Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Although the Trump administration's tax plan could scrap the 3.8% net investment income surtax, which could lower tax rates on long-term capital gains, clients should use strategies to reduce their tax bill, as there is no guarantee that the proposal would get Congress's approval, according to this article on U.S. News & World Report. For example, they may want to harvest losses to write off taxable gains. "In most cases, it's appropriate to harvest losses at the end of the year because you have a clear picture of what your tax circumstances will be. However, there are scenarios where harvesting losses makes sense prior to year's end," says a financial adviser.
One blunder the elderly should avoid if they intend to leave a legacy through an IRA with a trust as the beneficiary is to avoid having a see-through provision, according to Kiplinger. This is because trusts are subject to higher tax rates and it could lead to hefty taxes for their estate when the beneficiaries collect their inheritance. With a see-through provision, the trust beneficiaries will be considered the IRA's direct beneficiaries and their required minimum distributions will be based on their life expectancies, with these withdrawals taxed at their individual rates.
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Anticipation of auto enrollment features is expected to change the way advisers serve their clients.
December 6 -
Robo advisor seeks to add a piece of the $4.6 trillion market to its business.
September 11 -
Many would argue the retirement fund is archaic, inelegant and user-unfriendly. Is it time for something new?
December 15
While contributing to a 401(k) plan helps workers reduce their taxable income and their tax bill, socking away too much in the plan leave clients with no cash to cover unexpected expenses, according to USA Today. "Oftentimes investors box themselves in — in terms of future financial options — by worshipping solely at the altar of tax-deferred retirement accounts," an expert says. "The main mistake is not doing a realistic assessment of what your cash needs could be under various scenarios."
So many terms, so little time. Test yourself using our third installment of our quiz series.
A number of taxpayers collected no tax refund this year because their withholding was enough to cover their tax bill, according to the Motley Fool. They might not also have taken advantage of all the tax breaks available to them or changes in their financial situation boosted their tax bill or prevented them from claiming the tax breaks they had in the past years. Those who filed late with a paper return have to wait longer to collect their tax refund.
Contributing to a 529 college savings plan is one way to prepare financially for clients’ children’s college education, according to this Consumer Reports article. “If you aren’t putting money in a 529 plan for your kids, you should get started right away,” says an expert. “It’s absolutely the most tax-advantaged way to save for college.”
