Investing

“When you think about the potential for scamming people … if I was interested in investing in scamming, it’s gonna be the growth industry of all time and it’s enabled, in a way” by AI, Warren Buffett said.
“Obviously, AI has potential for good things too, but … I do think, as someone who doesn’t understand a damn thing about it, it has enormous potential for good and enormous potential for harm,” he added.

Warren Buffett isn’t jumping on the artificial intelligence bandwagon just yet, warning about the technology’s potential for harm.
“When you think about the potential for scamming people … if I was interested in investing in scamming, it’s gonna be the growth industry of all time and it’s enabled, in a way” by AI, Buffett said at Berkshire Hathaway’s annual shareholder meeting on Saturday. Buffett pointed to the technology’s ability to reproduce realistic and misleading content in an effort to send money to bad actors.

Scammers are known to use AI voice-cloning and deep-fake technology to manipulate videos and images that impersonate an individual’s family and friends to ask for money or personal information.
“Obviously, AI has potential for good things too, but … I do think, as someone who doesn’t understand a damn thing about it, it has enormous potential for good and enormous potential for harm — and I just don’t know how that plays out,” Buffett added.

Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 
David A. Grogen | CNBC

AI has been the talk of Wall Street for more than a year, as investors bet on the technology’s potential to drive higher profits going forward. Stocks such as Nvidia and Meta Platforms have skyrocketed during the AI boom, up 507% and 275%, respectively since the end of 2022.
However, the investing legend admitted he’s not familiar with AI and likened its potential that of the atomic bomb’s during the 20th century.

More from Berkshire Hathaway’s Annual Meeting

“I don’t know anything about about AI. That doesn’t mean I deny its existence or importance or anything of the sort,” Buffett said, speaking in a cautious tone. “We let the genie out of the bottle when we developed nuclear weapons and that genie has been doing some terrible things lately, and the power of that genie is what scares the hell out of me.”
“I don’t know any way to get the genie back in the bottle, and AI is somewhat similar. It’s part of the way out of the bottle, and it’s enormously important and it’s going to be done by somebody … whether it’s going to change the future of society, we will find out later,” Buffett added. More

Many companies offer stock compensation but employees miss the opportunity to build wealth.
Nearly three-quarters of companies offer some form of equity compensation to certain employees, according to a 2023 survey.
A few common types include stock options, restricted stock units and employee stock purchase plans.

Prasit photo | Moment | Getty Images

As employers compete to attract and retain talent, equity compensation — or an ownership stake in the company — has become a key workplace benefit.
Some 72% of companies offer some form of equity compensation to certain employees, a 2023 survey from Morgan Stanley found. That’s up from 65% in 2021.

These perks motivate employees and boost their long-term investing goals, according to the Morgan Stanley survey, which polled 1,000 U.S. employees and 600 human resource executives.
However, some “miss the opportunity” because they don’t understand it, said certified financial planner Chelsea Ransom-Cooper, chief financial planning officer for Zenith Wealth Partners in New York.
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Here’s what to know about three popular types of stock-based compensation, experts say.

There’s potential for ‘life-changing wealth’

Many employees receive so-called stock options as part of their compensation, which are the right to buy or “exercise” company shares at a preset price within a specific timeframe.

“It’s almost iconic to grant stock options in a startup private company,” said Bruce Brumberg, editor-in-chief and co-founder of myStockOptions.com, which covers various types of equity compensation.
Startups want to create the drive and incentive of ownership culture with the potential for “life-changing wealth,” he said.

Stock options become valuable when there’s a discount between your preset price and the market value, which makes it more attractive to exercise. However, the taxes can be complicated, depending on the type of stock options.
Incentive stock options can offer some tax benefits — if you meet certain rules — but could trigger the alternative minimum tax, a parallel system for higher earners.

