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The Supreme Court will soon hear a case that could affect broad swaths of the U.S. tax code, corporate revenue and federal wealth tax proposals.
Moore v. United States will challenge a levy enacted through President Donald Trump’s 2017 signature tax overhaul.

The U.S. Supreme Court building in Washington, D.C., on June 27, 2023.
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The Supreme Court will soon hear a case that could affect broad swaths of the U.S. tax code, corporate revenue and federal wealth tax proposals.
The case, Moore v. United States, is slated for the next court term and challenges a levy enacted through President Donald Trump’s 2017 signature tax overhaul. Originally designed as a transition tax, the levy aimed to collect a one-time tax from U.S. corporations that deferred income by keeping profits in foreign subsidiaries.

The plaintiffs are fighting taxes incurred via their investment in an India-based company by arguing about the definition of income. But experts say the Supreme Court decision may have broader implications.
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The case revisits the law’s definition of income, as outlined by the 16th Amendment, and whether individuals and companies must “realize” or receive profits before incurring taxes on unrealized gains. It’s a lingering question amid past billionaire tax proposals.
While experts say Trump’s 2017 tax works differently than a wealth tax, there are still concerns about the Moore case. “This is taking a case with a completely different set of facts, and could have these very, very broad implications for other parts of the tax code,” said Amanda Parsons, an associate professor at the University of Colorado Law School who specializes in tax law.
“This is just a very dangerous thing that they’re playing with here,” she added.

What the case means for corporations

The Supreme Court ruling could invite litigation about Congress’ approach to taxing so-called pass-through entities, such as partnerships, limited liability corporations, and S-corporations, said Chye-Ching Huang, the executive director of the Tax Law Center at New York University Law.
“That would create uncertainty and confusion about the correct tax treatment,” she said.
Other experts point to the possible implications for future corporate tax revenue.
“What this case is about is trying to make sure that corporations also pay the amount of tax that they’re supposed to pay,” said Susan Morse, a law professor and associate dean for academic affairs at the University of Texas at Austin School of Law.
“It’s a good illustration of how difficult it can be to resist corporations’ inclination and the push to try to avoid taxes and reduce their tax bills,” she said. More

Less than 5% of 401(k) plans offer funds dedicated to environmental, social and governance issues, according to the Plan Sponsor Council of America.
The money Americans have in their 401(k) plans is likely enabling fossil fuel extraction and deforestation, experts say, both of which climate scientists blame for the warming planet.
ESG funds have not been spared from the political fight over climate change.

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BOSTON — As worried about climate change you might be, it can be tricky, if not impossible, to invest with the environment in mind in your workplace retirement plan.
Less than 5% of 401(k) plans offer funds dedicated to environmental, social and governance issues, according to the Plan Sponsor Council of America’s latest member survey.

“There has been significant growth in the availability of ESG funds over the past five years, but including them in 401(k) plans has been slower,” said Georges Dyer, co-founder and executive director of the Crane Institute of Sustainability. CNBC interviewed Dyer after he spoke on a panel at the GreenFin conference this week in Boston.
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As a result, the money Americans have in their 401(k) plans is likely enabling fossil fuel extraction and deforestation, experts say. Both are issues climate scientists blame for the warming planet.
“In terms of accelerating climate change, a key impact of continuing to invest in high-carbon industries [or] greenhouse gas emissions is signaling to markets and governments that it’s okay to continue with business as usual,” said Andrew Behar, CEO of As You Sow, a nonprofit promoting corporate environmental and social responsibility.

Companies are slow to offer ESG options in 401(k)s

Worried about confusing employees, 401(k) plan sponsors are often wary of adding more fund options to their lineup, Dyer said.

“If they have gone through a process of selecting funds they are confident in including, they can be hesitant to trade those out for new funds,” he said.
Increasingly, employees are automatically enrolled in their 401(k) plan without weighing in on their investments. Often, their money is put in so-called target-date funds, which have become more popular for the fact that they automatically adjust the mix of investments over time to reduce risk as the worker approaches retirement.
More than 45% of fund options offered in retirement plans are target-date funds, according to research by the CFA Institute.
Yet, this ease may be making it harder for the planet. The CFA Institute found that target-date funds have a 16% higher weighted carbon intensity compared with all the retirement plans it sampled.

