The United States Congress created the 529 plan in 1996 and has been modifying it ever since. Like many government tax-advantaged products and programs, this plan gets its name from its placement within the Internal Revenue Service code (Section 529). 529s are also called "qualified tuition programs" or QTPs. Save for Your Children's Education and Save on Taxes 529 savings plans have many features and benefits, but the most appealing is the federal tax advantage...
Are you leaving your job and considering whether to take a distribution from your 401(k), 403(b), or governmental 457(b) plan? If so, make sure you've considered all your options. In general, you have the following four options when you're eligible to receive a distribution from your employer retirement savings plan. 1 Option 1: Leave the Money in the Plan This is the easiest option — you don't do anything at all Continued tax-deferred growth (or...
As a business owner, you should carefully consider the advantages of establishing an employer-sponsored retirement plan. Generally, you're allowed certain tax benefits for establishing an employer-sponsored retirement plan, including a tax credit for establishing the plan and a deduction for contributions you make. In return, however, you're required to include certain employees in the plan and to give a portion of the contributions you make to those participating employees. Nevertheless, a retirement plan can provide...
If you have not started working on a will, trust, or estate plan, you're not alone. A recent survey revealed that 66 percent of American adults don't have an estate plan. Of the 34 percent who do have a plan, one in five have not updated it in the last five years. 1 We know estate planning can be intimidating, so we're sharing some basic approaches here. Estate planning is a strategic financial process crafted...
2023 is now just another year in the history books, but it was interesting for a variety of reasons. Some of you subscribe to my " By The Numbers" weekly email, so you may be used to looking at the year through the lens of relevant numbers. But some numbers are worth reviewing one more time. Here are a few more of my favorites from 2023. 19% In 2023, roughly 19% of Americans ages 65...
A donor-advised fund (DAF) is a tool created to allow people to deliver significant charitable gifts over a long period. In some ways, it's similar to a private foundation but simplified. A DAF requires less money, time, legal assistance, and administration to establish and maintain. Best of all, a donor-advised fund can offer more significant tax advantages than a private foundation. A simple definition of a DAF is "an agreement between a donor and a...
Life insurance can be an excellent tool for charitable giving. Not only does life insurance allow you to make a substantial gift to charity at relatively little cost to you, but you may also benefit from tax rules that apply to gifts of life insurance. Life Insurance Allows You to Make Bigger Gifts Life insurance allows you to make a much larger gift to charity than you might otherwise be able to afford. Although the...
Whether you're seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals. Their power is in their versatility — many types of trusts exist, each designed for a specific purpose. Although trust law is complex and establishing a trust requires the services of an experienced attorney, mastering the basics isn't hard. What Is a Trust? A trust...
When developing your estate plan, you can do well by doing good. Leaving money to charity gives you a sense of personal satisfaction, but it can save on estate taxes. Here are a options to consider if you're considering making a charitable donation a part of your last will and testament. Outright Bequest in Your Will The easiest and most direct way to make a charitable gift is by an outright bequest of cash in...
In early 2022, the IRS issued proposed regulations regarding required minimum distributions (RMDs) to reflect changes made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The IRS has held off on releasing final regulations so that it can address additional changes to RMDs made by the SECURE 2.0 Act of 2022, which was passed in late 2022. In the meantime, the IRS has issued interim RMD relief and guidance for...
This past June, the Supreme Court struck down President Biden's plan to cancel up to $20,000 in federal student loan debt for qualified borrowers. As a result, millions of student loan borrowers are scheduled to start paying back their loans in October after a three-and-a-half-year reprieve. Scam artists have already begun to prey on vulnerable borrowers by posing as legitimate debt relief companies, promising to help them repay their loans. Many of them use aggressive...
When people think about a personal financial plan, they often think of 401(k)s and IRA, but fewer people remember to include life insurance. While this type of insurance is primarily designed to provide financial support to your loved ones in the event of an untimely death, it can also be a part of a well-rounded financial planning strategy. Indexed Universal Life insurance (IUL) is one way to create a balance between potential market-linked returns and...
