A New Year

By Brian Halverson, President

Last year was unique on many levels. The stock and bond markets had some of their worst years on record. Interest rates hit a 12-year high and the job market saw a lot of movement while unemployment remained low. It was a stressful and confusing year but, like all bad things, it came to an end and a new day started. The bond market has begun to rebound, the stock market is already up almost 7% as of this writing, and we have more or less returned to normal since COVID first flipped our lives upside down three years ago.

We experienced many changes at Heartland Trust in 2022 as well. We completed our conversion to Fidelity on our wealth management side. We added several new employees, including a chief operating officer who makes sure our business operations are running as smoothly as possible. We also promoted several team members. On top of that, we kicked off an office remodel project to add more workspace and to update other areas of the building.

While I am not disappointed to see 2022 gone, I am reminded of how our entire team came together. Through all of the challenges, we kept our commitment to deliver personalized service to help our clients reach their financial goals.

I am excited for what this year will bring. And I know we will stay dedicated to our company mission of serving the people, companies, and communities we work for. We wish everyone a happy and successful 2023!

Brian Halverson - PresidentA New Year
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2023 Retirement Plan Updates and SECURE Act 2.0

Tim Rensch, Retirement Services Relationship Manager

The end of 2022 brought several noteworthy changes to retirement savings plans. The changes are intended to have positive impacts on the ability to save for retirement and will have lasting impacts on the retirement savings industry in America.

In October of 2022, the Internal Revenue Service (IRS) set the 2023 salary contribution limits for 401(k) and similar employer sponsored retirement plans. The IRS looks at these limits every year.

The salary contribution limit in 2023 for employer sponsored plans is $22,500, an increase of $2,000 from last year. The IRS also increased the 2023 catch-up contribution limit for employer sponsored plans, available for those who are 50 years of age or older. The catch-up limit in 2023 is $7,500, which is an increase of $1,000 from last year. As you can see in the table posted below, the increases to elective deferrals and catch-up contributions are the largest the IRS has made in the last five years.

The biggest news for the retirement savings industry happened days before the end of 2022 when the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 was signed into law. SECURE Act 2.0 made significant rule changes for individual retirement accounts and employer sponsored retirement plans. The act has generated a lot of excitement because its intention is to expand access to retirement plans, increase the amount being saved for retirement, and help preserve retirement income.

SECURE 2.0 has also gained attention due to its extensive scope. The act has over 90 provisions, making it triple the size of the first SECURE Act passed in 2019. Implementing SECURE 2.0 will be an industry-wide effort, requiring changes in tax laws, labor laws, payroll processes, and recordkeeping systems.

An important feature of SECURE 2.0 is that not all the provisions go into effect in 2023. The act has several provisions effective this year, but many other provisions don’t take effect until 2024 or beyond. It will take time to examine, understand, and implement all the provisions of SECURE 2.0, so this phased-in approach will allow some time for all parties to take the steps necessary to implement the act.

Here is an overview of select provisions of this act that will affect employer sponsored retirement plans:

  • Starting in 2023, an individual must start taking Required Minimum Distributions (RMD) from their retirement account at the age of 73, one year later than the current RMD starting age. In 2033, ten years from now, the act moves the RMD starting age to 75.
  • Starting in 2024, Roth contributions made into a 401(k) plan will be exempt from RMD requirements. Currently, an individual’s Roth IRA is exempt from RMD requirements, but Roth money in 401(k) plans is not exempt. This provision will create a uniform treatment of RMD requirements on Roth savings.
  • Also starting in 2024, there is a new rule for individuals making catch-up contributions. Catch-up contributions must be made as Roth contributions for individuals that earned over $145,000. This will mean that a 401(k) plan that allows individuals to make catch-up contributions must also allow Roth contributions into the plan.
  • Starting in 2025, there will be an increased catch-up contribution limit in place for individuals aged 60-63. The catch-up contribution limit for these individuals will be the greater of $10,000 or 150% of the catch-up limit for the year.

If you have any questions regarding SECURE Act 2.0 or any other retirement plan questions, give us a call or send us an email at [email protected]. We’re always here to help.

Tim Rensch - Retirement Services Relationship Manager2023 Retirement Plan Updates and SECURE Act 2.0
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HTC Team News and Honors

• Our team continues to grow. We are excited to announce the following promotions and new hires.
Jana Samek was promoted to Director of Retirement Services.