Photo by LanaStock via Getty Images

By comparison, the more common nonqualified stock options generally have less favorable tax treatment and you’ll owe regular income taxes on the discount upon exercise.
But even with an initial discount, there’s no guarantee a company’s stock price won’t decrease after exercising a stock option.
“It could be worth nothing but a piece of paper,” Ransom-Cooper from Zenith Wealth Partners said.

Restricted stock units are ‘like a cash bonus’

Another benefit, restricted stock units, or RSUs, are company shares granted upon hiring, which vest over time. RSUs can also be tied to performance-based goals.
Some 94% of public companies offer RSUs to at least middle managers, according to a 2021 survey from the National Association of Stock Plan Professionals.
“I like to think of it like a cash bonus,” said Pittsburgh-based CFP Matthew Garasic, founder of Unrivaled Wealth Management. 

I like to think of it like a cash bonus.

Matthew Garasic
Founder of Unrivaled Wealth Management

For example, if the stock price is $10 and 100 shares vest, it’s treated like $1,000 in compensation for that year, and the standard withholding of 22% might not be enough, depending on your tax bracket, he explained.

After vesting, the decision to sell or hold RSUs depends on your short- and long-term investing goals.
“We like to establish a target of what they like to hold in company stock,” said Garasic, who aims to keep allocations of a single stock to 10% or less. “Once we get above that target, we just sell at vest.”

Employee stock purchase plans offer ‘free money’

Many publicly traded companies may also offer discounted company shares via an employee stock purchase plan, or ESPP.
“There’s free money to be had” with an ESPP, Garasic explained.
However, the decision to participate typically depends on your short-term financial goals.
After enrolling, your ESPP collects a portion of after-tax money from each paycheck and uses the funds to buy discounted company stock on a specific date.
The gold standard is a 15% discount with a lookback feature, which bases the stock purchase price on the value at the beginning or end of the offering period, whichever is lower, experts say.

Any time you’re investing in a single company, there’s certainly a big risk.

Kristin McKenna
President of Darrow Wealth Management

You can typically sell after a set period, but there’s no guarantee you’ll make money, even with the built-in discount.
“Any time you’re investing in a single company, there’s certainly a big risk,” CFP Kristin McKenna, president of Darrow Wealth Management in Boston, previously told CNBC.
Yearly goals like investing up to your employer’s 401(k) match should come before your ESPP, especially with limited income, she added. More

Wako Megumi | Istock | Getty Images

Company: Toyo Suisan Kaisha (2875.T)

Business: Toyo Suisan Kaisha and its subsidiaries produce and sell food products in Japan and internationally. The company operates through the following segments: Seafood, Overseas Instant Noodles, Domestic Instant Noodles, Frozen and Refrigerated Foods, Processed Foods and Cold Storage. It purchases, processes, and sells seafood, and manufactures and sells a variety of products including instant cup and bag noodles, soup and processed foods.
Stock Market Value: Roughly 1 trillion Japanese yen (10,070.00 yen per share)

Activist: Nihon Global Growth Partners Management

Percentage Ownership: 3.8%
Average Cost: n/a
Activist Commentary: Nihon Global Growth Partners Management is a long-term investor in Japanese-listed companies that are growing rapidly in markets outside of Japan. Prior to founding Nihon Global in 2018, the firm’s principals were involved in managing a private equity program in Japan starting in 2004. As private equity investors, the principals have done nine buyouts, including three listed companies in Japan. All the principals’ prior private equity investments involved Japanese companies where a substantial portion of the growth was in markets outside of Japan.

What’s happening

In late April, Nihon Global issued a press release and presentation detailing its investment in Toyo Suisan and four shareholder proposals it has put forward to be voted on at the company’s upcoming 2024 general shareholders’ meeting: (i) increase the dividend payout ratio to 40%; (ii) repurchase 20 billion yen of the company’s shares; (iii) implement a director stock compensation program; and (iv) disclose the company’s cost of capital.

