Your Tuesday Blip 3/23/21

Your Tuesday Blip 3/23/21

Stocks closed the day lower thanks to a slide in bank and energy stocks. At the close the Dow was off 308 points at 32,423. Trading volume was higher across the board indicating that institutions were active sellers in today’s market.
Oil prices fell 6.5% as bearish sentiment reared its head due to a slow vaccine rollout and extended lockdowns in Europe coupled with rising COVID cases in places like Brazil. Along with this softening in demand, crude inventories are on the rise and investors are pulling back until the supply demand equation becomes balanced.
A combination of rising covid infections and a semiconductor chip shortage is causing auto manufacturers in Brazil to suspend production at various plants across the country. Volkswagen said it would stop all auto production for at least two weeks citing chip shortages and health risks to its workers while Volvo did the same. General Motors has interrupted production at the best-selling Onix compact car and Honda halted production for its Civic sedan earlier in March. Fiat furloughed 10% of its workers to slow production and match chip supply.
Last week we started letting people know about the Washington Long Term Care (LTC) Trust Act, and let you know that there is a way to opt out of this new tax if you want to. In 2019, the Washington State Legislature passed a new bill aimed at providing LTC benefits to people in Washington. Benefits will not start until 2025, but beginning in 2022, there will be an additional 0.58% tax assessed to all wages of every Washington employee’s paycheck through payroll taxes. The taxes go to pay for the LTC benefits, which are currently worth $100 a day for 365 days – a total max lifetime benefit of $36,500. In order to qualify for this benefit, you must contribute for 10 years, or have paid the tax for 3 of the last 6 years, and be a Washington resident. For example, if you are 60 years old, then retire at 65, but wouldn’t require benefits until you are 70, you will have paid the taxes, but won’t qualify for benefits because you didn’t contribute for 10 years or for 3 of the last 6 years. If you’re someone that is younger, and you pay the taxes for the next 20 years, then you decide to retire in Idaho, or Arizona, or wherever, you will have paid the taxes but won’t qualify for benefits because you don’t live in Washington anymore. You can opt out of the tax, if you currently have a personal LTC policy, by contacting the Washington Employment Security Department, after October 1, 2021 and before December 31, 2022, and applying for an exemption. If your policy qualifies you for an exemption, you will need to provide this proof to your employer to be opted out of the tax. If you don’t have a personal LTC policy, and want to opt out of the tax, you still have time to get a policy. Currently you have until the end of 2022, but the legislature is working on an amended bill that will most likely require a policy to be active by mid July 2021. There are many factors that go into deciding what could be best for your situation, and if you would like more information about the LTC Trust Act, or would like a better understanding of how it might apply to your personal situation, please feel free to give us a call at 206-352-9205.