Jana Samek

We recently welcomed two new employees to our team: Jennifer Schmidt, Administrative Associate-Personal Trusts; and Maureen Jelinek, Chief Operating Officer

Jen Schmidt

Maureen Jelinek

• We enjoyed participating in the 22nd annual Festival of Trees, a community event that supports Fraser, Ltd. Thanks to our team members who decorated our tree: Mary Fridgen, Jen Schmidt, Ethan Linder, Jace Gilleshammer and Jen Johnston

• We embraced the holiday spirit with our team Ugly Sweater Christmas Celebration. The entries were festive and fun. Congratulations to Amy Remmick (left) who won the Most Creative award and Steve Halverson whose sweater was voted the Ugliest.

Amy Remmick

Steve Harlverson

• We are thrilled that we were able to participate in the 2023 Giving Hearts Day. Each team member picked a charity in which HTC made a donation in their honor. Here are the charities we supported:

  1. Ronald McDonald House Charities of the Red River Valley
  2. St. Gianna & Pietro Molla Maternity Home in Minto, ND
  3. Hospice of the Red River Valley
  4. Great Plains Food Bank
  5. Veterans Honor Flight of ND/MN
  6. Red River Zoo
  7. Landon’s Light
  8. Crosses For Cameron
  9. DMF 4-6-3 Foundation
  10. Arthritis Foundation of North Dakota
  11. Grace Lutheran School
  12. Lake Agassiz Habitat for Humanity
  13. Cats Cradle
  14. YWCA
  15. Park Christian School
  16. Henrik’s Heroes Fund
  17. Churches United
  18. Rape and Abuse Crisis Center

• Congratulations to Denise Lies who celebrated 30 years with HTC on January 14. Denise is our Senior Retirement Services Operations and Compliance. Congratulations, Denise!

Denise Lies

Heartland TrustHTC Team News and Honors
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Meet: Tim Rensch

Tim Rensch joined us in July as our Retirement Services Relationship Manager. He likes to spend time outside and read – and he’s already become a valuable part of our team. 

Tell us about yourself.
I am a native of Garrison, North Dakota, and moved to Fargo in 1993 to start college at North Dakota State University. I graduated with a BS in accounting and, after college, started my career in hotel management. In 2008, I started my first job in the financial services industry.  

What do you like to do in your spare time?
I like to go camping and hiking with my wife and dogs. I also like to ride my bicycle, kayak, golf, and read.  

Tell us about your favorite life experience.
I don’t have a single favorite life experience. I look at my past experiences, good and bad, as something to learn from so I am moving forward as the best possible person I can be.  

What is your favorite movie/play/book?
My favorite book is the next one I’m going to read. I love to learn new things and to be able to look at situations through the perspective of others. Books and movies are great opportunities to expand my perspective and awareness, but I don’t get hung up on a favorite. Each one has given me a different, thought-provoking experience. 

What was the first car you owned?
The first car I owned was a 1980 Pontiac 6000.  

How long have you been at Heartland Trust?
I started at HTC on July 13, 2022. 

What is your favorite part about working at Heartland Trust?
Heartland Trust is a place that treats people with respect and dignity. This holds true in the way the company treats employees, employees treat customers, and co-workers treat each other. Companies often spend a lot of time promoting their corporate culture, but I’ve found the companies with the best corporate culture show it and that is certainly true of Heartland Trust. 

Heartland TrustMeet: Tim Rensch
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2022 Market Review and Outlook for 2023

Kevin Wangen, Wealth Management Associate

Kevin Wangen, Wealth Management Associate

The economic and investment landscape for 2022 was memorable – and not in the way most of us want to remember.

Despite the increased optimism from investors as we rolled into 2022, the S&P 500 finished the year down 18.13%. The U.S. bond market, normally a safe haven when equity markets fall, posted returns of -13%. Inflation soared to 40 year highs. Interest rates rose to their highest levels since 2008. Egg prices went from roughly $1 per dozen to over $4 per dozen.

Through all of that, it didn’t seem like the sky was falling. We managed to avoid a recession, at least by the traditional economic definition. Unemployment remained low. The S&P 500 loss for 2022 put the value back to where it was 22 months ago in May 2021, a comparatively minor loss to other major market pullbacks. For context, The Great Recession of 2008 erased almost 12 years of gains.

The international markets did not fare quite as well through much of 2022. Most of Europe experienced higher inflation than the U.S.. They avoided a recession because declining oil prices and government subsidies softened the blow when the supply of Russian natural gas was shut off. China also fared better than expected when their “COVID-zero” policy was relaxed and an unexpected rate cut was announced.

Back in the U.S., there is still work to do in 2023. The overall market has shown strong signs of reemergence during the first part of the year. The Fed continues to raise interest rates, albeit at a much slower pace, in its efforts to curb inflation. So far it seems to be working. Return prospects for bonds should be more favorable as the Fed rate hike cycle comes to a close. Even egg prices have started to come down.

