Investing

An increasing number of states are requiring employers to disclose salary ranges in job postings.
Job seekers can use salary information as a starting point to ask the right questions, which can help them get to the top of the pay range.
Knowing the salary range can also help job and promotion seekers to negotiate for more than just pay.

Information is power

Job seekers can use an employer’s disclosure of the salary band for a given position to ask more questions.
Carter, the author of “Ask For More: 10 Questions to Negotiate Anything,” cited question examples such as “What will be required of me in the role?” and “How are you valuing within that band?” “
Use “tell me” questions to understand how companies come up with pay structures and qualifications required for the top of the pay range, she said. 

Establish a relationship

The tone of the questions themselves is important, too. “You’re looking to establish rapport and establish a relationship that’s going to take you not just through this one negotiation, but a year or two later when you’re asking for a raise or promotion,” Carter said. 

Negotiate on more than salary

Consider what you want out of a job, and remember that companies may have more flexibility on benefits than pay. Perks such as flexibility in hours, remote work, paid time off, mentorship, travel and professional-development conferences can add significant value. 

Use pay transparency when negotiating a raise

Knowing what others earn can also help if you want to negotiate a pay raise or promotion.
Sixty-eight percent of organizations plan salary increases for all workers in 2023, according to a survey of U.S. corporations by the International Foundation of Employee Benefit Plans. Survey respondents said performance is the greatest factor used to differentiate between worker salary increases. 
Pay transparency laws may make it less likely employees will need to go out on the open market to know their worth.

“A lot of times, employees really don’t have a sense of their market rate,” said Ben Zweig, CEO of Revelio Labs, a workforce intelligence company in New York City. Without posted salary information, the only way employees often find out their value is once they start interviewing and meeting with recruiters.
“That’s very wasteful; it’s very inefficient,” Zweig said. “Certainly firms don’t want employees doing that.”

Moving the conversation forward

Pay transparency may also help negotiations move beyond salary into how an organization should change a job to improve employee satisfaction. Experts say business leaders and hiring managers should understand that employees may put a higher value on fairness than the actual pay.
“Compensation won’t be the ultimate prize for doing well on your job,” Zweig said. 

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Lisa Su, CEO, AMD
Scott Mlyn | CNBC

It was a wild week for stocks, and investors still have plenty of data to weigh as they gauge which companies can emerge from the downturn as winners.
The Federal Reserve raised interest rates by another 0.75 percentage point last week. Investors considered the central bank’s next steps on its policy-tightening campaign, while also assessing a strong October jobs report.

The market’s cloudy picture is yet another reason for investors to maintain a long-term perspective as they pick out stocks.
To that end, here are five stocks chosen by Wall Street’s top professionals, according to TipRanks, a service that ranks analysts based on their past performances.

Chegg

Learning platform provider Chegg (CHGG) is marching ahead amid macroeconomic challenges with large strides. The company reported a third-quarter top and bottom line beat and also raised its guidance for the full year. This led to a nearly 22% surge in share price the following day.
Barrington Research analyst Alexander Paris seemed even more upbeat on Chegg after he analyzed the earnings report and commentary. The analyst calculated the valuation of the company as attractive when compared with its EdTech as well as vertically-focused SaaS peers, and thus reiterated his buy rating on the stock. He also increased the price target to $30 from $25.
Notably, the fall semester is now in full swing, prompting management to raise its revenue and adjusted earnings before interest, taxes, depreciation and amortization expectations for the year. (See Chegg Financial Statements on TipRanks)

Paris was also upbeat about Chegg’s strategy to increase its TAM (total addressable market) as well as the percentage of Chegg Study Pack subscribers. These boost the company’s average revenue per user (ARPU) and profitability.
In all, 57% of Paris’ ratings have generated profits. Moreover, each rating has brought 14.6% returns on average. The analyst is also ranked 207th among more than 8,000 analysts tracked on TipRanks.

