Markus Andrews

If you’re considering a Roth individual retirement account conversion, your tax bracket could help you decide whether the move makes sense.
Before completing the transfer, you need to know how long it will take to break even on upfront taxes, based on your long-term goals.
You should also weigh other financial planning opportunities in lower-income years, experts say.

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The best tax brackets for Roth conversions

When crunching the numbers for a Roth conversion, you’ll want to consider how the transfer impacts your current tax bracket, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
If you can stay within the 12% tax bracket or lower, “that’s a no-brainer, 99% of the time,” he said. But anything above the 12% is “situational,” depending on a client’s goals and other factors. 

Ryan Losi, a certified public accountant and executive vice president of CPA firm Piascik, also uses a “rule of thumb” to greenlight Roth conversions.
“If we can convert and still stay in the 24% bracket or lower, I’m a thumbs up,” he said. But bumping into the 32% bracket or higher prolongs the “recovery period” to recoup upfront taxes. 
Of course, these benchmarks can change depending on a client’s unique circumstances, such as estate planning goals, experts say. 

Weigh rebalancing in lower-income years

When completing a Roth conversion, advisors typically aim to fill a specific tax bracket with income without spilling into the next one.
But you could miss other planning opportunities by focusing solely on Roth conversions, Lucas said.
For example, if you’re sitting on a large brokerage account with sizable gains, you could leverage your lower tax brackets to rebalance your portfolio, he said.
The strategy, known as “tax gain harvesting” involves strategically selling profitable assets during lower-income years.
For 2024, you may qualify for the 0% long-term capital gains rate with a taxable income of up to $47,025 if you’re a single filer or up to $94,050 for married couples filing jointly. 
These figures would include assets sold from your brokerage account. More

The Federal Reserve is likely to cut interest rates for the third time when it meets next week.
Consumers could see some of their borrowing costs come down as well.
From credit cards to car loans and mortgages, here’s a breakdown of what to expect as the Fed trims its benchmark.

The Federal Reserve is expected to lower interest rates by another quarter point on Dec. 18 at the end of its two-day meeting. That would mark the third rate cut in a row — all together shaving a full percentage point off the federal funds rate since September.
So far, the central bank has moved slowly as they recalibrate policy after swiftly hiking rates when inflation hit a 40-year high.

“This could be the last cut for a while,” said Jacob Channel, senior economic analyst at LendingTree.
The Fed might choose to take “a wait-and-see approach” because there is some uncertainty around President-elect Donald Trump’s fiscal policy when he begins his second term, Channel said.
In the meantime, high interest rates have affected all sorts of consumer borrowing costs, from auto loans to credit cards. 
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The federal funds rate, which the U.S. central bank sets, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates consumers see every day.

A December cut could lower the Fed’s overnight borrowing rate by a quarter percentage point, or 25 basis points, to a range of between 4.25% and 4.50% from its current range of between 4.50% and 4.75%. 
That “will exert some margin of easing of financial pressure,” said Brett House, economics professor at Columbia Business School, but not across the board.
“Some of the most important interest rates that people face don’t benchmark off the Fed rate,” he said.
From credit cards to car loans to mortgages, here’s a breakdown of how it works:

Credit cards

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to 20.25% today, according to Bankrate — near an all-time high.
Even though the central bank started cutting interest rates in September, the average credit card interest rate has barely budged. Card issuers are often slower to respond to Fed decreases than to increases, said Greg McBride, Bankrate’s chief financial analyst.
“The rate will go a step lower but with a lag up to three months,” McBride said.
A better move for those with credit card debt is to switch to a 0% balance transfer credit card and aggressively pay down the balance, he said.
“Interest rates are not going to fall fast enough to do the heavy lifting for debt-burdened consumers,” he said.

Mortgage rates

Because 15- and 30-year mortgage rates are fixed and mostly tied to Treasury yields and the economy, they are not falling in step with Fed policy. And since most people have fixed-rate mortgages, their rate won’t change unless they refinance or sell their current home and buy another property. 
As of the week ending Dec. 6, the average rate for a 30-year, fixed-rate mortgage is 6.67%, according to the Mortgage Bankers Association.
Those rates are down somewhat from the previous month, but well above the 2024 low of 6.08% in late September.
“Going forward, mortgage rates will likely continue to fluctuate on a week-to-week basis and it’s impossible to say for certain where they’ll end up,” Channel said.