Meanwhile, some employers may be worried their workers won’t get high enough profits from ESG funds, Dyer said.
“Despite a large body of evidence that shows ESG funds tend to perform as well or better than non-ESG funds, a persistent misperception remains that they don’t,” Dyer said. Indeed, an analysis by Morgan Stanley in 2019 found that there was no significant difference in total returns between ESG-focused funds and traditional mutual funds.

Political fights have also hindered adoption

ESG funds have also not been spared from the political fight over climate change. That’s another factor slowing their adoption on 401(k) menus, experts say.
A Trump administration-era rule discouraged retirement plan sponsors from offering ESG funds, experts say. Under President Joe Biden, the U.S. Department of Labor has since changed that policy. Biden also used his first presidential veto to save the rule on investment choices related to ESG.
“The DOL rule is very clear that ESG factors may be material to investment performance, and therefore may be considered in the investment process,” Dyer said.
Although that rule remains in effect, it is currently being challenged in federal court in Texas, said Bradford Campbell, a former DOL official who also spoke at GreenFin. House Republicans also recently introduced legislation that could limit the use of EGS funds, or what they call “woke” investing.
“Interest in ESG-related investments is growing,” Campbell said. “But uncertainty about the future of the regulation due to the pending litigation and the possibility of policy changes [in] the next presidential election are certainly affecting the pace at which plans adopt such investments.”

How to examine your ESG 401(k) options

If you’re in the small pool of employees who do have access to an ESG fund in your retirement plan, your research may end there.
“Unfortunately, most often, we see that if a 401(k) offers sustainable investments, it offers just one,” Behar said.
If you do find multiple ESG options on your menu, you can look up which funds are climate-safe and also offer competitive returns, Behar said. Tools to do so include As You Sow’s Fossil Free Funds and MSCI’s ESG database.
For most other workers who aren’t able to divest from firms potentially worsening climate change, Behar recommends speaking to management at your company and requesting that sustainable funds be made available.
“It’s possible that a simple ask can start the process,” he said.

Employers have a fiduciary duty to administer retirement plans in the best interest of plan participants.

Andrew Behar
chief executive of As You Sow

If doing so doesn’t lead anywhere, employees may consider organizing with their colleagues, Behar said. “It’s easier to ignore a single voice than a chorus.”
His website includes an action toolkit to help employees make the case for a sustainable investment option in their retirement plan.
“Employers have a fiduciary duty to administer retirement plans in the best interest of plan participants,” Behar said. “If they’re not assessing climate risks as part of that process, they may be failing.” More

Many young adults do not become financially independent until they are well into their 20s.
However, there are steps parents can take that can speed up the process.
Here are four money moves to help children become financially independent, according to an advisor.

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These days, many young adults do not become financially independent until they are well into their 20s.
To be sure, inflation has made it even harder for those just starting out.

But, in addition to soaring food and housing costs, millennials and Gen Z face financial challenges their parents did not as young adults: On top of carrying larger student loan balances, their wages are lower than their parents’ earnings when they were in their 20s and 30s.
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More than half of Gen Zers and millennials are still financially dependent on their parents, although two-thirds said they don’t feel good about it, according to a recent survey by Experian.
While older generations are more likely to think their kids should be completely financially independent by the time they turn 21, young adults say that’s a good age to start paying some of their own expenses, such as credit card bills and travel costs, according to a separate report by Bankrate.com.
“There’s definitely a disconnect between parents and adult children,” said Ted Rossman, Bankrate’s senior industry analyst.

Now, 68% of parents with children over the age of 18 are making a financial sacrifice to help support them, Bankrate’s report also found.

Parents sacrifice their own financial wellbeing

From buying groceries to paying for cell phone plans or covering health and auto insurance, parents are spending more than $1,400 a month, on average, helping their adult children make ends meet, a report by Savings.com found.
For parents, however, supporting grown children can be a substantial drain at a time when their own financial security is in jeopardy. 