Huron Consulting Group

The next on our list of top analysts’ favorite stocks is Huron Consulting Group (HURN), an operational and financial consulting firm. The company is benefiting from the demand for its digital services, which led to a robust third quarter.
The company raised its full-year revenue guidance, gaining the confidence of Barrington Research analyst Kevin Steinke. The analyst raised his near-term revenue and adjusted EBITDA estimates and consequently raised the price target to $89 from $80. Steinke also rates Huron a buy — a rating he has maintained on the company for the past four years.
The analyst is upbeat about Huron’s expectations of adjusted EBITDA expansion to the mid-teens by 2025. “This is expected to drive annual adjusted EPS growth in the high teens through 2025,” said Steinke. (See Huron Consulting Stock Chart on TipRanks)
The company’s ability to return cash to shareholders was also highlighted by the analyst. The company intends to return 25% to 50% of yearly free cash flow to shareholders through repurchases.
Steinke stands at No. 415 out of more than 8,000 analysts on TipRanks. The analyst has had 54% successful ratings in the past year, with each rating generating an average of 11.5% returns.

KAR Auction Services

KAR Auction Services (KAR) provides a platform to auction used cars and offers salvage auction services in North America and the United Kingdom. The company has been feeling the pain of supply-side challenges in terms of the vehicles auctioned on its platform.
Although the company did not provide quarterly guidance, management did mention that it is looking at the bottom of supply issues. Management expects the recovery to be slow and gradual because of the various headwinds that continue to weigh on the business. (See Kar Auction Services Blogger Opinions & Sentiment on TipRanks)
Reflecting this sentiment was Barrington Research analyst Gary Prestopino, who also believes that growth in new vehicle production, higher interest rates and a slowing economy “should put downward pressure on new and used vehicle pricing.”
Nonetheless, the analyst is upbeat about KAR’s proactive cost-cutting measures, which are ahead of schedule and are keeping the company afloat in the market.
The analyst reiterated a buy rating on the stock with a price target of $25. “We believe that as the market recovers on a unit volume basis, KAR will show significant leverage and adjusted EBITDA growth based on a lower cost structure and a streamlined auction platform,” said Prestopino, who is ranked 56th among over 8,000 analysts on TipRanks.
The analyst also has a track record of 56% profitable ratings in the past year, with each rating generating 31.5% returns, on average.

Cirrus Logic

High-precision, analog and mixed-signal integrated circuit (IC) developer Cirrus Logic (CRUS) is beating the blues of the semiconductor industry with solid execution and solid design. The company has been a favorite of Susquehanna analyst Christopher Rolland, who recently reiterated his buy rating on the stock with a $95 price target.
Cirrus was also among the tech names that reported quarterly results that were significantly better than expected. Moreover, the guidance provided was upbeat. Higher smartphone volumes and new product ramps drove results. (See Cirrus Logic Risk Factors on TipRanks)
The company’s close association with Apple (AAPL), which is its largest customer, is not as bad as skeptics claim it to be. Rolland sees the relationship between the two companies tightening over time, driving outsized growth for Cirrus. Moreover, Rolland also believes Cirrus to be a potential buying target for Apple, which also depends on Cirrus’ IC products.
Nonetheless, even Rolland was cautious in the near term, saying that a pull-in in shipments might be coming soon. “However, in our experience, multiple quarters of better-than-expected revenue at Cirrus are often indicative of potential shipment pull-ins,” said Rolland, who expects a steeper sequential drop in shipments in March next year.
Rolland is placed at the 66th position among more than 8,000 analysts followed on TipRanks, and has a success rate of 66% on his ratings. Moreover, each of his ratings has generated 19.3% returns on average in the past year.

Advanced Micro Devices

Leading semiconductor company Advanced Micro Devices (AMD) is another stock on Christopher Rolland’s buy list. This is despite the company’s facing the headwinds of a PC inventory correction and demand slowdown. The analyst believes 2023 to be “turning into a ‘throwaway year’ for AMD as it works through major PC industry issues.”
The analyst reiterated his buy rating on the stock with a price target of $80, despite the company’s dull third quarter and even more lackluster fourth-quarter guidance. (See Advanced Micro Devices Stock Investors on TipRanks)
Rolland expects AMD to continue gaining market share, although at a slower pace than in the last few years.
Moreover, AMD’s new source of revenue from Xilinx is “highly strategic and profitable,” said Rolland. Xilinx’s acquisition opens an opportunity for AMD to accelerate its mix shift toward servers, which will be great for margins.

