Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients can give up to $14,000 away per year to any number of people without triggering the gift tax. Contributing to a 529 plan, however, allows a client to give 5 times that amount, or $70,000, without the tax bite, according to Kiplinger. The contribution cannot exceed that mount within the next five years. A spouse also can make the same contribution, doubling the gift to $140,000. -- Kiplinger
Certain tax planning strategies are a way to enhance returns without taking on more risk, according to The Des Moines Register. For example, a client who parks a bond investment in a tax-deferred account will end up having more of their gains than another client who opts to keep the same investment in a brokerage account. The difference is in the fees and taxes a client pays. -- The Des Moines Register
The bucket strategy for developing an investment portfolio is an effective approach to generating retirement income without depleting the funds, according to Morningstar. The strategy can be executed with tax-deferred accounts containing taxable bonds and other investments that are subject to high tax rates. It is also applicable to those who have tax-efficient investments in taxable accounts. -- Morningstar
As investment returns remain bleak because of dwindling interest rates, clients may be better off increasing their asset allocation to bond substitutes, such as investment-quality preferred stocks, according to The Wall Street Journal. Such stocks may be junior to bonds in terms of dividend payments, claims on assets and investment grade ratings, but bonds are taxed as regular income, unlike preferred stocks that are subject to long-term capital gains tax. -- The Wall Street Journal