Paying those bills “can also put your own retirement and other financial goals at risk,” Rossman said. “You can get loans for a lot of things, but retirement isn’t one of them.”
About half of parents with adult children said support has come at the expense of their own emergency savings or ability to pay down debt, while slightly fewer said supporting their children has been detrimental to their retirement savings, Bankrate found.

Helping children become financially independent

However, there are moves parents can take now to protect themselves down the road, according to Derek Miser, a financial advisor and president of Miser Wealth Partners in Knoxville, Tennessee.
Here are his top tips to help yourself, and your adult child, take financial control:

Focus on yourself. For starters, your debts and obligations should take priority before providing any financial support, Miser said. Further, you should also save for your future by contributing to retirement accounts, he added, so you are in a better position to help your adult offspring.
Avoid giving and instead loan. “It’s okay to financially help your children, but don’t just give money out without expecting payment back,” Miser advised. Consider loaning money instead, he said, and put a repayment plan in place, in writing to set the parameters.
Help children build healthy credit. Co-signing on credit cards or loans can help your children build healthy credit while they’re young to ensure they won’t need to lean on you in the future, he said. However, be aware that you may be responsible for that debt if your child cannot pay it back.
Introduce your children to financial experts. When you visit your financial, tax or accounting advisor, consider bringing your child and encourage them to participate in the conversation, Miser said. “This can help them understand how money works and what they can expect to be dealing with in the future.”

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U.S. households over the age of 55 control 74% of investable assets, but their retirement status has little to do with their asset levels, according to a new report.
Assets don’t always drive retirement choices, says certified financial planner Carolyn McClanahan.

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Americans often worry about hitting specific money goals for retirement, but a new report finds that the decision to retire often happens independently of reaching that “magic number.”
U.S. households over the age of 55 control 74% of investable assets, but their retirement status has little to do with their asset levels, according to a new report from Hearts & Wallets.

The research firm analyzed U.S. Census Bureau and Federal Reserve data, and conducted a survey of 5,993 people in August and September 2022.

The report found that more than a third, 36%, of households ages 55 to 64 are already retired. In that age group, 27% are within five years of stopping full-time work and 37% expect to continue working full-time for more than five years.
About a third, 35%, of people in that age group who have less than $50,000 in investable assets described themselves as retired. Among those with $2 million to just under $5 million set aside, 52% are retired.
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There are also some older workers who haven’t retired despite significant savings. Among survey respondents with $2 million to just under $5 million in investable assets, 82% of those ages 65 to 74 and about 94% of those 75 and older are retired.

“Recognize not all older households are retired. Retirement is more about having the financial house in order by paying off debt and scaling back lifestyle than reaching an asset target,” CEO and founder Laura Varas wrote in the report.

Retirement choices not always driven by assets

There are two major reasons people may delay their exit from the labor market, said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. She is also a member of the CNBC Financial Advisor Council.
“There are some people that love to work, and that work brings them meaning, and they can’t imagine not doing work, because its part of their well-being, and that’s not a bad thing,” said McClanahan, who is also a medical doctor. People who continue to work at that point make sure to maintain a balance where they can still enjoy their life.

A second group “lives out of fear,” she said, and are unsure whether they have enough to retire.
That may be especially true of those in the 55-plus age group, who may believe they have enough, but cannot predict whether they will live another four decades.  
“They fear that, ‘If I quit and I lose my ability to work, and then the work falls apart, what am I going to do?’ They live out of fear, and it keeps them from quitting work, even though they may want to,” McClanahan said.

For those workers, figuring out their retirement needs may help overcome that fear. Analyze how much you spend and break it down into how much you’re spending on the needs versus the wants, she said.
“What do you need for your base lifestyle? And do you have enough money to support that should you no longer work?” McClanahan said.
On the flip side, almost half, 47%, of workers end up retiring earlier than expected, according to the Employee Benefit Research Institute’s 2022 Retirement Confidence Survey. Of those, 32% pointed to a hardship such as illness or disability as the cause of their early exit, while 23% retired due to changes at their company, and 38% said they could afford to retire early.