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Fotog | Tetra Images | Getty Images

Company: Crown Holdings (CCK)

Business: Crown Holdings is a worldwide leader in the design, manufacture and sale of packaging products for consumer goods and industrial products. They operate in three segments: Beverage, which accounts for roughly 70% of earnings before interest, taxes, depreciation, and amortization; Transit Packaging and Food, both of which collectively make up the other approximately 30% of EBITDA. Their consumer packaging solutions primarily support the beverage and food industries through the sale of aluminum and steel cans. Their packaging for industrial products includes steel and plastic consumables and equipment, paper-based protective packaging, and plastic film consumables and equipment, which are sold into the metals, food and beverage, construction, agricultural, corrugated and general industries.
Stock Market Value: $8.8B ($73.75 per share)

Activist: Carl Icahn

Percentage Ownership: 8.5%
Average Cost: $79.80
Activist Commentary: Carl Icahn is the grandfather of shareholder activism and a true pioneer of the strategy. While he is not slowing down at all, he has reached an agreement with his son, Brett Icahn, to rejoin the firm as the eventual successor. Brett plans to employ his father’s favored approach of pushing companies to make changes designed to boost their stock prices, though he hasn’t ruled out friendly bets too. This is not a departure from the strategy Carl has succeeded with for many years. He can be friendly (i.e., Apple, Netflix) or he can be confrontational (i.e., Forest Labs, Biogen), often it depends on the response of management. Brett is an impressive activist investor in his own right, not because he is Carl’s son, but because he has demonstrated a long track record of extremely successful activist investing. The Sargon Portfolio he co-headed at Icahn at one time totaled around $7 billion and included extremely profitable investments in companies such as Netflix Inc. and Apple Inc. The Sargon Portfolio significantly outperformed the market with an annualized return of 27%. However, prior to that Brett started in 2002 with Icahn as an analyst and was later responsible for campaigns like Hain Celestial (280.3% return versus 46.7% for the S&P500), Take-Two Interactive (81.5% versus 64.5% for the S&P500) and Mentor Graphics (106.4% versus 79.4% for the S&P500).

What’s Happening?

Behind the Scenes

Crown operates in a consolidated global market that only has four scaled players globally and high barriers to entry – regional monopolies due to shipping costs, long-term contracts and training and experience to operate plants. They have an accelerating growth profile, which is catalyzed by sustainability trends and changing consumer preference: About 75% of new products go into cans today versus approximately 30% in 2014. They also enjoy the downside protection of a non-cyclical product.