Here at Heartland Trust, we continue to do our due diligence with respect to the investments we choose . Our investment process is detailed, tested, and focused on the long-term. We work to capture as much of the upside gain as possible when the market is thriving, while limiting the downside loss during periods of market turbulence.

Kevin Wangen – Wealth Management Associate2022 Market Review and Outlook for 2023
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On a Mission

Brian Halverson, President

Most businesses have a mission statement that guides them in their day-to-day responsibilities and directs their decision-making process. Think of it as how a business speaks to the purpose and understanding of what they do.  

Heartland Trust Company’s mission is “To provide a lifelong commitment to the well-being of those we serve.” It’s intended to be clean, precise, and all-encompassing. We use it to guide our decisions from the types of accounts we administer and the benefits we offer our employees to how we serve our community. 

We want our clients to have a strong sense of financial well-being so they are prepared for the next phases in their life. We want our employees to have a work environment that is motivating and joyful. We want the communities we live in to be vibrant and successful. 

Our IRA and investment account clients at Heartland Trust Company know we are going through a conversion with one of our vendors. This change has been thought through, discussed, and researched for years. We have experienced growth in both those we serve and the size of our team. At the root of this vendor change is our commitment to the well-being of those we serve. 

We want to work smarter, not harder, so we can stay focused on our mission and prioritize the things that matter most to us: our clients, our team, and our communities. 

Brian Halverson - PresidentOn a Mission
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Year-End Tax Planning

Adapted from Broadridge Investor Communication Services

As the end of the year approaches, it’s time to consider strategies that could help you reduce your tax bill. But most tax tips, suggestions, and strategies are of little practical help without a good understanding of your current tax situation. This is particularly true for year-end planning. You can’t know where to go next if you don’t know where you are now.

So take a break from the usual fall chores and pull out last year’s tax return, along with your current pay stubs and account statements. Doing a few quick projections will help you estimate your present tax situation and identify any glaring issues you’ll need to address while there’s still time.

When it comes to withholding, don’t shortchange yourself

If you project that you’ll owe a substantial amount when you file this year’s income tax return, ask your employer to increase your federal income tax withholding amounts. If you have both wage and consulting income and are making estimated tax payments, there’s an added benefit to doing this: Even though the additional withholding may need to come from your last few paychecks, it’s generally treated as having been withheld evenly throughout the year. This may help you avoid paying an estimated tax penalty due to underwithholding.

Of course, if you’ve significantly overpaid your taxes and estimate you’ll be receiving a large refund, you can reduce your withholding accordingly, putting money back in your pocket this year instead of waiting for your refund check to come next year.

Will you suffer the alternative?

Originally intended to prevent the very rich from using “loopholes” to avoid paying taxes, the alternative minimum tax (AMT) now reaches further into the ranks of middle-income taxpayers. The AMT is governed by a separate set of rules that exist in parallel to those for the regular income tax system. These rules disallow certain deductions that you are allowed to include in computing your regular income tax liability, and treat specific items, such as incentive stock options, differently. As a result, AMT liability may be triggered by such items as:

  • The standard deduction
  • Large deductions for state, local, personal property, and real estate taxes
  • Exercising incentive stock options

So when you sit down to project your taxes, calculate your regular income tax on Form 1040, and then consider your potential AMT liability using Form 6251. If it appears you’ll be subject to the AMT, you’ll need to take a very different planning approach during the last few months of the year. Even some of the most basic year-end tax planning strategies can have unintended consequences under AMT rules. For example, accelerating certain deductions into this year may prove counterproductive since AMT rules may require you to add them back into your income. If you think AMT is going to be a factor, consider talking to a tax professional about your specific tax situation.

Timing is everything

The last few months of the year may be the time to consider delaying or accelerating income and deductions, taking into consideration the impact on both this year’s taxes and next. If you expect to be in a different tax bracket next year, doing so may help you minimize your tax liability. For instance, if you expect to be in a lower tax bracket next year, you might want to postpone income from this year to next so that you will pay tax on it next year instead. At the same time, you may want to accelerate your deductions in order to pay less tax this year.

To delay income to the following year, you might be able to:

  • Defer year-end bonuses
  • Defer the sale of capital gain property (or take installment payments rather than a lump-sum payment)
  • Postpone receipt of distributions (other than required minimum distributions) from retirement accounts

To accelerate deductions into this year:

  • Consider paying medical expenses in December rather than January, if doing so will allow you to qualify for the medical expense deduction
  • Prepay deductible interest
  • Make alimony payments early
  • Make next year’s charitable contributions this year

The gifts that give back

If you itemize your deductions, consider donating money or property to charity before the end of the current tax year in order to increase the amount you can deduct on your taxes. As an aside, now is also a good time to consider making noncharitable gifts. You may give up to $16,000 (in 2022; twice that amount for a married couple) to as many individuals as you want without incurring any federal gift tax consequences. If you gift an appreciated asset, you won’t have to pay tax on the gain; any tax is deferred until the recipient of your gift disposes of the property.