Auto loans

Auto loans are fixed. However, payments have been getting bigger because car prices are rising and that has resulted in less-affordable monthly payments.
The average rate on a five-year new car loan is now around 7.59%, according to Bankrate.
While anyone planning to finance a new car could benefit from lower rates to come, the Fed’s next move will not have any material effect on what you get, said Bankrate’s McBride. “Sticker prices are high and the amounts being financed by borrowers are very, very high,” he said — around $40,000, on average.
“Even at very low rates, that is a budget-busting monthly payment,” he said.

Student loans

Federal student loan rates are also fixed, so most borrowers won’t be immediately affected by a rate cut. However, if you have a private loan, those loans may be fixed or have a variable rate tied to the Treasury bill or other rates, which means as the Fed cuts rates, the rates on private student loans will come down as well.
Eventually, borrowers with existing variable-rate private student loans may also be able to refinance into a less-expensive fixed-rate loan, according to higher education expert Mark Kantrowitz. 
However, refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, he said, “such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options.”
Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.

Savings rates

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.
As a result of the Fed’s string of rate hikes in recent years, top-yielding online savings accounts have offered the best returns in decades and still pay nearly 5%, according to McBride.
“This is still a good time to be a saver and a good time for cash,” he said. “The most competitive offers are still well ahead of inflation and that’s likely to persist.”
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Cathie Wood, CEO of Ark Invest, speaks during an interview on CNBC on the floor of the New York Stock Exchange on Feb. 27, 2023.
Brendan McDermid | Reuters

Innovation investor Cathie Wood’s struggling funds enjoyed a much-needed boost from Donald Trump’s reelection, but that hasn’t translated into investor inflows.
Wood’s flagship Ark Innovation ETF (ARKK) has surged more than 30% since Election Day on Nov. 5, pushing its year-to-date return to nearly 18%. Much of the gain came from its biggest holding Tesla, with a 16.3% weighting. The electric vehicle maker’s stock has skyrocketed about 70% since Trump claimed victory.

Still, the exchange-traded fund suffered $49 million in outflows in November and another $24 million in the first week of December, according to FactSet. They added to ARKK’s total outflows of more than $3 billion in 2024, in a record year for the ETF industry that experienced a whopping $1 trillion in new money.
“Investors continue to redeem shares. ARKK has lost its luster as the leading actively managed ETF,” said  Todd Rosenbluth, head of research at TMX VettaFi.

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The investor shot to fame during the Covid-19 pandemic for her bold calls on Tesla and popular Covid plays such as Zoom Video. However, the pandemic rally proved short-lived and ARKK has since lost about 60% of its value from its 2021 peak.
Wood is now betting that possible deregulation under Trump could sprout innovative developments after years of policy hurdles. She believes these technology advances could turbocharge the U.S. economy more powerfully than during the Reagan era.
Trump bump
Tesla has emerged as one of the biggest Trump beneficiaries in ARKK’s portfolio because of CEO Elon Musk, who poured $277 million into a pro-Trump campaign effort. Musk even got assigned a starring role by Trump, leading a so-called Department of Government Efficiency.

Following a massive postelection rally, Wood trimmed her Tesla holding in ARKK slightly, selling 51,335 shares on Wednesday for about $21.8 million, according to her daily update.

Arrows pointing outwards

Another top performer in ARKK has been Coinbase, which is the second-largest holding in the fund. The crypto exchange has seen shares rally more than 80% this year as bitcoin exceeded the key $100,000 threshold.
Investors have grown hopeful that Trump will usher in a golden age of crypto, which would include more supportive regulation for the industry and a potential national strategic bitcoin reserve or stockpile. This theme also benefited Robinhood, the sixth-biggest holding in ARKK, which has skyrocketed more than 213% in 2024.
Still, some of ARKK’s holdings have yet to return to their glory heydays during the pandemic even as tech benchmark Nasdaq Composite has hit multiple record highs. Roku is down 9% this year, while Pinterest has lost 16%. More

Traders work on the floor of the New York Stock Exchange during morning trading on Nov. 26, 2024.
Michael M. Santiago | Getty Images

Bitcoin exchange traded funds are now the largest holders of the flagship cryptocurrency. 
The 12 spot bitcoin ETFs in existence have collectively passed $100 billion in assets under management, one of the most successful ETF launches in history. 

