, margins had declined, ROE has plummeted and the stock has slid. So, I would take the firm’s predictions and chances of success with a grain of salt.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

Watch Daily: Monday – Friday, 3 PM ET

Dado Ruvic | Reuters

The Bitcoin network on Friday night slashed the incentives rewarded to miners in half for the fourth time in its history.
The celebrated event, which takes place about once every four years as mandated in the Bitcoin code, is designed to slow the issuance of bitcoins, thereby creating a scarcity effect and allowing the cryptocurrency to maintain its digital gold-like quality.

There may be some speculative trading on the event itself. JPMorgan said it expects to see some downside in bitcoin post-halving and Deutsche Bank said it “does not expect prices to increase significantly.” However, the impact may be bigger months from now, even if bitcoin continues its trend of diminishing returns from its halving day to its cycle top. Two key things to watch will be the block reward and the hash rate.

“While the upcoming Bitcoin halving will create a supply shock as the previous ones had, we believe its impact on the cryptocurrency’s price could be magnified by the concurrent demand shock created by the emergence of spot bitcoin ETFs,” said Benchmark’s Mark Palmer.
The bigger immediate impact will be to the miners themselves, he added. They’re the ones that run the machines that do the work of recording new blocks of bitcoin transactions and adding them to the global ledger, also known as the blockchain.
“Miners with access to inexpensive, reliable power sources are well positioned to navigate the post-halving market dynamics,” said Maxim’s Matthew Galinko in a note Friday. “Some miners, many that are not public, could exit the market with a combination of poor access to power, efficient machines, and capital. Miners with capital and relatively expensive power will likely find opportunities in the wake of potential consolidation and disruption driven by the halving.”
The block reward
Miners have two incentives to mine: transaction fees that are paid voluntarily by senders (for faster settlement) and mining rewards — 3.125 newly created bitcoins, or about $200,000 as of Friday evening, when the mining reward shrunk from 6.25 bitcoins. The incentive was initially 50 bitcoins.

Arrows pointing outwards

The reduction in the block rewards leads to a reduction in the supply of bitcoin by slowing the pace at which new coins are created, helping maintain the idea of bitcoin as digital gold — whose finite supply helps determine its value. Eventually, the number of bitcoins in circulation will cap at 21 million, per the Bitcoin code. There are about 19.6 million in circulation today.
“Miners utilize powerful, specialized computer hardware to validate transactions on the Bitcoin network and record them permanently on the blockchain,” Deutsche Bank analyst Marion Laboure said. “This process, known as mining, rewards miners with newly minted bitcoins. But with each halving, the reward to mining is decreased to maintain scarcity and control the cryptocurrency’s inflation rate over time.”

The hash rate

Historically after a halving, the Bitcoin hash rate – or the total computational power used by miners to process transactions on the Bitcoin network – has fallen, pricing some miners out of the market. It generally recovers in the medium term, however, Laboure pointed out.
The network hash rate has been hitting all-time highs for months as miners tried to take market share ahead of the halving. Growth in the Bitcoin hash rate dilutes individual miners’ contribution to the network hash rate.
“In the past three halvings, the network recovered its pre-halving hash rate levels within an average of 57 days,” she said. “It is also likely that the current elevated prices of bitcoin may limit this short-term dip in the hash rate, as bitcoin miners enjoy record high profits in the lead-up to the halving.”
Palmer said the impact of the halving on bitcoin miners’ economics could be “more than offset over time” if bitcoin’s price rallies keep pushing the cryptocurrency to new highs in the months ahead.

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A majority of new retirees claim Social Security retirement benefits before age 65, according to new research from the Alliance for Lifetime Income.
Waiting another five to eight years would result in higher lifetime benefits, experts say.
When deciding the right time to claim Social Security, retirees should consider not only the size of their monthly benefits but also their lifetime benefits.

Sporrer/Rupp | Image Source | Getty Images

The largest and final cohort of the baby boom generation — 30.4 million Americans — will turn 65 by 2030.
And more than half of that group will rely primarily on Social Security for income, according to new research from the Alliance for Lifetime Income.

When to claim Social Security retirement benefits is a high-stakes decision. Generally, the longer you wait, the larger your monthly checks will be.
Eligibility for retirement benefits starts at age 62. But full retirement age – generally age 66 or 67, depending on an individual’s birth year — is when retirees may receive 100% of the benefits they’ve earned.
For each year you wait past full retirement age up to 70, you may receive an 8% benefit boost.
“Everyone should know that you have a penalty if you collect before 70,” said Teresa Ghilarducci, a professor at The New School for Social Research and author of the book “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy.”
Yet a majority of new retirees claim benefits before age 65, according to the Alliance for Lifetime Income’s new research, even though waiting another five to eight years would result in higher lifetime benefits.

