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Roth individual retirement account conversions shift pretax or nondeductible IRA funds to a Roth IRA, which provides future tax-free growth.
But the move boosts your adjusted gross income and can trigger other tax consequences, experts say.

Baona | E+ | Getty Images

As year-end approaches, you may be eyeing Roth individual retirement account conversions.
The strategy, however, boosts your income, which can have other tax consequences, experts say.

Roth conversions shift pretax or nondeductible IRA funds to a Roth IRA, which provides future tax-free growth. But the converted balance boosts your current-year adjusted gross income.
Additionally, increasing your AGI can have “completely unintended” ramifications, said certified financial planner JoAnn May. She is also a certified public accountant and the principal and co-founder at Forest Asset Management in Riverside, Illinois.
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Whether you’re making Roth conversions or incurring other income, you need to monitor your AGI throughout the year, experts say. Otherwise, you could lose eligibility for certain tax breaks or unexpectedly trigger tax hikes.
For example, once earnings pass a certain threshold, Social Security recipients can owe taxes on up to 85% of benefit income, May said.

Higher AGI also makes it harder to claim the medical expense deduction, she said. For 2024, you can deduct unreimbursed costs above 7.5% of your AGI, assuming you itemize tax breaks.
Here are a couple of other major tax issues to watch, experts say.

You could pay ‘excess premiums’ for Medicare

If you’re approaching Medicare age or already enrolled, boosting your AGI could also impact income-related monthly adjustment amounts, or IRMAA, for Medicare Part B and Part D premiums.
The income used to determine IRMAA is based on your modified adjusted gross income, which is your AGI plus tax-exempt interest. There’s a two-year lookback for IRMAA, meaning your 2024 MAGI could impact IRMAA for 2026.
“That’s a big piece,” Ashton Lawrence, CFP and director at Mariner Wealth Advisors in Greenville, South Carolina previously told CNBC. “No one likes paying excess premiums.”

For 2024, the standard monthly Medicare Part B premium is $174.70. But that could be higher if your 2022 MAGI was above $103,000 as an individual or $206,000 as a married couple.
Those earnings thresholds are a cliff and Roth conversion income could push you into the next bracket, experts warn.  
“The last thing you want is to peak right over that bracket by $1,” Lawrence said. “Now your Medicare premiums have just jumped up substantially.”

You could lose marketplace tax credits

Another reason to watch your AGI is the marketplace health insurance tax break, known as the premium tax credit, which is currently enhanced through 2025.
In 2024, some 92% of marketplace enrollees, or 19.7 million people, were eligible for the advance payments of the premium tax credits, which reduce yearly health insurance premiums by $700 on average, according to the U.S. Centers for Medicare and Medicaid Services.
However, calculating credit eligibility can be complicated because it’s based on the difference between a benchmark premium — the cost of the second-lowest-cost silver plan available in an area — and a maximum contribution based on a percentage of income. 
To avoid eligibility issues, Forest Asset’s May said she skips Roth conversions for a client claiming the premium tax credit. More

A measure designed to help student loan borrowers with their payments expired this week, putting some borrowers at risk of delinquency.
As of Sept. 30, missed payments can be reported to credit agencies.

The one-year grace period for student loan borrowers who miss a payment expired this week. And yet, millions of Americans are likely unprepared to give up that key safety net.
The goal of the 12-month “on ramp” to repayment was to give borrowers some breathing room as they worked student loan payments back into their budgets. Although interest still accrued on their balances, missed payments did not damage their credit.

As of Sept. 30, however, student loan servicers are once again able to report missed payments to credit agencies, which means falling behind could hurt your credit score — that three-digit number that lenders use to determine if you can borrow, and the interest rate you’ll pay for credit cards, car loans and mortgages.
Generally speaking, the higher your credit score, the better off you are when it comes to getting a loan.
Recent studies show some borrowers are at risk of not being able to keep up.

Some borrowers haven’t made payments in years

Congress initially passed legislation to allow federal student loan borrowers to pause their loan payments in March 2020 as part of the Covid economic response. During that time, interest rates on most federal loans were set to zero. It’s now been roughly a year since student loan payments resumed.
Almost half, 47%, of borrowers said they’ve made at least some payments since the end of the payment pause, but 26% said they made no payments at all, according to a new report by the National Endowment for Financial Education. The nonprofit in August polled 813 adults who have or had student loan debt.