The funds now own slightly more than 1.1 million bitcoin, equivalent to about 5% of all the bitcoin in existence. 

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Bitcoin in 2024

Collectively, bitcoin ETFs now own more of the cryptocurrency than legendary pseudonymous founder Satoshi Nakamoto, who is believed to control as much as 1.1 million bitcoin. 
Largest bitcoin holders

U.S. Spot ETFs            1,104,534
Satoshi Nakamoto   1,100,000
Binance                        633,000
MicroStrategy             402,100
U.S. Government       198,109
Chinese Government 194,000
Bitfinex                            184,027
Kraken                              158,959
Block One                        164,000
Robinhood                      142,361

Source:  Bloomberg/Eric Balchunas
“Bitcoin ETFs have become the vehicle of choice for bitcoin holders,” Brian Hartigan, global head of ETFs at Invesco, said Monday on CNBC’s “Halftime Report.” 

Bitcoin is now 1% of all ETF assets

Here’s the math: U.S. ETFs now have a little over $10 trillion in assets under management. With spot bitcoin ETFs now accounting for more than $100 billion in assets, bitcoin is now about 1% of the assets under management of the entire ETF universe. 

That 1% is a significant milestone. For years, bitcoin advocates have been looking for ways to convince skeptics they should allocate a small portion of their portfolio to bitcoin. 
A typical argument is that as assets under management have grown, investors should allocate 1% of their portfolio to bitcoin. The argument is that if bitcoin goes bust, losing 1% is no big deal, but the scarcity value of the cryptocurrency leaves it with a bigger chance of increasing in value over time.
It’s now becoming a bit easier to make that kind of argument, with bitcoin accounting for 1% of the assets under management in ETFs.
 “So for people asking that question, if you don’t own it, you’re 1% under allocated to bitcoin,” Hartigan said.

Why have bitcoin ETFs been such a hit?

 The ETFs’ popularity boils down to pent-up demand and an up market.
“I think everything lined up perfectly for these products coming to market,” Nate Geraci, president of The ETF Store, said Monday on “ETF Edge.” “Because, remember, you had over 10 years of pent-up demand here, because the first bitcoin ETF filing was all the way back in 2013, and this has been talked about ad nauseam over the past decade. So I think that created a lot of pent-up demand.”
A relentless up market was the second catalyst. 
“Bitcoin itself has obviously performed very well,” Geraci said, noting that the crypto has more than doubled this year. “That clearly helps. There’s just been a ton of coverage in this space that helps generate investor interest. So all of the ingredients have been there. It’s really been a perfect recipe.”

Bitcoin backers’ hopes for 2025

The bitcoin and ETF industry are expecting even more inflows in 2025 on two hopes. First, they want institutions to loosen investment requirements and permit clients to own and trade bitcoin. Second, they seek a friendlier regulatory environment.
“The ETF has become the liquidity vehicle for holding the digital assets themselves,” Hartigan said on CNBC’s “ETF Edge” program. “It’s liquid, that’s regulated, and I think that really touts the benefits of the ETF. So, hopefully that’s the kind of that intermediary vehicle that we needed to give the institutional marketplace more access to digital coin.”
President-elect Donald Trump’s announcement that venture capitalist David Sacks will be the crypto “czar” and the plan to nominate Paul Atkins to be chair of the U.S. Securities and Exchange Commission has bitcoin enthusiasts believing that a much friendlier regulatory environment is coming.
Atkins, a former Republican SEC commissioner, has been supportive of bringing more regulatory clarity to the crypto market.
“If the SEC were more accommodating and would, you know, deal straightforwardly with these various [crypto] firms, I think it would be a lot better to have things happen here in the United States rather than outside,” Atkins said in a “Kibbe on Liberty” podcast in February 2023. 
In that podcast, Atkins expressed support for a digital currency that is not controlled by the government.
“To have something that is not controlled by any particular entity, is not centralized, is a trustless type of product, where you have all the different miners and validators who are validating different transactions and appending them to the blockchain, makes a lot of sense,” he said.