Behind the scenes

Toyo Suisan is an international conglomerate with multiple business segments across seafood, processed foods and refrigeration, but its crown jewel is its overseas instant noodle business. The company is a global leader in the space, specifically in North America which contributed 65% of consolidated earnings before interest and taxes in 2023 and is expected to surpass 70% in the coming years. Toyo Suisan’s brand of packaged instant noodles under the brand name Maruchan can be found in more than the dorm rooms of college students, dominating 70% of market share by volume and 45% by sales value in the US, and 75%+ in Mexico. The segment has enjoyed roughly 10.9% revenue and 12.8% EBIT compound annual growth rates from 2012 to 2024, as well as consistently healthy EBIT margins in the mid-teens.

Despite this staggering performance and status as a global leader in instant noodles in the U.S., Mexico, and Japan, the company appears deeply discounted to its intrinsic value. Nihon Global attributes this to the company’s (i) lack of strategic focus on its core assets; (ii) poor capital allocation, dedicating far too much capex on low ROA legacy businesses and being substantially overcapitalized; and (iii) a lack of attention to total shareholder return, which has underperformed peers in terms of total returns, as well as a lack of a formal shareholder return policy.
The ideal plan for Toyo Suisan would be to divest its legacy and non-core businesses and focus its capital and resources on growing its core noodles business. Legacy businesses have generated just 17% of the company’s 10-year cumulative earnings before interest, taxes, depreciation and amortization, yet they have been awarded 51% of the capex despite generating sub-5% return on assets. Assets like its valuable refrigerated warehouse segment, a very attractive business, would be better suited as a Japanese real estate investment trust or sold to a strategic acquirer. The same applies to its processed foods and seafood trading businesses, which would benefit from the scale and synergies provided by a strategic acquirer, yet they continue to languish in Toyo Suisan, hindering valuations and diverting attention from the company’s core growth areas all while delivering poor ROAs.
Nissin Foods (2897.T) is one of the largest and most respected instant noodle companies globally. Toyo Suisan has consistently outperformed Nissin Foods in North America, one of the most profitable and fastest-growing markets in the world. Yet, Nissin trades at a higher price-earnings multiple because it is a pure play focused on the instant noodle market. Nissin also has a clear 40% dividend payout ratio and conducts share buybacks. Toyo Suisan, on the other hand, is the last remaining company among its peers with no shareholder return policy and no stated targets regarding return on equity, dividend on equity, dividend payout ratio and total shareholder return, according to Nihon Global’s presentation. It also hasn’t conducted a share buyback in 17 years.
Becoming a pure-play noodle company with improved capital allocation practices would almost immediately close the roughly 8 times P/E multiple discount that Toyo Suisan trades at versus Nissin Foods. After that, as the dominant player in the North American market, Toyo Suisan would be in a prime position to be a global consolidator in the instant noodle market, a market that is prime for consolidation with two to three players dominating the industry. With this plan, Nihon Global estimates that the intrinsic value of the company is 17,300 yen per share or more, as opposed to the low 10,000 range.
However, while that type of an ambitious activist plan would be commonplace in the United States, activism in Japan is more of a jog than a sprint. It generally starts with shareholder proposals that by regulation can only address specific issues, such as capital allocation and dividends. Accordingly, Nihon Global has put forward four shareholder proposals to be voted on at the company’s annual meeting in June 2024: (i) increase the dividend payout ratio to 40%; (ii) repurchase 20 billion yen of the company’s shares; (iii) implement a director share compensation program which would make 40% of total compensation performance-linked and half of which would be stock; and (iv) disclose the company’s cost of capital. These are incredibly reasonable proposals. The dividend raise is an incremental increase of only 1.9% of December 2023 cash. The repurchase is only 4.6% of shareholders equity as of December 2023. The compensation program is equal to market standard, and the disclosure of cost of capital is consistent with the existing recommendations of the Tokyo Stock Exchange.
A word about shareholder proposals in Japan for those who are not familiar with them: They are like going before Judge Chamberlain Haller in the 1992 movie “My Cousin Vinny.” “That is a lucid, intelligent, well thought out objection. Overruled.” In other words, they rarely pass. Last year, 3% of corporate governance shareholder proposals were passed and 4% of balance sheet-based shareholder proposals were passed. That is part of an upward trend. But there is a lot of good news here. First, if passed they are binding – unlike in the U.S. Second, and more importantly, they do not need to pass to get the attention of management. Japanese business culture takes shareholder concerns seriously: If a proposal gets at least 20% of the votes, management will often act in some way that is consistent with it. Last year, 107 shareholder proposals received more than 20% approval from shareholders, and 49 received more than 30%, according to a study by law firm White & Case.
In this case, Nihon Global could potentially win here or receive upward of 40% of the vote, which is almost like a mandate in Japan. Last year at Toyo Suisan, a less experienced activist shareholder with negligible ownership who did not do any marketing or soliciting to support its more debatable proposal to amend the Articles of Incorporation received 19.8% of the vote. Moreover, the shareholder base here is 41% foreign and more likely to support a shareholder proposal. There is no “white knight” large shareholder and no cross holdings that support management. Nihon Global’s first three proposals are more likely to pass than its fourth proposal, as the first three require a majority of votes cast and the fourth proposal would require two-thirds of the votes cast. One last possibility that often happens in Japan is that Nihon Global could withdraw its proposals after meeting with management, who would agree to institute some of the recommendations. Senior management has thus far refused to meet with Nihon Global, but the firm has only been requesting a meeting since September 2023 and that is somewhat standard in Japan. Now that Nihon Global has escalated it to shareholder proposals, senior management may decide to meet with the firm, particularly as this is a next-generation senior management team, some of whom are American trained.
This activist campaign highlights three important themes in Japanese activist investing. First, it shows the opportunities available to activists in Japan where reasonable shareholder proposals could lead to significant shareholder value creation. Second, it shows the limitations of activism in Japan where ambitious plans, even if compelling and logical, such as divesting non-core businesses and focusing on the core business is a non-starter in the early stages of a campaign in Japan. Third, there is a trend in Asia of private equity investors turning to public company shareholder activism. While shareholder engagement in Japan is relatively new for public investors, private equity investors have been doing it for decades. Accordingly, it is the private equity investors who have the experience dealing with management teams of public Japanese companies. That is inviting a lot of former private equity investors into the space. Brian Doyle of Nihon Global and his team are a good example of this. Hiroyuki Otsuka, a former deputy head of Carlyle Group’s Japan business, recently raised approximately $1 billion dollars to launch Newton Investment Management, a Japanese engagement fund.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