“When you have to cut $500 to $1,000 from the monthly budget, that’s a significant amount of dollars people don’t have for other things,” said NEFE president and CEO Billy Hensley, a member of the CNBC Global Financial Wellness Advisory Board. “This will continue to be a shock and reverberate around the kitchen table.”
A separate report by Intuit Credit Karma also found that 20% of student loan borrowers have not made any payments toward their student loans since the pause ended and the majority — 69% — of borrowers who have not been paying on time said they will not be able to afford to pay down the interest they’ve accrued.
Many of those borrowers are now worried their credit score will take a hit once their student loan payment history is reported to the credit bureaus, Credit Karma found. In August, the site surveyed nearly 2,000 adults with outstanding student loan debt.

Consequences could be ‘catastrophic’

HOUSTON, TEXAS – AUGUST 29: Students study in the Rice University Library on August 29, 2022 in Houston, Texas.
Brandon Bell | Getty Images News | Getty Images

“When you don’t pay something for 4½ years the intent is clear, you are not going to pay,” said certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta, referring to the pandemic-era pause on federal student loan payments.
“Many believe that someone is going to bail them out and I think it’s going to end badly for a lot of people,” said Jenkin, who is also a member of CNBC’s Financial Advisor Council.
In fact, 48% of student loan borrowers anticipate debt forgiveness in the future, according to Sallie Mae’s annual How America Pays for College report. Of those who expect forgiveness, 37% plan to work in public service, while 7% say their future employer will pay for their loans. The biggest share, 47%, think the government will forgive student loans.
While there are still opportunities for relief, missed payments could now come at a high cost for borrowers, Jenkin said. “It’s going to be catastrophic to their credit score.”

How a missed payment can hurt your credit score

Student loan delinquencies will show up on your credit report once they hit 90-days past due, according to Liz Pagel, senior vice president of consumer lending at TransUnion.
“If a consumer misses their October payment and still hasn’t made the payment in November or December, then in January they will be reported as 90-days past due for that October payment and that is when their credit will be negatively impacted,” she said.
TransUnion data shows that just over half of student loan borrowers made payments over the past several months. 
“That doesn’t necessarily mean that these consumers cannot make the payments,” Pagel said. “Some may have made a logical choice to hold off awaiting possible loan forgiveness or just because they were aware that their credit would not be affected by not making payments.”
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To be sure, working those payments back into budgets after a four-year hiatus may require some sacrifices.
In the last year, roughly three-quarters of borrowers with student loan balances have had to make budgetary changes in order to make their payments, according to the NEFE report.
“If you don’t want your credit rating impacted, you have to develop a budget and figure out how you are going to incorporate student loan payments into that budget,” said Andrew Housser, co-founder and co-CEO of personal finance site Achieve.
“It’s crucial to look at options for consolidating other debts and reducing interest rates where possible,” Housser explained.

Of those with outstanding loans, 31% said they are less likely to pursue additional education, after taking the end of the repayment pause into account, NEFE also found.
A separate study commissioned by EdAssist by Bright Horizons also highlighted the impact student loan debt has had on borrowers.
To that point, 53% of U.S. workers said that knowing they would incur additional debt has prevented them from pursuing more education.
And as much as 86% of workers with education debt said their degree wasn’t worth the toll that student loans has had, according to Bright Horizons’ fourth annual education index, which in May polled more than 2,000 adults who are employed either full- or part-time.
Consumer advocates often caution students not to borrow more than you expect to earn as a starting salary.
“Higher education needs to do a better job of helping people understand the earning potential of a degree,” said NEFE’s Hensley. “We need to talk through how to launch and what that plan looks like.”
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Heritage Investment Group came in at No. 1 on CNBC’s list of the top 100 financial advisors in the U.S. for 2024.
The secret to the firm’s success is taking a very long-term view, says its president Frederick MacLean: “We do not engage in market timing, stock picking or tactical asset allocation on any level, and we do not react to market movements or economic news.”

Frederick MacLean, president of Heritage Investment Group
Courtesy: Heritage Investment Group

Frederick MacLean, president of Heritage Investment Group, doesn’t mind if you call his strategy boring. In fact, there’s not much that could unsettle him or his approach.   
Heritage Investment Group, which ranked No. 1 on CNBC’s list of the top 100 financial advisors in the U.S. for 2024, is committed to one golden rule, he said: “We do not time the market for any reason.”