Will bitcoin ETFs pass gold ETFs in 2025?

With spot bitcoin ETFs now over $100 billion in AUM, Geraci said there is a real chance bitcoin ETFs will pass gold ETFs next year.
“For context, the physical gold ETF category, which has been around for over 20 years, that has about $125 billion in assets [compared to $100 billion in spot bitcoin ETFs],” Geraci said.
“So, it’s not inconceivable to think that spot bitcoin ETFs will surpass gold ETFs sometime over the next several months, which is just astounding when you think about it, when I think about the demand here,” he added. More

Egg prices may approach record highs, just about two years after they peaked during the pandemic era.
Highly pathogenic avian influenza, better known as bird flu, has killed millions of chickens and reduced egg supply. Consumer egg demand is also highest around Thanksgiving and Christmas.
The trajectory of the bird flu outbreak is unclear.

A customer walks by a display of fresh eggs at a grocery store on Sept. 25, 2024 in San Anselmo, California.
Justin Sullivan | Getty Images

It’s déjà vu for grocery shoppers, as the price of those Grade A eggs has spiked in recent months, just two years after egg prices soared to record highs.
The average retail price of eggs in the U.S. has risen 38% since November 2023, according to consumer price index data issued Wednesday. Prices rose 8% last month alone.

A carton of a dozen large Grade A eggs cost $3.65 in November, up from $2.14 a year earlier, according to the U.S. Bureau of Labor Statistics.
There are two primary reasons for the surge: bird flu, which has reduced egg supply, and the strong consumer demand that’s typical around the winter holiday season, according to economists and market analysts.
“There’s a very real chance we could flirt with record highs” for prices, said Brian Moscogiuri, vice president of Eggs Unlimited, an egg supplier.

Grade A egg prices peaked at $4.82 a dozen in January 2023, having jumped from $1.93 in January 2022.
At a time of high pandemic-era inflation, eggs were a standout, with an annual inflation rate of 60% in calendar-year 2022, according to CPI data. They even entered the zeitgeist: Pop star Taylor Swift told comedian Trevor Noah at the Grammy Awards in February 2023 that her fans would “get on it” to help lower egg prices.

How a ‘serious’ bird flu outbreak is affecting egg prices

Now, as in 2022-23, highly pathogenic avian influenza — better known as bird flu — is a big culprit.
Bird flu is a highly contagious and lethal disease among birds, including chickens. The U.S. is in the midst of a “serious outbreak,” Moscogiuri said.
The disease entered the U.S. in late 2021 and has lingered, experts said. Prior to that, the last time bird flu had impacted egg-laying chickens at commercial farms was in 2015, Moscogiuri said.
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About 33 million commercial egg layers have been killed by bird flu in 2024, according to data from the Centers for Disease Control and Prevention.
That has “caused an egg supply shortage,” said Ryan Hojnowski, an egg analyst at Expana, an agricultural market research firm.

Roughly half of the commercial egg layer deaths for 2024 — about 15 million birds — have occurred since Oct. 15, according to CDC data. Wholesale egg prices are up 97% since mid-October, according to Expana.
“If you have one infection, chances are that d— near all the birds are infected, or will be infected in a very short time,” said Andrew Novakovic, a professor of agricultural economics at Cornell SC Johnson College of Business.

Thanksgiving, Christmas holidays raise egg demand

The egg supply shortage is also running headlong into peak season for consumer demand.
“Q4 is when we typically see the strongest demand for eggs as consumers tend to bake around the Thanksgiving and Christmas holidays,” Hojnowski said.
High demand and reduced supply have combined to lift prices, experts said.
“When we get past this holiday effect, I think we’ll see some [price] softening,” Novakovic said.