Postpone the inevitable

To reduce your taxable income this year, consider maximizing pretax contributions to an employer-sponsored retirement plan such as a 401(k). You won’t be taxed on the contributions you make now, and you may be in a lower tax bracket when you do eventually withdraw the funds and report the income. (Note that if you take withdrawals from the plan before age 59½, you’ll generally be subject to a 10% penalty tax in addition to any income tax due, unless an exception applies.)

If you qualify, you might also consider making either a tax-deductible contribution to a traditional IRA or an after-tax contribution to a Roth IRA. In the first instance, a current income tax deduction effectively defers income — and its taxation — to future years (as with a retirement plan, an additional 10% penalty tax will apply to withdrawals made prior to age 59½ in addition to any income tax due, unless an exception applies); in the second, while there’s no current tax deduction allowed, qualifying distributions you take later will be tax free. You’ll generally have until the due date of your federal income tax return to make these contributions.

Tax planning can be complicated. Consider seeking the assistance of a tax professional to determine what year-end tax planning moves, if any, are right for your individual circumstances.

Broadridge Investor Communication SolutionsYear-End Tax Planning
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Unequal Inheritance: Aspects to Consider

Jennifer M. Johnston, CTFA

All families have their own dynamics. Some families have children who fall into similar levels of economic stability, while some families have children who are all unique and have a wide range of financial and personal success that result in different abilities to care of themselves and their families in the way they may have been accustomed to growing up or the way you may want to see.  

How do parents approach this when it is time to prepare or review their estate planning documents? First you need to decide if this is an issue for you. If your children are equally capable of taking care of themselves and have the equal ability to do so then this may be a moot issue for you.  

However, if you have one child who is a successful attorney, another child who is a successful preschool teacher, and another who struggles with addiction and holding down a job you may have some things to consider when it comes to an equal or unequal inheritance amongst your children. 

An unequal inheritance may also be thought of as an equitable inheritance.  Where an equal inheritance beneficiaries receive the same share, an equitable (or unequal) inheritance beneficiaries receive what is deemed fair by the Grantor given their individual circumstances. Of course “fair” is discretionary and where the complexities start and emotions can run high if the inheritance isn’t dealt with properly.

Here are some common reasons why an unequal/equitable inheritance may be considered by parents:

  • Special needs
  • Addiction
  • Difference in earnings
  • Gifts given during lifetime 
  • Stepchildren
  • Sibling with more children
  • Legal issues
  • Grandchildren
  • A child providing care to the grantor during life
  • Differences in cost to live in a certain area
  • A younger child who hasn’t completed their education or established a career

If you decide that an unequal or equitable inheritance is right for your situation the most important things you can do, aside from updating your estate planning documents, are to communicate and document your decision with your beneficiaries.

Communicate: Communication with your children is essential and the sooner the better.  Or if you find yourself on the flipside and are a beneficiary set to receive an unequal share think about gently bringing up the subject in order to understand why this decision has been made before your loved one is gone. 

Communication, regardless who initiates it, should be priority number one if your estate is not going to be divided equally.  (It is also a good idea to discuss your estate plan with your beneficiaries if you do plan for an equal division as there could be concern the division should be unequal/equitable given each beneficiaries unique situation.) An open discussion will help everyone understand where both parties are coming from.  Emotions may attempt to take the driver’s seat during the conversation so going into it with compassion and understanding is a good mindset to remind everyone to strive for.

Document: Once everyone has been involved in the discussion, whether everything is agreed to or not it is extremely important that everything is clearly documented. Some of the details to document include:

  • Date of the discussion.
  • Names of who were present.
  • Details of what was discussed.
  • Reasons why the inheritance will be distributed in unequal shares must be well documented.  The same is true if you are going to make equal shares but there are concerns loved ones may think unequal/equitable shares should be distributed.
  • Note and make it clear the Grantor(s)/Trustor(s) are of sound mind at the time of this discussion. 
    • Your estate document should also make clear that at the time of this discussion and the execution of any legal documents that contain this decision the Grantor(s)/Trustor(s) are making a conscious decision and are under no duress.
  • If possible obtaining signatures from all of the attendees. This can be a valuable document to include with your trust or will and may even be referenced in your applicable document.  