Even with the stock market hitting record-high levels, cooling inflation, slowing job growth and the first Federal Reserve rate cut since 2020 — a super-sized half-point, no less — all on the cusp of an upcoming U.S. presidential election, MacLean is steadfast in his philosophy.

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Here’s a look at more coverage of CNBC’s FA 100 list of top financial advisory firms for 2024:

To navigate the ups and downs, MacLean said, the firm maintains a longer time horizon.
“We are very long-term investors, we do not engage in market timing, stock picking or tactical asset allocation on any level, and we do not react to market movements or economic news,’ he explained.
In fact, these days, having “a sound investment process is more important than ever,” he said.
Portfolios are built “to let you weather whatever the upcoming storm is,” MacLean said. “Our use of appropriate asset allocations, rebalancing and proper investment vehicles allows our clients to stay the course.”

“Markets are extremely efficient,” according to MacLean, and “the rate cut is a good example.”
The three major averages initially slid on news that the Fed dialed back interest rates by a half point on Sept. 18, but then climbed higher and ended the week with the Dow Jones Industrial Average and S&P 500 rising to new all-time highs on Sept 20.

The advantages of ‘quiet discipline’

Trying to time the market is almost always a losing bet, other financial experts also say. That’s because it’s impossible to know when good and bad days will occur.
For example, the 10 best trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions, often in close proximity to the worst days, according to a Wells Fargo analysis published earlier this year.
“We could be accused of being boring, but our quiet discipline through the years has certainly been an integral part of our success,” MacLean said.

This approach also allows the firm to focus on the planning aspect on the business, MacLean said, including retirement and estate planning, cash flow management and tax strategies.
“From the outset, we recognized the need for objective, fiduciary advice that is critical for long-term investor success,” MacLean said.
That has also been key in their ability to reach the next generation of clients, a hurdle other financial advisory firms have struggled with achieving.
“It’s natural for clients to recommend us to their kids,” MacLean said.

The partners at Heritage Investment Group: Standing from left to right: David Teas, Tracy McCarver, S. Hardy Taylor Sitting from left to right: R. Ian McCarver, Frederick R. MacLean, Jr., Timothy Slattery
Courtesy: Heritage Investment Group

It helps that everyone at the 20-person firm is on the same page.
Heritage, which started in 1993 and has offices in Tampa, Orlando and Pompano Beach, Florida, is largely a family business “formed out of an estate planning law firm that my parents founded in 1974,” MacLean said.
MacLean works with his sister, his son and a few of his oldest friends, including Timothy Slattery, who is the chief investment officer.
Together, Heritage Investment Group has $1.7 billion under management and more than 2,050 accounts. More

Source: Recursion Pharmaceuticals

AI drug pioneer Recursion Pharmaceuticals said Wednesday that one of its experimental treatments hit a key milestone.
Recursion was able to use its artificial intelligence-enabled drug discovery platform to identify an area of biology to target for the treatment of solid tumors and lymphoma, match it with a drug candidate and move all the way to gaining regulatory approval to begin studies in less than 18 months.

“We think that’s a really exciting proof point, not only for us as a company, but I think for the techbio industry as well,” said CEO and co-founder Chris Gibson, in an interview with CNBC.
The Food and Drug Administration cleared the investigational new drug application for a phase 1/2 clinical trial of an experimental drug candidate known as REC-1245. The company said the potential market for this treatment could be more than 100,000 patients in the U.S. and European Union.
The trial will evaluate the safety and tolerability of REC-1245 and will begin in the fourth quarter of this year. The phase 1 data from the dose-escalation portion of the study could be completed by the end of next year, the company has said.
The drug will target RBM39, which Recursion said appears functionally similar to a well-known but hard to target marker known as CDK12 to treat advanced HR-proficient cancers such as ovarian, prostate, breast and pancreatic cancers.
“I think what’s really exciting about this particular program of Recursion is that this small molecule and novel target came out from essentially a Google-search equivalent, from this giant map of biology that we’ve already built,” Gibson said, referring to the massive datasets that Recursion has created over the past 11 years.