How to know your full retirement age

To gauge when to claim, you first should know your full retirement age — the point when you’re eligible for 100% of the benefits you’ve earned.
Today, a new higher full retirement age of 67 is getting gradually phased in.
“For most of the people retiring today, their full retirement age is somewhere between 66 and 67,” said Joe Elsasser, a certified financial planner and president of Covisum, a Social Security claiming software company.
If you were born between 1943 and 1954, your full retirement age is 66.  The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. If you were born in 1960 or later, your full retirement age is 67.

Social Security full retirement age

Year of birth
Social Security full retirement age

1943-1954
66

1955
66 and two months

1956
66 and four months

1957
66 and six months

1958
66 and eight months

1959
66 and 10 months

1960 and later
67

Source: Social Security Administration

Why it pays to delay retirement benefits

Claiming at age 62 comes with significant penalties, experts say.
For people who are turning 65 this year, early claiming would have resulted in a 30% benefit cut. Instead of $1,000 per month at their full retirement age, 66 and 10 months, they would be receiving around $700 per month had they claimed at age 62.
Most people know that early claiming will result in reduced benefits, a Schroders survey from 2023 found. However, many respondents still planned to start their monthly checks early.
Using the word “early” to describe claiming at 62 may lead people to feel there is an advantage to claiming then, Shai Akabas, executive director of the economic policy program at the Bipartisan Policy Center, said during a presentation by Alliance for Lifetime Income.

Instead, that could be called the “minimum benefit age” to help people understand there are benefit reductions for claiming then, he said.
A bipartisan group of senators has called for making that change, as well as changing “full retirement age” to “standard benefit age.” Age 70, the highest claiming age, would be called the “maximum benefit age.”
When deciding the right time to claim Social Security, retirees should consider not only the size of their monthly benefits, but also their lifetime benefits, longevity protection and immediate needs, according to the Bipartisan Policy Center.
It also helps to consider how a claiming decision will affect a spouse or dependents who may also receive benefits based on a worker’s record.
Research has found only about 8% of beneficiaries delay until age 70, the highest possible age to claim benefits, according to Ghilarducci. Because Social Security benefits are one of the few sources of guaranteed income for many retirees, having smaller monthly checks can make them more financially vulnerable.
Those who can’t delay their Social Security benefits for years can still increase their lifetime benefit income by delaying for just a few months, Ghilarducci said.
“Do whatever you can to bridge to a higher Social Security benefit amount,” Ghilarducci said. More

The number of centenarians in the U.S. is poised to quadruple over the next three decades.
By 2054, Americans over 100 years old will represent 0.1% of the population, up from 0.03% today, according to a Pew Research Center analysis.
Many Americans will likely have to work past age 65 to fund longer retirements, experts said. Households should also save as much and as early as possible.

Artur Debat | Moment | Getty Images

The number of centenarians in the U.S. is poised to balloon in coming decades. That longevity poses a big financial challenge for households.
By 2054, there will be an estimated 422,000 Americans age 100 and older — more than four times the 101,000 in 2024, according to a Pew Research Center analysis of U.S. Census Bureau data.

Centenarians make up 0.03% of the total U.S. population today, a share expected to reach 0.1% three decades from now, the analysis found.
What’s more, the centenarian population has nearly tripled in the last three decades alone, according to Pew.

Irving Piken during his 111th birthday celebration at the Laguna Woods Community Center in California on Dec. 20, 2019. Piken, who passed away in February 2020, was believed to be the oldest man living in the U.S. 
Mark Rightmire/MediaNews Group/Orange County Register via Getty Images

Meanwhile, even if Americans don’t reach age 100, more of them will live to 90 and 95 years old, said John Scott, director of retirement savings at The Pew Charitable Trusts.
That demographic shift will put enormous stress on the traditional notion of financing retirement, experts said.
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“If people still retire in their 60s, it means the funding for retirement needs to go on for decades,” said Barry Glassman, a certified financial planner and founder of Glassman Wealth Services.
 “If retirement is going to last that long, then savings needs to last that long as well,” said Glassman, a member of CNBC’s Advisor Council.