Crown grew EBITDA during the pandemic, when demand for aluminum cans spiked since restaurants and bars were forced to close and consumers were buying canned cocktails and beer to consume at home. The company has underperformed its peers, including its main competitor Ball. Last week, they saw a steep drop in the stock price from $85.01 on Oct. 24 to $70.69 on Oct. 25, following their most recent earnings release. They attributed their lowered financial outlook to inflation, high interest rates and unfavorable currency translation. This underperformance is also due to shuddered demand for canned beverages that exploded during the pandemic, leading to an overage of inventory.
The opportunity to create shareholder value here is relatively simple: sell non-core businesses, buy back shares and focus on the pure-play beverage business. The company announced its acquisition of Signode, a transit packaging business, for $3.9 billion in 2017, and might be reluctant to sell it for less than that now. However, there is a lot of value to selling that business, the least of which is the amount of proceeds they receive (within reason). There is more value in how they use those proceeds (i.e., buying back stock in an undervalued, growing business). There is also tremendous value in freeing up management to focus on the core business, and there is value to being a pure play business and getting a market multiple closer to their pure-play peer, Ball. So, management should not be as focused on what they can get for Signode as in what a sale allows them to do in the future. Crown also runs an aerosol and food-packaging business that manufactures cans for household products and snacks and still owns a minority stake in the European food-can business. Icahn believes that the company should sell all these non-core assets and focus on the beverage can business which has secular tailwinds and is undervalued relative to its pure-play peer. Using cash flow to strengthen the balance sheet and repurchase stock ahead of this would enhance shareholder returns as Crown closes this valuation gap.
Icahn is not the only activist with a position in Crown. Impactive Capital first disclosed a stake in Crown in their first quarter 2020 13F filing and has advocated for the company to pursue the same opportunities that Icahn is advocating for – divesting non-core assets and share buybacks. Shortly after Impactive took its position, Crown announced a strategic review of its portfolio and capital allocation priorities. This resulted in the 80% divestiture of the company’s European food can business in 2021. But there is clearly more portfolio simplification that can be done here. Impactive always has an environmental, social and governance thesis in their investments and looks for situations where positive ESG improvements can drive value. This situation is no exception. Focusing on the growing aluminum can market as a replacement for plastic and glass is not only good for Crown but good for the environment. Because aluminum’s inherent properties don’t change through use or recycling, cans are 100% recyclable repeatedly.
It is important to note that there is a ton of value here, regardless of who is on the management team. I would not assume that Icahn or Impactive want to see a change in management here. But if management is not up to the task, that is always a possibility. On a recent conference call, Crown CEO Timothy Donahue said: “You never like to say, we’re caught off guard, but I think we were really.” When you are a CEO who has been caught off guard, the last thing you want to see is Carl Icahn show up in your stock.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and he is the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Squire is also the creator of the AESG™ investment category, an activist investment style focused on improving ESG practices of portfolio companies.

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Justice Amy Coney Barrett denied an emergency application brought by the Pacific Legal Foundation to block federal student loan forgiveness.
Barrett is responsible for such applications issued from cases in the 7th U.S. Circuit Court of Appeals.
For now, student loan forgiveness remains on hold from a separate challenge brought by six GOP-led states after an appeals court judge in the 8th Circuit granted a stay.
Close to 26 million Americans have already applied for student loan forgiveness.

Supreme Court nominee and U.S. Court of Appeals Judge Amy Coney Barrett on Capitol Hill in Washington, October 21, 2020.
Ken Cedeno | Reuters

The Supreme Court on Friday rejected a second request to block the Biden administration’s student loan debt relief program.
Justice Amy Coney Barrett denied an emergency application to block the program brought Tuesday by the Pacific Legal Foundation, a conservative legal group, on behalf of two borrowers in Indiana.

On Oct. 20, Barrett rejected a similar request from the Brown County Taxpayers Association in Wisconsin.
Barrett is responsible for such applications issued from cases in the 7th U.S. Circuit Court of Appeals, which includes Indiana and Wisconsin.
Friday’s decision has little practical effect. For now, student loan forgiveness remains on hold from a challenge brought by six Republican-led states. An appeals court judge in the 8th Circuit in October granted the states’ emergency petition to stay the plan pending consideration of the states’ appeal.
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Since the White House in August unveiled its plan — to cancel $10,000 in student loans for most borrowers and up to $20,000 for those who received Pell Grants for low-income families — it has faced at least six lawsuits.

Close to 26 million Americans have already applied for student loan forgiveness, and the Biden administration has approved 16 million of the requests, the White House said Thursday. The administration has continued to encourage borrowers to apply for relief despite the recent challenges.
Caleb Kruckenberg, an attorney at Pacific Legal Foundation, in an emailed statement said, “We’re disappointed by today’s denial but will continue to fight this program in court.”
“Practically since this program was announced, the administration has sought to avoid judicial scrutiny,” Kruckenberg said. “Thus far they have succeeded. But that does not change the fact that this program is illegal from stem to stern.”

‘Standing’ remains an issue for forgiveness challenges

The main obstacle for those hoping to foil the president’s action has been finding a plaintiff who can prove they’ve been harmed by the policy, experts say.
“Such injury is needed to establish what courts call ‘standing,'” Laurence Tribe, a Harvard law professor, recently told CNBC. “No individual or business or state is demonstrably injured the way private lenders would have been if, for instance, their loans to students had been canceled.”
In that light, Barrett’s decision to reject the Pacific Legal Foundation’s request isn’t surprising, said higher education expert Mark Kantrowitz.
“There were very few substantive differences between their original lawsuit and the new lawsuit, which spells a lack of legal standing,” he said.