If you’re forced to quit when you are not ready, it is crucial to connect with a financial planner to identify the sources of your cash flow, including assessing a strategy for collecting Social Security or making withdrawals from retirement plans.
“If they’re taking care of a loved one, that’s where it’s really important to look [for] any resources that the loved one who they’re taking care of can provide for them to soften the blow,” McClanahan said. More

After a tough year for the stock and bond markets in 2022, some advisors are turning to alternative investments, according to a new survey.
Investors are drawn to diversification, lowering portfolio risk and boosting returns.
However, some of the trade-offs may include complexity, lack of liquidity and higher fees.

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After a tough year for the stock and bond markets in 2022, some advisors are turning to alternative investments, according to a new survey from the Financial Planning Association. 
Nearly 30% of advisors are actively investing in or seeking alternative investments, or “alternatives,” for clients, the findings show. These assets typically fall outside traditional investments in publicly traded stocks, bonds and cash.

Some investors are drawn to alternatives for diversification, lowering portfolio risk and boosting returns, said certified financial planner Ashton Lawrence, director at Mariner Wealth Advisors in Greenville, South Carolina.
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Indeed, “diversification” and “risk mitigation” were top objectives among advisors who recommend alternatives, according to the FPA survey.
However, there’s variation among risk and return, with many assets falling under the “alternatives” umbrella, including hedge funds, private equity, “real assets” such as real estate or commodities and prepackaged investments known as “structured products.”
“The big thing I harp on is conducting thorough due diligence,” Lawrence said, noting the importance of understanding the product, why you’re buying it and how it fits with the rest of your portfolio.

A ‘lack of liquidity’ and higher fees

While some advisors recommend alternatives, nearly 30% are “familiar” with them but are steering clear, the FPA survey found.
For many advisors, the biggest obstacle was the “lack of liquidity” with certain products, especially amid economic uncertainty and higher borrowing rates.

That risk isn’t understood well by many investors, explained Chris Mellone, a CFP and partner at VLP Financial Advisors in Vienna, Virginia. “It’s just really tough to get out of some of these funds.”
Fees and expenses were other challenges for alternatives, and those tend to be higher with certain products, according to Lawrence. “That’s nothing really to frown upon if the value is there and you can justify the expense,” he said.
“But if all you’re doing is paying for an expensive money market fund, I would say you’re probably better off trying to find another strategy,” Lawrence added.

Advisors may access private deals

While the FPA survey cites private equity as the top category of alternative assets, other advisors don’t believe it’s a good fit for clients.
“The best [private equity] deals are the ones that you’re never going to get access to,” and most clients can’t compete with the wealthiest investors, said Matthew McKay, a College Station, Texas-based CFP at Briaud Financial Advisors.

Alternatively, McKay’s firm focuses on “funds of funds,” where the firm acts as a general partner by investing on behalf of 100 clients in one deal.
“Collectively, we’re more than enough,” he said. “That’s where a lot of these retail folks are getting access to funds.” More

Covid-era Paycheck Protection Program fraud may have contributed to home price inflation in certain U.S. markets, research suggests.
“Fraud on this scale is enormously costly,” said Sam Kruger, co-author and assistant professor of finance at the University of Texas at Austin.

Prospective buyers are welcomed by real estate agents at an open house in West Hempstead, New York on April 18, 2021.
Newsday LLC / Contributor

PPP loan fraud affected home prices

U.S. home prices rose by 24% between November 2019 and November 2021, according to the Federal Reserve Bank of San Francisco, driven by factors such as shifting demand and regional moves.

However, government aid may have also contributed to that growth, including higher rates of fraudulent PPP loans in certain areas, according to the new research.

This is a very specific type of stimulus that injected cash into certain areas, and it seems to have played a pretty significant role.