Working longer may be necessary …

Among the best ways to hedge against outliving one’s savings is by working longer, according to retirement experts.
It’s already happening.
By 2032, 25% of men and 17% of women age 65 and older are expected to be in the labor force, up from 24% and 15%, respectively, in 2022, according to Population Reference Bureau.
That may be more necessary as employers have offloaded responsibility for retirement savings onto workers’ shoulders, by shifting from pensions to 401(k)-type retirement plans. Workers must choose how to invest and how much money to save with each paycheck to ensure for a comfortable retirement.

But even delaying retirement by a few years — to 68 years old from 65, for example — can financially “move the needle significantly,” Glassman said.
“People need to be prepared to work longer,” he said.
Doing so yields more years of income, and generally allows people to save for a longer time, delay drawing down their nest egg and defer claiming Social Security benefits.
Social Security, unlike 401(k) plans, provides guaranteed income for life. By delaying claiming to age 70, retirees can maximize their monthly checks.

If they have the resources, retirees can also consider buying an annuity with a portion of their savings to generate a monthly guaranteed income stream like Social Security, Pew’s Scott said.
Retirees can still work part time so they have some additional cash flow, Glassman said.
He sees more clients doing this, with professionals who become consultants upon retirement, or radiologists who can work remotely and read health scans, he said.
“There is a demand for labor in this country,” Scott said.
Staying up to date with skills may help retirees find some work later if they need to supplement income, he said.

… and more possible in the future

Of course, working longer won’t be possible for everyone.
People may have physically taxing jobs that require them to retire relatively early, or suffer health complications that require early retirement, for example. Others may not be able to do jobs on a part-time basis.
Retirement is likely to be full of many more “healthy, vibrant” years in coming decades due to advancements in technology and health care, for example — meaning the notion of working longer, even in physical jobs, isn’t far-fetched, Glassman said.

He pointed to marathon statistics as an example: 441 people age 70 and older finished the New York City Marathon in 2023, about 0.9% of all runners. That’s up from 144 people two decades earlier, or roughly 0.4% of the total runners.
Aside from work, Americans should try to save as much as they can, and start as early as they can, Scott said. Those who get an employer 401(k) match at work should strive to save enough to get the full match, which is essentially free money, he said.
Responsibilities like paying student loans, saving for a house and spending on caregiving needs for children does make saving difficult, but even saving a little bit now will help in the long run, he said.
“Over time, that will add up,” Scott said.

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The annual rate for newly purchased Series I bonds could fall below 5% in May, which is lower than the current 5.27% on new purchases through April 30.
Short-term investors may have more competitive options for cash, such as Treasury bills, money market funds or certificates of deposit.
However, the I bond’s fixed rate may still appeal to long-term investors looking to preserve purchasing power.

dowell | Moment | Getty Images

While the annual rate for newly purchased Series I bonds could fall below 5% in May, the assets may still appeal to long-term investors, experts say.
Investors currently earn 5.27% annual interest on new I bonds purchased before May 1. Some experts predict the new rate could drop to around 4.27% based on inflation and other factors.

But there’s still a chance to lock in six months of the 5.27% yearly rate for new I bonds before May 1, assuming you haven’t exceeded the purchase limit for 2024.
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Based on the last six months of inflation data, the variable portion will fall from 3.94% to 2.96% in May. The fixed-rate portion is harder to predict, but experts say it could stay close to 1.3%.
The 1.3% fixed rate makes I bonds “very attractive” for long-term investors because the rate stays the same after purchase, said Ken Tumin, founder of DepositAccounts.com, which closely tracks these assets.  
By contrast, the variable rate stays the same for six months after purchase, regardless of when the Treasury announces new rates. After that, the variable yield changes to the next announced rate.

It’s a ‘better bet’ to buy I bonds now

If you want more I bonds, “it’s probably a better bet to buy before the end of April and lock in that higher rate for six months,” according to David Enna, founder of Tipswatch.com, a website that tracks Treasury inflation-protected securities, or TIPS, and I bond rates.
If you buy I bonds now, you’ll receive 5.27% annual interest for six months and the new May rate for the following six months. He suggests buying a few days before April 30.
Enna expects the fixed rate will be 1.2% or 1.3% in May, based on the half-year average of real yields for 5- and 10-year TIPS.
However, long-term investors could be disappointed if they purchase in April and the Treasury announces a higher fixed interest rate in May.

I bonds no longer a ‘slam dunk’ for short-term investors

While long-term investors may be eyeing the I bond fixed rate, short-term investors may have better options for cash elsewhere, experts say.
“They’re not a slam dunk anymore compared to an online [certificate of deposit] or compared to an online savings account,” Tumin said.