In the Pacific Legal Foundation case, Indiana-based plaintiffs Frank Garrison and Noel Johnson said that they would be financially harmed if some of their student debt was automatically forgiven because they would incur state taxes on that canceled debt.
Indiana is one of several states that has said forgiveness would be taxable at the state level, and potentially the county level.
Both Garrison and Johnson are lawyers; Garrison works for the Pacific Legal Foundation and Johnson for the Public Interest Legal Foundation. They are pursuing relief through the public service loan forgiveness program, which allows those who work for the government or specific nonprofits to get their debt canceled after 10 years, or 120 payments. PSLF forgiveness is not considered taxable income.
After the initial lawsuit, the Education Department said that borrowers can opt out if they do not want to have their loans forgiven.

Student loan borrowers ‘in limbo’

As legal challenges mount, financial advisors say borrowers are left wondering where student loan forgiveness stands.
“The interference of the courts is really troubling because people are looking for certainty with what’s happening with their student loans,” said Ethan Miller, a certified financial planner and founder of Planning for Progress in the Washington, D.C., area. Miller specializes in clients with student loans.
“There was a plan that clearly outlined the steps,” he said. “And yet everyone’s been put in limbo.”

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Ron Baron said he began investing during the 1970s, which was a tumultuous time.
As a stockbroker, he recommended small-cap companies, such as Disney and McDonald’s, and told clients to sell when the stocks doubled or tripled. But many of these stocks continued to climb.
Now, having learned from this lesson, Baron says, he invests in companies that will grow over full market cycles, at a faster-than-average rate.
“Our goal is to double our money about every five or six years,” Baron writes.

Ron Baron, founder of Baron Capital
Anjali Sundaram | CNBC

I began my career as a securities analyst in 1970. It was a tumultuous time.
The Vietnam War, Watergate, the resignation of President Richard Nixon, the Iranian hostage crisis, a recession, inflation, interest rates in the double-digits, gas prices that had tripled. The only crisis with which we did not have to contend during that decade was a pandemic. Further, in the midst of chaos, the stock market crashed, resulting in a global bear market that lasted from 1973 to 1974. It was one of the worst downturns since the Great Depression. The only one comparable was the financial crisis of 2007–2008.

My experience during the 1970s was foundational. The stocks I had recommended were small-cap companies. They included Disney, McDonald’s, Federal Express, Nike, and Hyatt.
After these stocks doubled or tripled, I recommended selling. That was because I earned brokerage commissions — not a salary. Several years later, when I looked back, virtually all those stocks continued to grow dramatically.
I concluded that, instead of trading stocks or trying to predict market fluctuations, the better strategy was to discover and invest in great companies at attractive prices and stay invested for the long term.
I believed then, and believe now, that you do not make money trying to forecast short-term market moves.
In my 52 years of investing, I have never seen anyone consistently and accurately predict what the economy or the stock market was going to do. So whenever extraneous events happened and stocks uniformly declined, I believed that represented long-term opportunity.

Investing in ‘pro-entropic’ businesses

I also learned to invest in “pro-entropic” businesses. In times of entropy – disorganized chaos – I found many of the best companies did not just survive but thrived. They took advantage of opportunities that tough times presented. They acquired weaker competitors at bargain prices or gained market share as their rivals faltered. They accommodated customers, creating loyalty and goodwill and enhancing lifetime value. While continuing to invest in key areas such as R&D and sales, they rooted out extra fat elsewhere in their budgets, creating long-term efficiencies. When conditions normalized, they were better positioned than ever to take advantage of their resiliency.
After the 1973-1974 bear market, I saw this pattern play out again and again. The stock market crash of 1987, the dot-com bubble burst of 2000-2001, the 2007-2008 financial crisis, and now. That is why I like to say we invest in companies, not in stocks.
We look for companies that will grow over full market cycles, at a faster-than-average rate. We invest based on what we think a business will be worth in five or 10 years, not what it is worth right now.
Our goal is to double our money about every five or six years. We seek to accomplish that by investing for the long term in companies we believe are competitively advantaged and managed by exceptional people.