“This is the first program that’s come of that,” he continued. “It’s the first program that really is leveraging many of these new tools that we’ve built in one unit.”
There is much hope that artificial intelligence will be able to significantly speed up drug discovery and make it less costly by eliminating some of the time-consuming trial-and-error as drug candidates are screened and selected. But investors have been wanting to see that the reality can live up to the hype.

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Recursion shares year to date

Recursion, which counts Nvidia among its investors, has seen its shares fall 38% in 2024. But the stock is still more than 60% below a 52-week high it hit in late February.
The company is planning to merge with fellow AI-drug discovery company Exscientia, which will allow it to harness even more data. The deal is expected to close early next year.
The majority of analysts rate Recursion shares a hold, but two analysts do have a buy rating on the stock, according to FactSet. The average analyst price target of $10.14, implies a 64% return.

Don’t miss these insights from CNBC PRO More

The sixth annual CNBC FA 100 list recognizes advisory firms that help clients navigate decisions.
The CNBC FA 100 weighs several factors beyond years of experience and assets under management.

Alvaro Gonzalez | Moment | Getty Images

Whether it’s stock market volatility, the Federal Reserve’s interest rate cuts or proposed tax law changes, we’re dedicated to breaking down the news to help investors make smart money decisions.
But CNBC’s personal finance team also recognizes the value of financial planning, regardless of your life stage, income level or wealth.

Education is the driving force behind the CNBC FA 100 list, now in its sixth year, which ranks the country’s top financial advisor firms.      

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Here’s a look at more coverage of CNBC’s FA 100 list of top financial advisory firms for 2024:

CNBC’s FA 100 uses a proprietary methodology created in partnership with data provider AccuPoint Solutions.
This year, the process started with SEC filings for 40,896 registered investment advisory firms before narrowing down the list. You can see the full methodology here.
These top-ranked advisors average 35 years in the business and collectively manage more than $375 billion. But the ranking considers more than experience and assets under management.
The FA 100 features firms that support decision-making beyond the investment portfolio by weighing service offerings, specialties and other factors. We also noted the firms’ number of certified financial planners, which is widely regarded as the industry’s top professional designation.   

The benefits of financial planning

You’ve got a partner in decision-making.

Paul Brahim
President-elect of the Financial Planning Association

Often, investors seek an advisor in the five years before and after retirement, according to T. Rowe Price’s 2023 Retirement Savings and Spending Study.
But financial planning can provide “an extraordinary amount of impact” throughout life as clients weigh competing goals, said certified financial planner Paul Brahim, managing director of Wealth Enhancement in Pittsburgh, Pennsylvania.
“You’ve got a partner in decision-making,” said Brahim, who is also president-elect of the Financial Planning Association.

10 questions to ask your next financial planner

There’s a wide range of financial advice available, regardless of your income or total assets. The cost and scope of services vary by advisor and firm.
Ultimately, you may consider several candidates before choosing the right financial planner to meet your family’s needs. The CFP Board suggests asking prospective advisors these 10 questions:

What are your qualifications and credentials?
What services do you offer?
Will you have a fiduciary duty to me?
What is your approach to financial planning?
What types of clients do you typically work with?
Will you be the only advisor working with me?
How will I pay for your services?
How much do you typically charge?
Do others stand to gain from the financial advice you give me?
Have you ever been publicly disciplined for any unlawful or unethical actions in your career?

You can check an advisor’s record by searching for their name on BrokerCheck and with the SEC, and verify CFP certification with the CFB Board. More

The methodology for the 2024 edition of CNBC’s annual FA 100 ranking of registered investment advisors was prepared in partnership with data provider AccuPoint Solutions.
A variety of core data points from AccuPoint Solutions’ database of RIAs were analyzed, ranging from the firm’s compliance record and years in business to total accounts and assets under management.

Strauss/curtis | The Image Bank | Getty Images

CNBC enlisted data provider AccuPoint Solutions to assist with the ranking of registered investment advisors for this year’s FA 100 list.
The methodology consisted of first analyzing a variety of core data points from AccuPoint Solutions’ proprietary database of registered investment advisors.