Karrastock | Moment | Getty Images

But the trajectory is difficult to predict, experts said.
For one, bird flu’s staying power is unclear. There have been recent outbreaks in U.S. dairy cows, and “several recent human cases in U.S. dairy and poultry workers,” the CDC said. As of Dec. 11, the current public health risk was “low,” however, the CDC website said.  
The U.S. Department of Agriculture on Friday issued a federal order requiring testing of U.S. milk supply for bird flu, to help track and contain the virus.
“Like any infectious disease, it’s a little hard to accurately forecast how it’s going to progress,” Novakovic said. More

The economy is doing “exceptionally well” as President-elect Donald Trump gets ready to enter the White House, said Moody’s Analytics chief economist Mark Zandi.
But, Zandi added, “I do think there are some potential storms coming.”

Mark Zandi, chief economist at Moody’s Analytics, testifies during a Senate Budget Committee hearing in the Dirksen Building in Washington, D.C., May 4, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

The economy is doing “exceptionally well” as President-elect Donald Trump gets ready to enter the White House, according to Moody’s Analytics chief economist Mark Zandi.
Zandi, speaking at the Consumer Federation of America’s financial services conference on Wednesday, noted some of the glowing areas: Gross domestic product has been growing at around 3%, productivity and business formation rates are strong, and the stock market is up.

“The economy can weather a lot of storms,” Zandi said.
But, he added, “I do think there are some potential storms coming” next year under the new administration.

Immigration policy, tariffs could affect economy

Zandi expects Trump to act quickly on deporting immigrants and implementing tariffs, two moves that could have profound impacts on the U.S. economy.
“I believe President Trump is going to do what he said he’ll do on the campaign trail,” Zandi said. “He’s going to be quite aggressive in pursuing the policies.”
Immigration has played a big role in the economy’s strength, Zandi said.

Others agree. “Recent immigrants have flowed disproportionately into the parts of the labor force that were particularly tight in 2022, contributing to labor supply in places where it was most badly needed,” Goldman Sachs analysts wrote in a note to clients in May.

Meanwhile, tariffs create “a whole lot of uncertainty for businesses,” Zandi said. As a result, they could lead to job losses.
Tariffs are also likely to affect people’s spending, he said.
“It’s going to mean higher costs for consumers — it’s a tax increase,” Zandi said.
Trump’s universal tariff proposals could cause prices to skyrocket on clothing, toys, furniture, household appliances, footwear and travel goods, according to a recent report from the National Retail Federation.
Trump has said he would impose a 10% or 20% tariff on all imports across the board.
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The NRF found that the impact of the tariffs would be “dramatic” double-digit percentage price spikes in nearly all six retail categories that the trade group examined.
For example, the cost of clothing could rise between 12.5% and 20.6%, the analysis found. That means an $80 pair of men’s jeans would instead cost between $90 and $96.
These new prices would squeeze consumer budgets, especially for low-income households, which spend three times as much of their after-tax income on apparel as high-income households spend, according to the NRF report, which cited Bureau of Labor Statistics data. More

If you’re age 73 or older and retired, the annual deadline for required minimum distributions is approaching, according to the IRS.
Generally, you must start RMDs by age 73. The first due date is April 1 after turning 73, and you must take future RMDs by Dec. 31.
Skipping an RMD or not taking the full amount by the deadline will trigger a 25% penalty.

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Large balances can cause a ‘tax nightmare’

For some investors, bigger pretax accounts can be “a tax nightmare in retirement” when it’s time for RMDs, certified financial planner Derek Williams with Veratis Advisors in Cary, North Carolina previously told CNBC.
Pretax RMDs boost your adjusted gross income, which can cause higher Medicare Part B and Part D premiums, among other tax consequences, he said.

Your RMD is based on your pre-tax retirement balance as of Dec. 31 from the previous year. That means your 2024 RMD uses year-end figures from 2023.