If the aforementioned steps are not taken to document a discussion was had with the entire family (including everyone who is receiving and/or may be excluded from a class of individuals who is not receiving anything) there is a higher probability the document (will or trust) may be contested or challenged in court. This is an expensive and stressful process for all involved and most certainly not what any parent wants to leave as part of their legacy. 

Speak with your attorney about including a “no contest” clause in your will or trust. A no contest clause is basically a “you get nothing” clause if you challenge the inheritance you are to receive (in some states this only applies if there is no probable cause). This clause is meant to deter someone who is receiving an inheritance they do not agree with from seeking legal action. Sadly it may do nothing to keep someone who has been excluded from an inheritance from taking legal action as they have nothing to lose from suing the estate or trust.

While HTC cannot offer legal or tax advice we love being a part of your team to work with you and your attorney and CPA to help make your estate plan the best one for you. If you are in need of a referral for an attorney or CPA we would be happy to provide a few for you. We look forward to connecting with you soon!

Jennifer Johnston, CTFA – Trust OfficerUnequal Inheritance: Aspects to Consider
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HTC Team News and Honors

Our team wrapped up our 2022-23 United Way Campaign with a great event featuring taco in a bag, a dunk tank and lots of laughs. Thanks to our brave dunk tank victims: Brian Halverson, Dustin Sobolik, Jana Samek, Jon Benson, Mary Fridgen, and Naomi Schempp!

This fall, HTC team members enjoyed an old-fashioned picnic complete with food and games. Thanks to our amazing event organizers: Amy Remmick, Brian Halverson, Missy Zarak, Monica Millette and Kayla Kranda. What a fun afternoon of team building and fun!

Our Retirement Services team held their annual Retirement Insight event in October. Dustin Sobolik led a presentation on financial planning and Clay Leveritt from American Funds gave us an informative market update.

Heartland TrustHTC Team News and Honors
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Meet Jace Gilleshammer

Jace Gilleshammer – IT Coordinator

Jace Gilleshammer is our IT Coordinator. He recently returned to the Fargo area and we are excited that he is part of our Heartland Trust team. 

Tell us about yourself. 

I was born in Grafton, North Dakota, and spent my schooling years here in north Fargo. A few years after high school I moved to Minneapolis to further my career, which led me on a path to Arizona where I spent the last 13 years. It was there that I met my wife. We have two daughters and couldn’t be more pleased to have our oldest in kindergarten here in the Fargo school system. We are very excited to raise our family in Fargo and to be a part of this community. 

What do you like to do in your spare time? 

I have two kids under 6 so I don’t understand that question anymore. I have really enjoyed getting back to the lakes, playing with my kids on grass instead of rock, and planting a garden again. There’s something soothing about getting some garden dirt under your fingernails.

Tell us about your favorite life experience. 

Nothing will ever compare to the joy and happiness I experienced while being present for the birth of my two daughters. Before that, my favorite experience was my first time flying an airplane. I grew up a super fan of aviation and my biggest childhood (and current) dream is to land on an aircraft carrier. I grew up directly off the east end of the Fargo Jet Center runway so I used to sit and watch planes take off and land all day long. To this day I always look up anytime I hear an aircraft engine.

What is your favorite movie/play/book? 

I don’t have a specific one to point out; however, the one I’ve spent the most time with was The Complete Encyclopedia of World Aircraft. More than 900 pages of just about any aircraft you can think of.

What was the first car you owned? 

 It was a 1986 Dodge 600 SE in faded brown with a red velvety interior. I got it in the summer after my freshman year at Ben Franklin so you can imagine how excited my friends and I were to get our first taste of freedom heading into high school.

If you could meet one person, dead or alive, who would it be and why?

Nikola Tesla. Our technological world wouldn’t be half of what it is if it weren’t for his ideas that pushed boundaries. It would be fun to discuss how his ideas, typically deemed too far-fetched for his place in time, have molded where we are on a global scale today. Look up some of his inventions and see all he was responsible for.

How long have you been at Heartland Trust? 

I’ve been here four months, and I’m delighted to say that I already feel like I am part of a new family. From day one everyone here has been more than willing to help me feel welcome.

What is your favorite part about working at Heartland Trust? 

While my funny answer would be the popcorn, my favorite part about working at Heartland is the people. You’ll meet some of the kindest and most caring individuals here.

Do you have a favorite recipe you would like to share?

It’s my mom’s homemade spaghetti sauce and, unfortunately, I have no clue what was in it other than a sprinkle of love and a touch of sugar and spice. But if I had to eat only one thing for the rest of my life, that would be it.

Heartland TrustMeet Jace Gilleshammer
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