Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
A report from Bankrate says that millennials are cutting spending to free more money for savings, CNBC reports. As much as 60% of 18-to-36-year-olds said they have cut spending to save for retirement. "It's great to see millennials so focused on saving," an expert with Bankrate says. However, they should "take advantage of the tax benefits of retirement accounts now — workplace 401ks and Roth IRAs — and shop around for the best savings rates to store, and add to, your emergency fund."
Financial planners are encouraging clients to set up a health savings account to save on medical expenses, according to this article on Bloomberg. An HSA is funded with pre-tax dollars, offers tax-exempt growth on investments within the account and provides tax-free distributions for qualified medical expenses. It is the same as flexible spending plan except that it does not have the "use it or lose it" requirement.
Fifteen tax planning tips from analysts and industry experts advisers may consider in 2017.
Investors are looking for alternatives to bonds, as rising interest rates make the securities lose their market value, according to a Kiplinger contributor. These options include annuities, particularly a fixed-index annuity product that allows investors to gain from market-linked interest credits and have steady source of guaranteed income in retirement. Clients who consider this annuity are advised to consult a tax advisor to know the tax consequences of investing in this product.
While low fees make ETFs attractive, investors should consider other factors in determining the total cost of an ETF, according to this article on Nasdaq. An expert says that while self-indexing is more popular, it cannot "replace the value proposition of our index partners." Index transitions are associated to a change in holdings and can lead to a greater turnover in the fund, which means more trading fees, capital gain distributions and taxes.
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Borrowing against the value of one’s 401(k) is a great way to ride out a low-yield environment, right? Think again.
October 16 -
Are you taking full advantage of the tools at your disposal? Advisors share insights about approaches.
September 25 -
Early withdrawals from employer-sponsored plans can derail retirement, but may be necessary.
September 8
Not many families are taking advantage of the tax-advantaged 529 college savings plan, even though the plan has been in existence for 20 years, according to this article on Money. The savings vehicle offers tax-free growth on investments, and withdrawals are not subject to taxes if the funds are used to cover qualified education expenses. While parents can get a 529 plan from their home state, they have the option of buying a plan from any of the more than 30 states that offer similar plans.
