ARPA What?

On March 11, Congress passed a third round of COVID-related stimulus via the American Rescue Plan Act (ARPA) with a price tag of $1.9 trillion.  This latest package – months in the making – is best known for direct payments of $1,400 to qualifying persons and each of their dependents.  A more abrupt income phase-out (adjusted gross income of $75,000 or $150,000 married filing jointly) made fewer people eligible this round.  Those who are near that threshold may consider making a deductible IRA contribution for example.  But stimulus payment eligibility aside, there are other provisions in the bill that may provide you with some strategic planning opportunities – even for those who do not qualify for direct payments.

Here are a few additional items/areas of the bill we found most interesting and/or likely relevant:

If ARPA money is creating surplus cash flow for you and your family, you may find it tempting to splurge.  Better instead that you consider saving the extra as a personal emergency fund.  Last year was a perfect example of why maintaining a rainy day savings account is important. Not everyone made it through 2020 unscathed. That being said, we also believe it unwise to save too much in low-interest savings accounts. Sitting on substantially more than you’ll reasonably need will result in lost purchasing power to inflation and growth of value over time.  Let us help you review and restore appropriate min/max balance ranges for your situation and bank accounts, so that your money is working hard; it should be working as hard as you are.

Lastly, if you hear about strategies to defer current income into future years to qualify for recent stimulus provisions, be careful. While this year seems like a good year to do so with the added benefits from ARPA, it is increasingly likely that tax changes are coming.  While the potential changes may ultimately prove a topic deserving of their own article, it would not surprise us to see rates drift higher in 2022 – particularly for households making more than $400k/year.  We will continue to monitor what that means with respect to your investments, but never advocate allowing taxes to be the sole factor driving decisions.   The full ARPA legislation can be viewed at:

Author: Jordan Acer, CFP | Nvest Wealth Strategies, Inc. – April 5, 2021
Posted in Personal Finance, Quarterly Newsletters.