Funding College Expenses with 529 Plans

Having funds available for the pursuits of higher education commonly is a financial planning point of interest among our clientele. However, the rising amenities and increasing demand for college degrees in the workforce have driven higher institutions’ prices up. The average annual cost of attendance (all expenses) is $55,000 for a private college and $27,000 for an in-state public college¹. …

When do I sign up for Medicare?

Health Insurance can feel like a puzzle, where we can eyeball a part, but we won’t know if it’s correct until the pieces around it are found. In a sense, Medicare exists to help eliminate the puzzle aspect. However, the process of starting Medicare can be equally confounding. One of the most critical questions is, when do I sign up …

Illinois 2021 Tax Code Changes

With a new year come new tax changes. These are the changes to the Illinois tax code that went into effect on January 1st, 2021: Minimal Changes for the Average Taxpayer Remote retailers above a certain threshold must now collect local sales tax. The phase-out of the corporate franchise tax continues. New income tax credits targeted toward businesses in the …

Contribution Limits for 2021

The IRS announced that employee contribution limits on 401(k)s and other qualified retirement accounts would remain the same in 2021. The deferral limit for individuals under the age of 50 is $19,500. The catch-up for individuals over age 50 will be $6,500. The total contribution limit (from all sources) is increasing by $1,000 to $58,000 in 2021 (and $64,500 including …

Beware of Unemployment Fraud

Fraudulent and imposter unemployment claims have become increasingly more prevalent in the wake of the pandemic and the expansion of jobless benefits by the federal government. Even though unemployment insurance offices have systems in place that stop most fraudulent or impostor claims before they are even processed, some filings may fall through the cracks. There is always a chance you …

The Case for Increasing Roth Contributions

Roth IRAs have always been valuable tools in the retirement and legacy world. Then late in 2019, the SECURE Act made tax-deferred inherited accounts, like regular IRA’s or 401k’s a 10-year ticking tax bomb for heirs. Shortly after, the 2020 CARES act injected trillions of dollars back into the economy, inflating the US’s growing debt. This article will start with …

Protecting Your Client’s Investments in the Face of Divorce

Published on FamilyLawyerMagazine.com by Diana Shepherdon, June 11, 2020 The key is to find an objective divorce financial expert who is also a licensed financial and investment professional and has a solid understanding of financial considerations in a divorce. This can make all the difference when protecting your client’s investments in the face of divorce. Here are the rights and …

Single Premium Immediate Annuities

A Single Premium Immediate Annuity (SPIA) is an exchange of a lump sum (premium) for a stream of income (annuity) until the covered person dies. An SPIA may be beneficial to a financial situation, but there are several pros and cons to consider. First, an illustration of how an SPIA works and its value. Next, a discussion of the pros …

Gifting Opportunities in a Low-Interest-Rate Environment

In early 2020, the Fed cut down their rate to zero to stimulate the economy. We have since learned this was far less effective to the overall market than planned, but individuals can still benefit significantly. An earlier post on charitable contributions discussed some new rules to increase donations for the tax year 2020. This article will dive further into attractive giving …

An Overlooked Opportunity to Reduce Medicare Premiums

The Social Security administration calculates Medicare premiums using a two year look back on Modified Adjusted Gross Income (MAGI). As an example, 2019 MAGI will set Medicare Premiums for 2021. However, if income recently dropped off, current Medicare premiums may not seem fair. Form SSA-44 allows a Medicare participant to claim a life-changing event for a reduction of MAGI. A …

Changes to Charitable Contributions

The CARES Act was signed into law on March 27, 2020 and has already become infamous for rollout issues. However, there are two changes to charitable contribution rules to incentivize donating in 2020. This year is the most tax-effective charitable contributions have been since the Tax Cuts and Jobs Act was put in place. The first provision is a universal …

Health Savings Accounts

The Health Savings Account (HSA) is one of the most powerful investment vehicles. Not only is it the only account that offers triple tax savings at the federal level (if funds are used for qualified medical expenses). HSA funds can be used as an additional source of retirement funds after the age of 65. However, there are several restrictions to …

Retirement Account Contributions

The IRS announced that contribution limits on 401(k)s and other qualified retirement accounts will be increasing slightly in 2020.  The new deferral limit for individuals under the age of 50 is $19,500, which is an increase of $500 from 2019.  The catch-up for individuals over age 50 will be $6,500 ($6,000 / 2019).  The total contribution limit (employee and employer …

The SECURE Act

The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as The SECURE Act, is a retirement security package under debate in Congress.  Currently, the bill is stalled in the Senate after passing through the House of Representatives in May 2019.  Among the changes to retirement plans and 529 plans, two of the more notable changes, if …

Borrowing on Margin

In the event of a large cash need, the decision to liquidate investments to raise cash to cover or the use of financing usually comes down to the cost of capital (expected rate of return from the investments vs. the cost of borrowing). There are, however, tax implications for some financing, such as the ability to deduct certain interest from …

Increased Contributions Limits

The IRS announced cost of living adjustments in the contribution limits to popular retirement savings accounts for 2019.  The limit allowed to be contributed by employees to a 401(k), 403(b), Thrift Savings Plans, and 457 plans for 2019 increased from $18,500 to $19,000.  Participants over the age of 50 can contribute an additional $6,000 (unchanged from 2018). Contribution limits to …

Back-Door Roth Contributions

Because of the nature of tax-free growth and distributions, Roth IRAs are one of the more valuable savings tools available. The one major hurdle to these accounts is the income limitation when making direct contributions. In 2018, for single filers contributions to a Roth IRA are phased out for people with Modified Adjusted Gross Income (MAGI) above $120,000 and completely …

529 Education Savings Plan

Under the Tax Cuts and Jobs Act of 2017, the new law expanded the definition of qualified distributions for a 529 plan. Under previous law, qualified distributions were distributions for tuition, books, room & board, fees and supplies for higher education. Qualified distributions were tax-free at the federal and state level and avoided a 10% federal penalty. With the tax …