With the large lifetime unified exclusion on estates and gifts ($13,610,000 for 2024) few individuals are subject to the federal estate tax. For those looking to efficiently transfer wealth, that shifts the focus to addressing income tax. Specifically, for highly-appreciated assets how can we make sure step-up in cost basis at death is preserved and maximized? For example, understanding that gifting assets during lifetime will result in the cost basis of that property carrying over to the recipient (referred to as “carryover basis”). This contrasts with passing assets at death where certain pr ..read more

Each year, as part of the release of the administration’s budget proposal, the Treasury Department issues its General Explanations of the Administration’s Fiscal Year Revenue Proposals, otherwise known as the “Green Book.” This document provides detail on various tax-related provisions favored by the current administration – a sort of “wish list” of tax law changes. While these proposals will not likely move forward in the short-term, they do provide a glimpse of potential policy items that may be pursued in the future. For example, one of the items included in the Green Book during the Obama ..read more

One of the key challenges with our retirement system is that a significant portion of workers do not have access to a retirement savings program through their employer. According to the AARP, nearly half of workers are not covered by a workplace plan (AARP 2022 Report). In the past there have been several attempts to address this issue at the federal level, with proposals to adopt an “Auto IRA” program requiring businesses (with certain exceptions) to at least offer a payroll deduction IRA program for employees. As far back as 2006, an Automatic IRA Act was introduced to increase coverage and ..read more

Over the past two decades, single individuals have emerged as the fastest-growing type of household in the U.S. The share of single member households has risen much faster than married couples. Currently, more than a quarter of all households comprise one person. Some of the drivers of this shift in household demographics include the trend of delaying marriage, falling birthrates, and more widows living alone than ever before. Single households rising at a fast pace (2000–2003) Source: U.S. Census Bureau, Cumulative increase in U.S. households, 2000-2023. Planning considerations and challenge ..read more

With the continued rise in health care expenses and more employers shifting the burden for meeting those expenses to employees, it’s not surprising to see significant growth in the use of health savings accounts (HSAs). HSAs can offer tax advantages to account owners that exceed other tax-deferred savings. These accounts, which are also portable, can help savers prepare for health expenses in the future. While HSAs are not new to the marketplace, their popularity has accelerated in the past decade. HSAs were introduced by legislation passed by Congress in late 2003 (the Medicare Modernization ..read more

Whether it’s the possibility of higher tax rates in the future or recent policy changes impacting inherited retirement accounts, investors have a lot to consider when it comes to their personal financial situation. Looking at the year ahead, individuals may want to explore opportunities to save more, reduce taxes, or transfer wealth more efficiently. Here are 10 ideas for income and estate tax planning: 1. Consider Roth IRA conversions A thoughtful strategy utilizing Roth conversions can be an effective way to hedge against higher taxes in the future. In fact, tax rates are scheduled to increa ..read more

The Congressional Budget Office (CBO) recently released its latest analysis of the federal government’s finances. While the annual budget deficit will not rival levels realized during peak Covid years, the CBO reports a nearly $1.7 trillion deficit in 2023. Unless Congress takes some policy action, budget deficits are expected to persist. In fact, government spending as a percentage of GDP (23.1%) easily outpaces revenue (17.5% of GDP). Also, higher interest rates are driving an increase in the cost of servicing the existing debt. At some point, the debt trajectory will drive discussions on Ca ..read more

Ensuring that beneficiaries are listed on all retirement accounts, including IRAs, is important to avoid costly mistakes. Beneficiary designations also help ensure that the account owner’s wishes are honored. When making the designations it is also important to note that there are fundamental differences among types of beneficiaries, specifically spousal compared with non-spousal. The tax code gives preference to spousal beneficiaries with more choices and potentially more advantageous tax treatment of required distributions compared with non-spouse beneficiaries. Spouses may choose between tw ..read more

With rising federal budget deficits creating the risk of higher taxes in the future, more higher-income taxpayers are interested in Roth accounts. When Roth IRAs were introduced by the Taxpayer Relief Act of 1997, there were income restrictions on the provision to convert traditional IRA assets to a Roth IRA. Specifically, Roth IRA conversions were limited to taxpayers with adjusted gross income (AGI) under $100,000. In 2006, tax legislation signed into law (The Tax Increase and Prevention Reconciliation Act of 2005) repealed this restriction. As a result, beginning in 2010, the law opened the ..read more

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