The Tesla example

Tesla is probably the most well-known company we currently own. But I would point out that it is no outlier. In fact, Tesla is the perfect example of how our long-term investment process works.
We first invested in 2014. I thought Elon Musk was one of the most visionary people I had ever met. What he was proposing was so revolutionary, so disruptive, yet made such sense.

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We have owned its stock for years while Tesla built its business. Sales grew, but its share price, although extremely volatile, was mostly flat. We remained invested throughout that time, and when the market finally caught on in 2019, Tesla’s share price increased 20 times. That’s why we try to invest in companies early – because you never know when the market will finally perceive the value we perceived, and it drives the share price up.
We only invest in one kind of asset – growth equities. Why? Because we think growth stocks are the best way to make money over time.

While the simple answer to combat inflation is to invest over the long term, the concept of compounding tells us why. … Over time, this effect snowballs…

Historically, our economy has grown on average 6% to 7% nominally per year, or doubling every 10 or 12 years, and the stock markets have closely reflected that growth. U.S. GDP in 1967 was $865 billion, 55 years later it is $25.7 trillion — or over 28 times greater than it was in 1967.
The S&P 500 Index was 91 in 1967. It is now at about 3,700.
We seek to invest in companies that grow at twice that rate at a time when we believe their share prices do not reflect their favorable prospects.
Stocks are also a terrific hedge against inflation. Inflation is once again back in the headlines, but it has always been present. The purchasing power of the dollar has fallen about 50% every 18 years, on average, over the past 50 years.
While inflation causes currencies to lose value over time, it has a positive impact on tangible assets, businesses and economic growth. This means stocks are the best way to counter the devaluation of your money.
While the simple answer to combat inflation is to invest over the long term, the concept of compounding tells us why. When your savings earn returns, compounding allows these returns to earn even more returns. Over time, this effect snowballs, and earnings grow at an increasingly fast rate.
So, if you earn 7.2% on an investment, which is the historic annual growth rate of the stock market (excluding dividends) for the past 60 years, the growth of your investment will be exponential. You will have nearly seven times your initial amount in 30 years, 12 times in 40 years, and more than 23 times in 50 years!
I’d also like to point out that the stock market is one of the most democratic investment vehicles — available to everyone, unlike real estate, private equity, hedge funds, etc. I founded Baron Capital in 1982 to give middle-class people like my parents a chance to grow their savings. Even today, 40 years later, that is why I do what I do.
Ron Baron is chairman and CEO of Baron Capital, a firm he founded in 1982. Baron has 52 years of research experience.

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If you’re expecting a deduction for pretax individual retirement account contributions, you need to know the IRS rules to qualify.
The tax break depends on your participation in workplace retirement plans and income.

dowell | Moment | Getty Images

As the year-end approaches, you may be looking for ways to lower your 2022 tax bill — and certain tax-saving moves have rules you must follow in order to qualify.
One option, adding money to your pretax individual retirement account, may be attractive if you make too much for Roth IRA deposits, and want to lower your adjusted gross income.

For 2022, you can save up to $6,000 or $7,000 if you’re 50 or older, as long as you’ve made at least that much from a job or self-employment.
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While you can still contribute to your IRA until April 18, 2023, the tax filing deadline for 2022, there are strict guidelines for qualifying for a deduction.
“Anyone can contribute to a traditional IRA — you, me, Jeff Bezos,” said certified financial planner Howard Pressman, partner at Egan, Berger & Weiner in Vienna, Virginia. 
But the ability to write off IRA contributions depends on two factors: participation in workplace retirement plans and income, he said.

An investor and their spouse may be “in the clear” to write off their entire IRA contributions if both spouses aren’t participating in an employer’s retirement plan. 
However, the rules change if either partner has coverage and participates in the plan, including deposits from the employee or company.
For example, participation may include employee contributions, company matches, profit-sharing or other employer deposits.

