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Important IRS Update: Significant Interest Penalty Increase for Tax Underpayments
The Internal Revenue Service (IRS) has recently announced a critical change that could significantly impact taxpayers who underpay their taxes. This update is particularly relevant as we approach the next tax filing season. Previously, the IRS charged a 3% interest penalty on estimated tax underpayments. However, this rate has now been increased to a substantial
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Will Inflation Hurt Stock Returns? Not Necessarily
Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks. A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. Since 1993, one-year returns on
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Maximize Your Charitable Impact with These Four Strategies
As the year draws to a close, it’s a perfect opportunity to rethink how you give to charity. This is important for managing how much tax you pay and how much help reaches those in need. Here are four effective strategies: Need Guidance? Reach Out to Us! These strategies are just a starting point. There
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What’s the Benefit of Using A 529 Plan to Help with Educational Expenses?
A 529 plan can be used to help support your loved ones in their future college education. There are three big benefits associated with using a 529 plan. The earnings or distributions are tax exempt, the contribution limits are much higher than comparable investment options, and anyone with any income level is allowed to invest.
One of the biggest benefits is the higher contribution limits. One strong advantage of 529 plans is that the contribution limits are much higher than comparable accounts. As of mid-2022, all 529 plans have a maximum lifetime contribution limit of at least $235,000. Bear in mind that you may also apply for states set limits that are at $500,000 and above.
Compare this with the possibility of making contributions to an individual retirement account with an annual maximum of $6,000, or $7,000 if over age 50. If a parent begins investing in an IRA once their child is born and continues making the maximum contribution every single year, the total parent contribution is just over $100,000. However, this is approximately half the amount that is allowed in states that have a low end of the 529 maximum.
Make sure you discuss the possibilities of using a 529 plan to support your loved ones in the future by contacting an experienced and dedicated financial planner.
When we work with clients, it’s a big goal for us to help you see all the details of your plan working together to support your financial future, but also to help you reach your family’s financial goals. If you want to set aside funds to help support a loved one’s college education, meet with us to see if a 529 plan or some other strategy best suits your needs.