They’re not a slam dunk anymore compared to an online [certificate of deposit] or compared to an online savings account.

Founder of DepositAccounts.com

As of April 19, the top 1% average one-year CDs were paying about 5.5%, and the top high-yield savings accounts were paying around 5%, according to DepositAccounts.   
Experts say short-term investors may also consider U.S. Treasurys or a money market fund.
As of April 19, most Treasury bills were paying well over 5%, and two-year Treasury notes were around 5%. Meanwhile, some of the largest money market funds were paying close to 5.4% as of April 19, according to Crane Data. 
“You just don’t know where short-term rates are going to go,” Enna said. “That’s why I like the idea of locking in a year if you’re going to buy a short-term investment. More

The path to 2% inflation is “more difficult” in 2024, Federal Reserve Bank of Chicago president Austan Goolsbee said on Friday.
Inflation has dropped significantly since its pandemic-era peak of 9.1%, but it remains above the Fed’s target.
Goolsbee said the Fed needs “more sniffing” before it can start cutting interest rates.

Chicago Federal Reserve Bank President Austan Goolsbee speaks at the Council on Foreign Relations in New York, U.S., February 14, 2024. 
Staff | Reuters

“If you take a broad view, inflation got way above where we were comfortable with and it’s down a lot,” he said.
The first three readings for this year indicate covering the remaining distance to 2% “may not be as rapid,” he added.
That “stalling” merits further investigation on the direction of the economy before the Fed moves to cut rates, said Goolsbee, who is a nonvoting member this year of the rate-setting Federal Open Market Committee.
He described himself as a “proud data dog,” and pointed to what he says is “the first rule of the kennel.”

“If you are unclear, stop walking and start sniffing,” he said. “And with these numbers, we need to do more sniffing.”
“We want to have confidence that we are on this path to 2[%],” he said. “That’s the thing we have got to pay attention to.”

Housing inflation is a key area to watch, Goolsbee said.
“That’s the one that has not behaved as we thought it would,” he said.
Shelter costs, which make up about one-third of the weighting in the CPI, rose 5.7% in March from a year ago. 
“The market rent inflation is well down, but it hasn’t flowed through into the official measure,” he said. “If it doesn’t — I still think it will — but if it doesn’t, I think we’re going to have a hard time. It’s definitely going to be more difficult to get to 2% overall if we do not see progress.”

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Problems with the new Free Application for Federal Student Aid have resulted in fewer students applying for college financial aid.
Given the current status of FAFSA submissions, the Department of Education is on track to see 2.6 million fewer FAFSAs submitted this year, a nearly 20% decline, according to higher education expert Mark Kantrowitz.
Studies show students are more likely to enroll in college when they have the financial resources to help them pay for it.

As enrollment deadlines approach, fewer students have figured out how they will afford college next year.
Ongoing problems with the new Free Application for Federal Student Aid have delayed financial aid award letters and even prevented many high school seniors and their families from applying for aid at all.

As of the latest update, roughly 7.3 million 2024-25 FAFSA applications have been submitted and sent to schools, according to the U.S. Department of Education, less than half of the more than 17 million students who use the FAFSA in ordinary years.
At the current rate, the number of FAFSAs submitted by the end of August will be about 2.6 million fewer than the same time last year, a decrease of 18%, according to higher education expert Mark Kantrowitz.
“This is a complete disaster,” he said.
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Still, it’s too soon to say whether those remaining students will ultimately apply for aid and how that could impact their decisions about college in the fall, according to Sandy Baum, senior fellow at Urban Institute’s Center on Education Data and Policy.

“The question is really, ‘What is the long-term impact?’ We just don’t know yet,” she said.
Many institutions are now issuing aid with the information they have on hand, according to the Department of Education.
“Students should know that they are not going through this alone, we will remain in regular communication with schools and students and encourage students to stay in touch with us and with their colleges,” an Education Department spokesperson said.