This analysis used an initial list of 40,896 RIA firms from the Securities and Exchange Commission regulatory database. Through a process, the list was eventually cut to 903 RIAs meeting CNBC’s proprietary criteria.
CNBC staff sent an extensive email survey to all those firms that met the initial criteria to gather more details. In turn, those advisory firms filled out a comprehensive application in regard to their practice. The CNBC team verified that data with those firms and with the SEC regulatory database. AccuPoint once again applied CNBC’s proprietary weighted categories to further refine and rank the firms, ultimately creating the list of the top 100 firms.

More from FA 100:

Here’s a look at more coverage of CNBC’s FA 100 list of top financial advisory firms for 2024:

CNBC receives no compensation from placing financial advisory firms on our list. Additionally, an advisor’s appearance on our ranking does not constitute an individual endorsement by CNBC of any firm.
The primary data points used in the analysis were reviewed, either as a minimum baseline or within a range, eliminating those firms that did not meet CNBC’s requirements. Once the initial list was compiled, weightings were also applied accordingly. These data points included:

Advisory firm’s regulatory/compliance record. (Editor’s note: Each advisory firm’s CRD number was checked for validity. Any firm that had a disclosure on its SEC ADV was automatically disqualified from the ranking.)
Number of years in the business.
Number of certified financial planners.
Number of employees.
Number of investment advisors registered with the firm.
The ratio of investment advisors to total number of employees.
Total assets under management.
Percentage of discretionary assets under management.
Total accounts under management.
Number of states where the RIA is registered.
Country of domicile. More

A trader works on the floor of the New York Stock Exchange. 

Stocks @ Night is a daily newsletter delivered after hours, giving you a first look at tomorrow and last look at today. Sign up for free to receive it directly in your inbox.
Here’s what CNBC TV’s producers were watching as October’s trading kicked off and what’s on the radar for the next session.

OPEC

On Wednesday, CNBC’s Brian Sullivan will report on a meeting of the oil cartel.
Brent and West Texas Intermediate futures both jumped by as much as 4% on Tuesday before, during and after Iran’s ballistic missile attack against Israel.
Even with this move, both are down about 5% in a month.
Energy was the top performing sector of the S&P 500 on Tuesday, up 2.24%. It remains 7.7% from the April high. In the last 12 months, the sector is flat.
ConocoPhillips was up 3.9% Tuesday. It is 19% from the April high.
APA was up 4.9%. It is 41% from the October 2023 high.
Halliburton was up 3% Tuesday, and it’s 32% from the October 2023 high.
Exxon Mobil was up 2.3%. It is 3% from the April high.
Chevron was up 1.65% Tuesday, standing 12% from the high reached nearly a year ago.

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ConocoPhillips’ performance in 2024

Chipotle

The burrito chain’s interim CEO Scott Boatwright and Jack Hartung, president of strategy, finance and supply chain, joined Jim Cramer and “Mad Money” Tuesday night. They both touted technology in the stores, while promising to maintain human contact. That automation includes everything from food preparation and beyond.
The stock is up 2.3% since former CEO Brian Niccol announced he was leaving.
Chipotle is 17.5% from its 52-week high.
Year to date, Chipotle is up 25%.
Texas Roadhouse is up about 45% in 2024.
Brinker International, which has brands like Chili’s, Maggiano’s Little Italy and It’s Just Wings is up 82% in 2024.
At the bottom of the barrel this year: Bloomin’ Brands is down 41%, and Jack in the Box is down 42%. Red Robin is off 65% in 2024. 

Nike

The stock is down 5% in extended trading after the sneaker giant reported quarterly results.
Nike beat earnings expectations, but revenue came in lighter than expected.
The sneaker company is skipping full-year guidance and has postponed investor day.
New CEO Elliott Hill starts in about two weeks.
CNBC TV’s Sara Eisen will stay on the story Wednesday.

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Nike shares in 2024

Tesla Q3 deliveries

CNBC TV’s Phil LeBeau will report when the numbers come in later this week. Consensus estimates call for 461,000 units.
Tesla is up 20.5% in a month, and it’s 5% from the July high. 

Ford September auto sales

LeBeau is also watching this release.
Ford Motor is down about 4% in a month and off roughly 16% in three months. Shares are 27% from the July high.