The popular Public Service Loan Forgiveness program began a partial processing pause on May 1 and it likely runs through July, the U.S. Department of Education recently said.
The temporary suspension comes as the Biden administration overhauls the once-troubled federal student loan program.
Here’s what borrowers should know.

Teacher teaching her students in art class at school.
Fg Trade | E+ | Getty Images

The popular Public Service Loan Forgiveness program began a partial processing pause on May 1, which will likely run through July, the U.S. Department of Education recently said.
The temporary suspension comes as the Biden administration overhauls the once-troubled federal student loan program.

Here’s what borrowers should know.

Why the pause is happening

The PSLF program, signed into law by President George W. Bush in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of on-time payments.
However, the program has been plagued by problems, making people who actually get the relief a rarity.
Borrowers often believe they’re paying their way to loan cancellation only to discover at some point in the process that they don’t qualify, usually for confusing technical reasons. Lenders have been blamed for misleading borrowers and botching their timelines.
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The Biden administration has been trying to reform the program. As part of that overhaul, it is changing how loan servicing works for public servants, and some of the customer service will soon be handled by the government itself.
“After the improvements, PSLF borrowers will have all of their PSLF information centralized on StudentAid.gov so that the Department can provide real-time and more accurate information on payment counts and form processing,” the Education Department wrote in a recent blog post.
Previously, only one company managed the servicing for PSLF borrowers on behalf of the government: first, FedLoan, and more recently, Mohela, or the Missouri Higher Education Loan Authority. Going forward, a number of different companies will service the accounts, along with the Education Department.