Ramon Montejo García, 17, a senior at the KIPP Northeast Denver Leadership Academy in Colorado.
Credit: Ramon Montejo García

Ramon Montejo García, a 17-year-old senior at the KIPP Northeast Denver Leadership Academy in Colorado, has been accepted to his first-choice school, Wheaton College in Massachusetts. 
But with a sticker price of nearly $80,000 per year, including tuition, fees, and room and board, Montejo García, like many college hopefuls, will need financial aid to bring the cost down. However, he hasn’t submitted a FASFA yet, which serves as the gateway to all federal aid money, including loans, work-study opportunities and grants.
One issue with the new form specifically concerned parents without a Social Security number. Although Montejo García’s parents have lived in the U.S. since 2001, they are both undocumented. (The U.S. Department of Education said this issue has been resolved.)
Without aid, Montejo Garcia said he will likely attend an in-state school but added that “it’s been really emotional.”
“How will this work out? I don’t have a lot of time,” he said.
Other students may default to their local public college as well, according to Charles Welch, president and CEO of the American Association of State Colleges and Universities.
“So many of our students are more likely to attend an institution that is close by,” he said. “For many of our students it’s less about comparing offers and more about, ‘Can I go at all?'”

Fewer grants going out

As of April 5, only 28% of the high school class of 2024 has completed the FAFSA, according to the National College Attainment Network, a 38% decline compared with a year ago.
Of all the financial aid opportunities the FAFSA opens up, grants are the most desirable kind of assistance because they typically do not need to be repaid.
Under the new aid formula, an additional 2.1 million students should be eligible for the maximum Pell Grant, according to the Department of Education.
However, given the slower pace of FAFSA applications being submitted, “the number of Pell Grant recipients will be about the same as last year, despite the new Pell Grant formula making it easier for students to qualify,” Kantrowitz said.

FAFSA completion paves the way for college

Submitting a FAFSA is one of the best predictors of whether a high school senior will go to college, the National College Attainment Network found. Seniors who complete the FAFSA are 84% more likely to immediately enroll in college. 
However, in the past, many families mistakenly assumed they wouldn’t qualify for financial aid and didn’t even bother to apply. Others said a lengthy and overly complicated application was a major hurdle. Some said they just didn’t have enough information about it.
In ordinary years, high school graduates were already missing out on billions of dollars’ worth of federal grants because they didn’t fill out the FAFSA, experts say.
“We really want to think about the students considering forgoing the process altogether,” said Ellie Bruecker, interim director of research at The Institute for College Access and Success.
The goal of FAFSA simplification was to improve college access, she added. “The number of students left out of the college pipeline is huge.”
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Certain heirs have to deplete inherited retirement accounts within 10 years due to a provision in the Secure Act.
However, the rules have confused taxpayers and the IRS has again delayed penalties for missed required minimum distributions.

Hero Images | Getty Images

The IRS has again waived required withdrawals for certain Americans who have inherited retirement accounts since 2020. It may not be a good thing for heirs, experts say.
Before the Secure Act of 2019, heirs could “stretch” retirement account withdrawals over their lifetime, which reduced year-to-year tax liability. Now, certain heirs have a shorter timeline due to changed rules for so-called required minimum distributions, or RMDs.

Under the Secure Act, certain heirs must empty inherited accounts by the 10th year after the original account owner’s death. Otherwise, they could face a hefty penalty. In 2022, the IRS proposed mandatory yearly withdrawals if the original account owner had already started distributions.
Amid questions, the IRS has previously waived the penalty for missed RMDs, and the agency on April 16 extended that relief for 2024.
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“It’s so confusing,” said individual retirement account expert and certified public accountant Ed Slott, speaking about the 10-year rule.
“Even the IRS has to give people a break until they can figure out if [beneficiaries] are subject to RMDs or not,” he said.

The latest penalty relief only applies to certain heirs, known as “non-eligible designated beneficiaries,” subject to the 10-year withdrawal rule under the Secure Act. Non-eligible designated beneficiaries include heirs who aren’t a spouse, minor child, disabled, chronically ill or certain trusts.

New rule ‘could be a little dangerous’

The latest IRS update says those heirs won’t incur a penalty for missed RMDs for inherited accounts in 2024. But they still must empty the account by the original 10-year deadline.
That “could be a little dangerous because it is potentially just letting you kick the can down the road on making a decision,” according to certified financial planner Edward Jastrem, chief planning officer at Heritage Financial Services in Westwood, Massachusetts.
With years of delayed RMDs, heirs with sizable pretax inherited retirement accounts may need larger future distributions to empty the account within 10 years.

Before 2018, the federal individual brackets were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. But five of these brackets are lower through 2025, at 10%, 12%, 22%, 24%, 32%, 35% and 37%. Without changes from Congress, tax brackets will revert to 2017 levels.
Depending on your tax bracket, it could make sense to start making withdrawals in 2024, especially with higher tax brackets on the horizon, Slott said.
Of course, you need to weigh your entire financial situation while planning for inherited retirement account withdrawals. “It’s one of many moving parts,” Jastrem added.

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