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Ford Motor shares over the past three months

Lilly’s R&D investment

CNBC TV’s pharmaceutical industry reporter Angelica Peebles will interview David Ricks, Eli Lilly’s CEO, on the network Wednesday.
Lilly shares are down 4.3% in a week and stand 9% from the August high.
The stock is up 51% year to date, ranking second in the S&P health care sector. It’s just below DaVita, which is up 55% in 2024. More

The massive dockworker strike could have “devastating consequences for American workers, their families and local communities,” according to Matthew Shay, president and CEO of the National Retail Federation.
Four years after the pandemic, another supply-and-demand logistics crisis would drive up prices for some consumer staples once again, other experts also say.
Grocery prices may be hit first.

Port of Miami dockworkers strike near the port entrance and demand a new labor contract, on October 1, 2024 in Miami, Florida. 
Giorgio Viera | Afp | Getty Images

A dockworker strike at seaports along the U.S. East and Gulf coasts is expected to cause massive problems for global supply chains and the economy. American consumers will likely pay the price.
The International Longshoremen’s Association, or ILA, went on strike early Tuesday at 14 major ports over wage increases and use of automation. In all, the ports threatened with strikes handle $3 trillion annually in U.S. international trade, according to an analysis by The Conference Board.

“A disruption of this scale during this pivotal moment in our nation’s economic recovery will have devastating consequences for American workers, their families and local communities,” Matthew Shay, president and CEO of the National Retail Federation, said in a statement Tuesday. Supply chain dynamics are a key issue for the NRF, the retail industry’s largest trade association, especially ahead of the peak holiday season.
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“American businesses, workers and families rely on the seamless flow of goods through these ports, and this strike will result in consumers ultimately paying higher prices due to limited supplies and greater demand for imported goods,” Shay said. 
“After more than two years of runaway inflationary pressures and in the midst of recovery from Hurricane Helene, this strike will result in further hardship,” he said.

U.S. port strike could cause inflation

Overall, the U.S. economy has notched steady progress in lowering inflation, but in most cases price increases are only slowing — not falling outright. 

The consumer price index, a key inflation measure that tracks average prices across a broad basket of consumer goods and services, increased 2.5% in August relative to a year earlier, according to the Bureau of Labor Statistics. That’s down from a pandemic-era peak of 9.1% in June 2022.
The cost of goods has been well controlled, with relatively stable commodity prices and — at least until recently — lower shipping costs, according to Lauren Saidel-Baker, an economist at ITR Economics.
However, “the port strike could cause renewed goods-side inflation,” she said.

The standoff between the ILA, which represents about 45,000 port workers, and the United States Maritime Alliance, or USMX, comes almost exactly four years since the Covid pandemic snarled global supply chains.
At the time, goods weren’t hitting the shelves as quickly as consumers wanted them, which drove up prices.
The U.S. port strikes could have a similar effect, “setting up a scenario reminiscent of the pandemic-era logistics crisis,” Saidel-Baker said.
While shortages and delays are possible, the biggest economic impact will be in pricing, she said, with greater inflationary consequences more likely the longer the strike persists. 

Strike’s duration will determine the impact

“The top-line takeaway here is duration amplifies impact,” Lisa DeNight, managing director of national industrial research at commercial real estate firm Newmark, told CNBC’s “The Exchange” on Monday.
In a short-term strike, “companies with safety stocks may buffer initial disruptions, but perishable goods will be affected almost immediately,” according to Amir Mousavian, professor of supply chain management at the University of New England’s College of Business.
In that case, some grocery prices would be first to rise, including imported coffee, bananas and frozen food.
“They don’t have a long shelf life, which means lower reserves,” Mousavian said.

If the strike takes longer to resolve, businesses will need to find alternative shipping routes, likely at a higher cost, which could translate into price increases for other goods, Mousavian said, including pharmaceuticals, apparel and automobiles.
“If it keeps dragging on, it will cascade through all sorts of sectors and would be hard for most businesses to avoid,” Mousavian said.
“And it’s the consumer who ultimately pays the price,” he added.
Mousavian said the timing of the strike is especially concerning, ahead of the holiday shopping season and the U.S. presidential election — and on the heels of the Federal Reserve’s first rate cut in four years, which was welcome news for Americans struggling to keep up with the elevated cost of living.
“A prolonged strike could reverse these gains, forcing the Federal Reserve to reconsider its economic strategy and possibly reintroduce more restrictive measures,” Mousavian said.
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