Income limits for employees with a workplace plan

For 2022, single investors using a workplace retirement plan may claim a tax break for their entire IRA contribution if their modified adjusted gross income is $68,000 or less.
While there’s still a partial deduction before they reach $78,000, the benefit disappears once they meet that threshold.
Married couples filing together may receive the full benefit with $109,000 or less in income, and their partial tax break is still available before reaching $129,000.

There’s an IRS chart covering each of these limits for 2022 here.
Spouses who don’t work outside of the home may also contribute based on the income of the earning spouse, in what’s known as a spousal IRA, Pressman added. 
“This also has income limitations, but they are higher than those for workers covered by a plan,” he said. 

Other tax breaks for retirement savings

Although some investors won’t qualify for IRA contribution deductions, there are other options to consider.
Nondeductible IRA contributions are a popular choice because some investors convert the after-tax deposit to a Roth IRA, known as a Roth conversion, which bypasses the income limits. 
Other options may include maxing out a workplace retirement plan, including catch-up contributions for those who are age 50 and older, Pressman suggests.
After that, you may consider investing in low-turnover index mutual funds in a regular brokerage account.
“This account will not be subject to retirement rules, limiting your access to the funds, and when you take distributions your growth will be taxed at more favorable capital gains tax rates rather than higher ordinary income rates of IRAs,” he added.
“While you will need to pay taxes on capital gains and dividends each year, using index funds with low turnover should keep these taxes to a minimum,” Pressman said.

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Whether the winner would choose an annuity or the reduced lump sum, taxes would take a big bite out of the prize.
The cash option for this jackpot is $782.4 million, just under half the annuitized value.
If the winner were to go with the lump sum, $187.8 million would be withheld for federal taxes — and that would likely be just the start.

Jonathan Alcorn | Reuters

If you manage to beat the odds stacked against hitting the Powerball jackpot, don’t forget you’ll have a silent partner in the win: the taxman.
The jackpot for Saturday night’s drawing is now the largest lottery prize ever at an estimated $1.6 billion — pretax — if you were to opt to take your windfall as an annuity spread over three decades. The upfront cash option — which most jackpot winners choose — for this drawing is $782.4 million, also pretax.

With the chance of a single ticket hitting the jackpot at about 1 in 292 million, the top prize has been rolling higher through thrice-weekly drawings since Aug. 3, when a ticket in Pennsylvania matched all six numbers drawn to score a $206.9 million jackpot. 
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These days, the annuity option is bigger than it previously was, relative to the cash option, due to higher interest rates that make it possible for the game to fund larger annuitized prizes, according to the Multi-State Lottery Association, which runs Powerball. The cash option, however, is driven by ticket sales.

$187.8 million would get shaved off the top

So what would you pay in taxes if you were to beat the odds and land the jackpot?
Assuming you were like most winners and chose the cash option, a 24% federal tax withholding would reduce the $782.4 million by $187.8 million.

Yet more would likely be due to the IRS at tax time. The top federal income tax rate is 37% and this year applies to income above $539,900 for individual tax filers and $647,850 for married couples. Next year, the top rate is imposed on income above $578,125 (individuals) and $693,750 (married couples).

This means that unless you were able to reduce your taxable income by, say, making charitable donations, another 13% — or about $101.7 million — would be due to the IRS. That would translate into $289.5 million going to federal coffers in all, leaving you with a cool $492.9 million.
State taxes could also be due, depending on where the ticket was purchased and where you live. While some jurisdictions have no income tax — or do not tax lottery winnings — others impose a top tax rate of more than 10%.

Nevertheless, the winner would end up with more money than most people see in a lifetime.
Meanwhile, Mega Millions’ jackpot is $119 million, or $57.7 million in cash, according to the Mega Millions website, for Friday night’s drawing. The chance of your ticket hitting the jackpot in that game is roughly 1 in 302 million.
Correction: The headline on an earlier version mischaracterized the jackpot.

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A job loss can be traumatic, setting off a myriad of financial problems.
But taking the right steps, sooner rather than later, can help reduce the disruptiveness.