What borrowers can expect during the transition

The Education Department will not review PSLF form submissions for roughly a two-month period, it says. (The exact dates will depend on how long the changes take place to complete.)
Meanwhile, from May 1 through July, it says, “borrowers will not be able to see their PSLF payment counts on MOHELA’s website.”
“During the transition, PSLF forgiveness will be suspended,” said higher education expert Mark Kantrowitz.

Borrowers will be able to continue making their loan payments, and these months will count on their timeline to loan forgiveness. Borrowers should also be able to submit a form to certify public service employment and to apply for loan forgiveness if they are at the 10-year mark.
“Forms will be reviewed as soon as the transition is complete,” the Education Department says.
If you qualify for debt cancellation during the transition, you can request a forbearance from your servicer in the meantime, it says, adding that any overpayments should be refunded.

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If you opted into your employer’s Roth 401(k) after-tax matching contribution this year, it could trigger a tax surprise, experts say.
Your employer’s Roth match will be extra income for tax purposes and levies aren’t automatically withheld.

JGI/Jamie Grill

If you’ve opted into your employer’s Roth 401(k) after-tax matching contributions this year, it could trigger a tax surprise without proper planning, experts say. 
Enacted in 2022, Secure 2.0 ushered in sweeping changes for retirement savers, including the option for employers to offer 401(k) matches in Roth accounts. These accounts are after-tax, meaning employees pay upfront taxes but growth and withdrawals in retirement are tax-free. Previously Roth 401(k) matches went into pretax accounts.

Roughly 12% of employers with 401(k) plans said they are “definitely” adding the feature and 37% are “still considering it,” according to a recent survey from the Plan Sponsor Council of America.
However, those new matching Roth contributions could have “unintended consequences” at tax time, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
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“If you go this route, you’ll want to know that you’re basically getting extra income” and taxes aren’t automatically withheld, Lucas said. 
“You’re increasing your adjusted gross income by taking this match as a Roth,” he said.

“If you go this route, you’ll want to know that you’re basically getting extra income.”

Tommy Lucas
Financial advisor at Moisand Fitzgerald Tamayo

For example, let’s say your salary is $100,000 with a 6% employer match in 2024. If you designate your $6,000 employer match as Roth and you’re in the 22% federal income tax bracket, you could have an extra $1,320 in tax liability, according to Lucas.
“There’s probably something on top of that for state income taxes,” depending on where you live, he said.
Plus, you won’t see your employer’s matching Roth contribution reported on Form W-2, according to IRS guidance released late last year. Instead, you’ll receive Form 1099-R, which could be confusing, Lucas said.

How to plan for income from Roth 401(k) matches

If you’ve chosen your company’s Roth matches for 2024, you need to prepare for the extra income, said CFP Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.
You can increase your federal and state withholdings with your employer or boost your quarterly estimated tax payments, he said.  

For example, if you expect to incur $1,320 more in federal taxes, you could divide that amount by your remaining 2024 paychecks and include that “extra withholding” on Form W-4 for your employer, Lucas said.
Of course, you’ll need to double-check that the change is reflected on future paychecks, he said.
“In either case, working with a trusted tax advisor would help to optimize overall tax planning and eventual tax reporting for the year,” Guarino added.

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Warren Buffett’s biggest advantage in investing is time.
Had he retired at 65, he may have never become a household name.
Here’s what individual investors can learn from his approach.

Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles as he plays bridge following the annual Berkshire Hathaway shareholders meeting in Omaha, Nebraska, on May 5, 2019.
Nati Harnik | AP

Warren Buffett is widely praised for his investment acumen.
But one of the biggest factors to his success has nothing to do with picking the right companies.