Sam Kruger
Assistant professor of finance at the University of Texas at Austin

The paper found that certain markets had elevated rates of PPP loan fraud, and individuals who received fraudulent loans were more likely to have purchased property.
“This is a very specific type of stimulus that injected cash into certain areas, and it seems to have played a pretty significant role,” Kruger said.
ZIP codes with “high suspicious lending per capita” had home price growth that was 5.7% higher than ZIP codes in the same county with lower levels of fraud, the paper found. “This effect is large relative to other proposed factors explaining house price growth during the Covid period,” the authors wrote.

The findings were consistent after weighing factors such as land supply, previous home price growth, remote work access, population density, net migration, proximity to the central business district and prior rates of remote work.
“It’s not just that you’re stealing money from the government,” Kruger said. “There are potential distortions and spillover effects that are affecting other people in the community.” More

When it comes to retirement, many Americans have a big-dollar figure in mind for how much they will need.
What most people should strive for is the “mentality of feeling assured that you can spend money throughout retirement,” one expert said.
These tips can help determine what you will need.

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When it comes to how much they will need to comfortably retire, Americans have a “magic number” in mind — $1.27 million, according to new research from Northwestern Mutual.
That’s up from $1.25 million last year, the financial services firm found, based on an online survey of 2,740 adults conducted between February and March.

Respondents in their 50s expected to need the most when they retire — more than $1.5 million, the survey found. For those in their 60s and 70s, who are close to or in retirement, those expectations dropped to less than $1 million.

It’s not surprising that expectations for retirement needs are getting higher amid higher inflation, said Alap Patel, a Chicago-based certified financial planner and wealth management advisor for Northwestern Mutual.
If you retire at 60 and live to 100, you have to worry about what costs will be over 40 years, he noted.
“It’s not just about your expenses, but it’s also the mentality of feeling assured that you can spend money throughout retirement,” Patel said.

Savings fall far short of retirement goals

Yet across all age groups, the amount respondents said they currently have saved toward retirement fell short of their million dollar-plus goals — with an average of just $89,300 set aside, a 3% increase from 2022.

Those closest to retirement had more saved, but not by much, with an average of $110,900 for those in their 50s, $112,500 for those in their 60s and $113,900 for those in their 70s.
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Older cohorts are not only adjusting down their expectations for how much they will need in retirement, they are also planning to work longer, the survey found.
Americans plan to work until age 65 on average, according to the results. That is up from 64 last year and 62.6 in 2021.
Baby boomers plan to work the longest, until age 71, the survey found. Gen Xers plan to work until 65, millennials until 63 and Gen Z until 60.

The biggest retirement worry was declining health, with 44%; followed closely by outliving savings, with 43%; and boredom, with 31%.
Another recent survey from research and consulting firm Cerulli Associates found the biggest worry for both retirement savers and retirees, with 58%, is outliving their money.
Many people can get lost in the numbers of what they should save.
“A lot of people get so overwhelmed that the number is so big that they have to save this much by this age,” said Winnie Sun, managing director and founding partner of Sun Group Wealth Partners in Irvine, California. She is a member of CNBC’s Financial Advisor Council.

Calculating your own retirement ‘magic number’

Rather than think about a big goal number for retirement, Patel said he urges clients to identify their income needs.
To get an idea of where your money is going, take a look at your credit card and bank statements.
By multiplying your estimated annual budget — for example, $100,000 — by a factor of 25, you may arrive at a generic lump sum you may need to cover your retirement years which, in this example, would be $2.5 million, Patel said.
By cutting your spending, you may also reduce the amount of money it will take to cover your retirement needs.
To help people start tackling those bigger goals, Sun said, she typically breaks them into “more bite-size chunks of activities that they can do.”
That may include a debit card or credit card fast for at least one month to better track their budget. “That will give them a sense of how much they’re spending,” Sun said.
Or instead it may include a savings challenge, like setting a goal for a certain amount of money to stash away in the next three months.
“If we put pressure to have them do it sooner, even when they think they’re not ready, it will help develop better patterns long term,” Sun said.