Wanan Yossingkum | Istock | Getty Images

The labor market is still strong, but layoffs are picking up.
This year Peloton, Netflix, Shopify, Lyft, and, most recently, Twitter, all announced significant staff reductions. Meanwhile, executive outplacement firm Challenger, Gray & Christmas reported this week that job-cut announcements were up 48% year-over-year in October, with more layoffs on the horizon.

Getting terminated can be traumatic, setting off a myriad of financial problems.
By taking certain steps, sooner rather than later, you can reduce the disruption and boost your odds of a positive next chapter, experts say.

1. File to collect unemployment benefits ASAP

You should file for unemployment benefits as soon as possible after a layoff, said Andrew Stettner, the director of workforce policy and senior fellow at The Century Foundation.
Even if you received unemployment benefits earlier in the pandemic and are facing joblessness again, you may qualify for more aid.

The rules vary state by state, but generally, so long as you’ve worked at least 15 weeks since last receiving unemployment benefits, you’re eligible to open a new claim for a partial payment, Stettner said. Most people will need to have been working for at least six months to qualify for a full benefit again.

If you’ve been employed for more than a year, your benefit should come fairly quickly.

2. Weigh health insurance options

Job losses can also often mean losing your health insurance.
“As overwhelming as it may be, it’s important to look for coverage quickly” after a layoff, said Caitlin Donovan, a spokesperson for the National Patient Advocate Foundation, a nonprofit that helps individuals access and pay for health care.  
Your first step should be to speak with someone in your company’s human resources department to understand when your coverage technically ends.
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“There’s no blanket rule here: For some, coverage may end immediately; for others, it may go until the end of the month,” Donovan said. “Either way, you should immediately start planning to transition to a new plan.” 
Navigating the health insurance landscape on your own can be stressful and confusing.
There are resources you can turn to for help. If you have a diagnosed condition, including cancer, lupus or diabetes, you may be able to get support deciding on and enrolling in a plan with the National Patient Advocate Foundation, Donovan said. You can also consult with a local health-care “navigator.” 

Generally, newly laid off and uninsured people will have three routes to coverage from which to pick: COBRA, the Affordable Care Act subsidized marketplace or a public plan such as Medicaid or Medicare.
COBRA gives those who have left a company the option of staying on their former employer’s insurance plan, although it’s typically very expensive. That’s because people have to keep paying the part of their premium they’d been responsible for while working, as well as the remainder, which their former employer had covered.
Medicaid typically involves no or low monthly premiums, and marketplace plans are the cheapest they’ve ever been for many people, thanks to relief legislation passed in the pandemic.

3. Protect your retirement savings

Many people save for their retirement through their job. If you had access to a 401(k) plan at the company from which you were laid off, you’ll need to decide what to do with that account.
You may not want to do anything, said Rita Assaf, vice president of retirement leadership at Fidelity.
Most employers allow you to keep your plan with them after you leave, Assaf said. (However, if you have less than $5,000 in the account, the money may be sent to an individual retirement account for you, she added.)
However, you won’t be able to continue contributing to a plan at a company you’re no longer working for. And you may be limited in how much you can take as a loan or withdraw from the account.

Make sure to research fees and expenses when choosing an IRA provider.

Rita Assaf
vice president of retirement leadership at Fidelity

Another option is to roll over the account into an IRA, which can be opened at a bank or brokerage firm. This would allow you to continue saving. You may also be able to withdraw money from this account if you’re under 59½ without any penalties, Assaf said, if you use it for a first-time home purchase or higher-education expenses.
“Make sure to research fees and expenses when choosing an IRA provider, if you do, though, as they can really vary,” Assaf said.
If you’re hopping to another job right away, you may have the option to roll your old 401(k) plan into one with your new employer. Having just one savings retirement account may feel more manageable.
“It’s important to note that not all employers will accept a rollover from a previous employer’s plan, so you should check with your new employer before making any decisions,” Assaf said.
What you don’t want to do, if at all possible, is to cash out the account, she said. You’ll likely be dinged with taxes and penalties, not to mention risking your financial security when you leave work for good.

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