“His skill is investing, but his secret is time,” Morgan Housel wrote in the bestselling business book, “The Psychology of Money.”
“That’s how compounding works,” Housel wrote.
To that point, 99% of Buffett’s net worth was accumulated after he was 65 years old, Housel said during a 2022 interview with CNBC.
“If Buffett retired at age 65, you would have never heard of him,” Housel said.
Today, Buffett’s total net worth is estimated at $132 billion.

That’s up substantially from the $84.5 billion net worth Buffett had at the time Housel’s book was published in 2020. Most of that wealth came in Buffett’s later years, Housel wrote, with $84.2 billion after he turned 50 and $81.5 billion after he turned 65.
Compound interest accumulates not only the on the initial amount invested, but also to the interest in previous periods.
Buffett has compared it to a snowball rolling down a hill. By the time it gets to the bottom, it is much larger.
“The trick is to have a very long hill, which means starting very young or living … to be very old,” Buffett said.

How to use compound interest to your advantage

Everyday investors can easily put the power of compound interest to work.
“Start early — as young as you can — and even if it’s just small amounts, just keep doing it,” said David Rea, president of Salem Investment Counselors in Winston-Salem, North Carolina.
Buffett himself got an early start, making his first stock purchase at age 11. But after selling the three shares of Cities Service, he saw the stock surge, which served as an early lesson that it’s hard to predict when to buy a stock and when to sell it.
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People tend to get excited when the market is going up, which prompts them to buy, noted Bradley Klontz, a certified financial planner and behavioral finance expert with Your Mental Wealth Advisors.
Then when markets drop, they tend to get scared and sell, which is the opposite of what they should be doing, said Klontz, who is also a member of the CNBC FA Council.
The S&P 500 has returned more than 10% per year on average over the past 100 years, Klontz noted. Yet investors who try to time the market won’t reap the full benefit of those gains if they’re moving in and out of their investments.
Individuals are not necessarily to blame; survival instincts will prompt you to follow the crowd.
“We’re wired to do it,” Klontz said.

Becoming a millionaire is ‘easy’ if you start early

We’re also wired to consume today rather than prioritize future gratification. To combat that, it helps to have a specific vision for why you’re investing — the freedom you hope to achieve, the car you want to drive and the emotional satisfaction that life will bring you, Klontz said.
When you clearly have that goal in mind, take action and set up automated movements of your money, say from your paycheck to your 401(k) plan, he recommended.
Like Buffett, individuals will also reap the most rewards if they start young.
“It’s actually pretty easy to become a millionaire if you’re starting early,” Klontz said.

But the longer you wait, the harder it is to catch up. For example, the $5 a day you would need to accumulate $1 million when you’re just starting out may turn into $500 a month at age 30, he said.
The good news is that an investment strategy does not need to be complicated. Buffett himself has recommended individuals keep it simple with a low-cost S&P 500 index fund.
“If you buy an S&P 500, index fund, week in and week out, you will compound to a large amount of money,” Rea said.
Investors can also take other cues from Buffett — don’t panic; buy American; and keep investing through good and bad, Rea said.

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The U.S. Department of Education recently said that it will soon transfer some student loan borrowers to different servicers.
Here’s what you need to know.

The US Department of Education sign hangs over the entrance to the federal building housing the agency’s headquarters on February 9, 2024, in Washington, DC. 
J. David Ake | Getty Images

If your current federal student loan servicer is Mohela, or the Missouri Higher Education Loan Authority, the U.S. Department of Education said it will soon transfer some student loan borrowers to different servicers.
Here’s what you should know about the change.

Change impacts Mohela borrowers

The Education Department began transferring a portion of Mohela’s borrowers this week to different companies, it said in an April 29 blog post.
More than 1 million borrowers may be impacted.
“A different servicer will begin managing these loans and assisting these borrowers,” the department said.
The Education Department contracts with different companies to service its federal student loans, including Mohela, Nelnet and EdFinancial. It pays the servicers more than $1 billion a year to do so, according to higher education expert Mark Kantrowitz.