For 2024, the calculation divides your 2023 pretax balance by an IRS life expectancy factor.  
If you skip an RMD or don’t take the full amount by the deadline, you can expect a 25% excise tax on the amount not withdrawn. The penalty falls to 10% if the RMD is “timely corrected within two years,” according to the IRS.
The agency could waive the RMD penalty if the shortfall was due to “reasonable error” and you take “reasonable steps” to correct it. But you must file Form 5329 with a letter of explanation.

Reduce taxes with charitable transfer

If you need to take an RMD and also want to plan a year-end gift to charity, it’s possible to accomplish both with a qualified charitable distribution, or QCD, experts say.
QCDs are transfers from an individual retirement account to a non-profit organization, which “counts against your RMD but doesn’t get added to your taxable income,” according to CFP Michael Lofley with HBKS Wealth Advisors in Stuart, Florida.
Plus, you can use the strategy to score a tax break for charitable gifts, even if you don’t itemize deductions on your tax return, said Lofley, who is also a certified public accountant.
There’s been a higher standard deduction since 2018, and only about 10% of taxpayers itemized tax breaks on 2021 returns, according to the most recent IRS filing data. More

Mortgage lenders want to know if you’re financially capable of paying back the loan and will ask for documents like tax returns, your W-2 and paystubs.
Any money that you earn that isn’t tied to a form like a W-2 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree.
Here’s what to know.

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A number of factors can get your mortgage application denied. So-called “unverifiable income” is one of them. 
Mortgage lenders want to know if you’re financially capable of paying back the loan. One way they’ll do that is by requesting documents like your federal income tax returns, W-2 and current pay stubs, according to Freddie Mac. 

Any money that you earn that isn’t tied to a form like a W-2 or 1099 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree. 
For instance, income you earn from a rental property you own may be tricky for a mortgage lender to verify, he said. The same can be said for things like gifted cash for a down payment or side hustle earnings.
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It’s a more common problem than you might expect.
About 12% of recent prospective homebuyers were denied a mortgage because a lender could not verify their income, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024.
In such instances where you have different forms of income or are self-employed, it may be worth looking into non-conventional mortgage options, said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. 
“The good news is that there are programs available for people who don’t qualify conventionally,” she said. “But it is a little bit more expensive.”
For example, you may have to sustain higher-than-usual mortgage rates.
Here’s what you need to know.

How a non-qualified mortgage works

Some homebuyers who need more flexibility when applying for mortgages could benefit from a non-qualified mortgage, or a Non-QM loan, Cohn said.
Such loans verify income differently. If you’re self-employed, a non-QM lender can use bank statements to calculate the income that may qualify for the loan instead of a pay stub, tax return or W-2, she said.
“They might also look at what kind of assets you have,” Channel said.
Other banks and lenders will accept the most recent 1099 and do not rely upon tax returns if you’re self-employed in a business you own, Cohn said.

But, be careful. While it may be easier to qualify through income, such loans can be more costly, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. 
“You may have to jump through more hoops in order to get those mortgages,” Channel said.
For example, you may need a higher credit score or be required to provide a bigger down payment.
The loan may also come with a rate higher than that of a conventional loan. That’s because non-QM loans do not follow the criteria of qualified mortgages set by the Consumer Financial Protection Bureau.
In the first half of 2024, the average initial 30-year interest rate for non-QM loans was 6.7%, compared to 6.4% for a qualified loan, according to data from CoreLogic.

A ‘stepping stone’ for unverified income

Non-QM loans are often better suited for those who invest in real estate or wealthy individuals with a number of assets, Channel said.
“In those instances, you can kind of substitute assets for active income,” he said.

Even if you suspect your income will be hard to verify, it’s smart to start with traditional loan options.
If your application for a conventional mortgage is rejected, reach out to your lender and ask why it was denied, he explained.
“Maybe you submitted the wrong year’s W-2 form. Mistakes do happen” Channel said.
But if you’re going through a transition from being employed to self-employed, or starting a new job with a new company, a non-QM loan could be a “stepping stone,” Cohn said.
Once you start to show sufficient income on your returns, you can always apply for a refinance in the future, experts say.
“Just because you take out a non-QM loan doesn’t mean you’re stuck,” Cohn said. More