As you think about retirement, in an ideal world, you would have enough guaranteed zero risk income to cover your guaranteed expenses.

Alap Patel
wealth management advisor for Northwestern Mutual

Everyone typically has three types of expenses, Patel said. The first group includes mundane costs such as utilities, groceries and property taxes, that need to be paid regardless of what happens with your investments or in the economy.
“If the markets are down 30%, it doesn’t matter,” Patel said. “You have to pay your property taxes.”
The second category is discretionary expenses, such as going on vacation or eating out, that can be reduced in the event the economy pulls back. The third category is aspirational spending, such as paying for a trip for a big anniversary or a child’s wedding.
“As you think about retirement, in an ideal world, you would have enough guaranteed zero-risk income to cover your guaranteed expenses,” Patel said.

Social Security benefits may cover some of those monthly income needs. Respondents to Northwestern Mutual’s survey said they expect those benefits to cover 28% of their overall retirement funding. To find out how much you may receive, check your Social Security statement.
In addition, retirees may want to consider adding annuities, Patel said. If you and your spouse need $6,000 per month in income in retirement, and Social Security benefits provide $5,000, you may purchase an annuity to cover the remaining $1,000 per month, he said.
By having your monthly expenses covered with guaranteed income, you may be more comfortable taking more risk elsewhere in your portfolio, he said.
To get assurance your plan will work, it helps to talk with a trustworthy financial advisor. More

Overall, 57% of Americans now say they are living paycheck to paycheck, according to a recent report.
Workers last month saw their buying power improve for the first time in two years.
A year of high costs took a toll on household finances, according to a Federal Reserve Board report.

After leaning heavily on their paychecks as prices spiked over the last year, households are finally feeling some relief.
As of May, 57% of consumers said they were living paycheck to paycheck, down from 61% the month earlier, according to a new LendingClub report.

Workers last month saw their buying power improve for the first time in two years, as inflation eased off the pandemic-era peak.
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The consumer price index, which measures the average change in prices for consumer goods and services, declined to an annual rate of 4% in May after hitting 9.1% in June 2022, the highest level in four decades.
However, a year of high costs took a toll on household finances, according to the Federal Reserve Board’s Economic Well-Being of U.S. Households report. The share of adults doing at least OK financially fell sharply in 2022, to the lowest level since 2016, the report found.
During that time, many consumers dipped into their savings, relied on credit cards or turned to personal loans for everyday expenses, a separate survey by LendingTree found.

High borrowing costs are stressing households

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Americans now owe nearly $1 trillion in credit card debt, a record high, according to the most recent data from the Federal Reserve Bank of New York. Interest rates on credit cards are also at historic levels, at more than 20%. Although much lower than a credit card, even personal loan rates are in the double digits.
“While these personal loans can help people extend their budget in the short term, the interest rates and other costs associated with them can keep people stuck in the cycle of debt,” said LendingTree’s chief credit analyst Matt Schulz.
Still today, 73% of consumers said higher prices have affected their ability to cover monthly expenses, including cell phone bills, utilities, auto insurance and cable and internet service, according to a report from Doxo on how Americans pay their bills.

Savings are a buffer against economic hardship

Having a cash cushion can prevent a financial catastrophe in the event of an unexpected expense or job loss. Yet, most Americans are uncomfortable with the level of money they have in a rainy-day fund, according to a recent Bankrate survey.
“Despite their best efforts to live within their means, consumers face unexpected expenses regularly that stress their budgets and impact their ability to meet their financial obligations, causing the financial health of many to remain fragile,” said Alia Dudum, LendingClub’s money expert.

Fewer than half of Americans have enough emergency savings to cover at least three months of expenses, which is the minimum amount most financial experts recommend. About 22% have no emergency savings at all, according to Bankrate.
“Aim to have six months’ worth of personal expenses set aside in risk-free securities or cash,” advised Reese Harper, a certified financial planner and CEO of financial planning software firm Elements.
To get there, save at least 10% of your income a month in an after-tax brokerage account or a high-yield savings account, he said, which will “boost your financial confidence and reduce stress.”
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