Why the transfer is happening

Mohela requested the transfers, the Education Department said, but the company has also been a magnet for controversy of late.

At the end of October 2023, the government accused the servicer of failing to send timely billing statements to 2.5 million borrowers when the Covid-era pause on payments expired, resulting in more than 800,000 borrowers becoming delinquent.
The Education Department withheld $7.2 million in payment to Mohela for its error.
“The disruption to Mohela’s servicing last fall may have been caused by capacity issues,” Kantrowitz said.
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In February, the Student Borrower Protection Center and the American Federation of Teachers published a joint report titled, “The Mohela Papers,” finding that four in 10 student loan borrowers in repayment serviced by Mohela “experienced a servicing failure since loan payments resumed in September 2023.”
On April 10, the U.S. Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Economic Policy held a hearing about Mohela’s performance as a student loan servicer.
“Today, Mohela surrendered more than 10 percent of its total loan servicing business, showing that its executives now recognize what borrowers have long understood: Mohela’s position as a leader in the student loan industry was a mistake,” Mike Pierce, the executive director of the Student Borrower Protection Center, said in a statement.
Officials at Mohela did not immediately respond to a request for comment.
Pierce added that he hopes Education Secretary Miguel Cardona “builds on this progress and continues to protect borrowers by stripping the scandal-plagued firm of its remaining business.”
After the transfers, Mohela will still service the federal student loans of at least 6 million borrowers, Kantrowitz estimates.

What borrowers should do amid transition

Borrowers who are being transferred to a different servicer should receive alerts from Mohela and their new servicer, the Education Department explained.
They will then need to establish an online account with their new servicer.

If you were enrolled in automatic payments with your servicer, which usually leads to a small discount on your interest rate, you may need to reenroll, Kantrowitz said.
If a borrower has a problem with their servicer, they can submit a complaint to the Department of Education’s Federal Student Aid unit.

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The IRS has released an update on its strategic operating plan, which outlines “major accomplishments” since its infusion of funding less than two years ago.
The agency aims to more than double the audit rate for the wealthiest taxpayers with total positive income of more than $10 million by tax year 2026.
It also plans to nearly triple audit rates on large corporations with assets over $250 million and boost audit rates by tenfold for large, complex partnerships with assets over $10 million.

Internal Revenue Commissioner Danny Werfel speaks during his swearing in ceremony at the IRS in Washington, D.C., on April 4, 2023.
Bonnie Cash | Getty Images News | Getty Images

The IRS has released an update on its strategic operating plan, which outlines “major accomplishments” in taxpayer service, technology and enforcement since its infusion of funding less than two years ago.
Emphasizing key focus areas, the agency on Thursday highlighted the need for sustained funding, including a $104 billion proposal to extend Inflation Reduction Act funding through fiscal 2034.

The agency also renewed its focus on “tax fairness” with plans to increase audits on the wealthiest taxpayers, large corporations and complex partnerships.
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“This update also reflects our ongoing effort to make sure we focus compliance resources where they need to be,” IRS Commissioner Danny Werfel told reporters on a press call.
The IRS aims to more than double the audit rate for the wealthiest taxpayers with total positive income of more than $10 million by tax year 2026. This would bring the audit rate for these individuals to 16.5% in 2026, compared to 11% in 2019.
The agency also plans to “nearly triple audit rates” on large corporations with assets over $250 million and boost audit rates “by tenfold” for large, complex partnerships with assets over $10 million, Werfel said.

“At the same time, the IRS continues to emphasize the agency will not increase audit rates for small businesses and taxpayers making under $400,000,” he said. “And those remain at historically low levels.”
In fiscal 2023, the IRS closed nearly 583,000 tax return audits, resulting in $31.9 billion in recommended additional tax, according to the latest Databook.
For all returns filed between 2013 and 2021, the IRS examined 0.44% of individual returns and 0.74% of corporate returns as of the end of fiscal 2023.

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