Thursday, October 7, 2021

Fund Retirement and Reward Workers with a Cash Balance Plan

Cash balance plans are defined benefit plans that share some key characteristics with 401(k) plans, which makes them flexible and appealing to a growing cadre of small employers. In fact, there was a 17% increase in new cash balance plans between 2017 and 2018.1

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The Tax Cuts and Jobs Act helped boost the popularity of cash balance plans, because making deductible contributions can help partners in professional service firms and other business owners reduce their income below certain thresholds to qualify for an additional 20% tax cut.

These hybrid plans have generous contribution limits that increase with age. In 2021, a 65-year-old could save as much as $276,000 in a cash balance plan, while a 55-year-old could save $207,000 on a tax-deferred basis (until the account reaches a maximum accumulation of $2.5 million).2 They can also be stacked on top of a 401(k), which has a maximum contribution of $26,000 in 2021, or $64,500 with a profit-sharing plan.

Having the ability to make larger contributions may allow business owners to reduce their tax burdens, build retirement savings, and reward valuable employees — all at the same time.

Grandparent 529 Plans Get a Boost Under New FAFSA Rules

529 plans are a favored way to save for college due to the tax benefits and other advantages they offer when funds are used to pay a beneficiary’s qualified college expenses. Up until now, the FAFSA (Free Application for Federal Student Aid) treated grandparent-owned 529 plans more harshly than parent-owned 529 plans. This will change thanks to the FAFSA Simplification Act that was enacted in December 2020. The new law streamlines the FAFSA and makes changes to the formula that’s used to calculate financial aid eligibility.



Current FAFSA Rules

Under current rules, parent-owned 529 plans are listed on the FAFSA as a parent asset. Parent assets are counted at a rate of 5.64%, which means that 5.64% of the value of the 529 account is deemed available to pay for college. Later, when distributions are made to pay college expenses, the funds aren’t counted at all; the FAFSA ignores distributions from a parent-owned 529 plan.

By contrast, grandparent-owned 529 plans do not need to be listed as an asset on the FAFSA. This sounds like a benefit. However, the catch is that any withdrawals from a grandparent-owned 529 plan are counted as untaxed student income in the following year and assessed at 50%. This can have a negative impact on federal financial aid eligibility.

Thursday, September 30, 2021

Ways you’re wasting money on tech and smart fixes to save cash

 Look around your house. How much do you think you have spent on gadgets and tech subscriptions over the years?

With shiny new gear popping up daily and yet another streaming service there to woo you, it’s hard to stop the flow of cash. I can help. Tap or click for all the best ways to scan without shelling out money for a scanner. You’re welcome.

Lots of quality software is free, too, if you know where to look. Tap or click for 9 free copycats that work like a charm.

Before you pull out your credit card again, read through this list of mistakes that might be costing you cash and easy fixes to spend less ...

Read more at USA Today - 8 min. read

These Social Security mistakes could cost you money

 According to a Nationwide survey, 54% of those who haven't started receiving Social Security said they know exactly how to optimize their benefit, but only 6% knew all the factors that determine the maximum benefit someone can receive.

Consider the common mistakes people make ...

Read more at CNBC - 7 min. read

Sunday, September 26, 2021

Could a $1 trillion coin save the federal government from financial Armageddon?

 If it's debt ceiling crisis season, then it's also time for the craziest solution to the problem: Getting President Joe Biden to issue a $1 trillion coin.

The idea, which has been around for about a decade, is that the president can issue a $1 trillion "commemorative" coin, deposit it with the Federal Reserve, and allow the government to keep paying its bills ...

Read more at 3KCRA NBC - 3 min. read

Five Tips to Follow When Applying for a Mortgage

 The housing market during the coronavirus pandemic has certainly been notable. Historically low interest rates resulted in record homebuying, even as housing prices escalated.1



Fortunately, the mortgage industry has been able to keep up with the pace of the real estate market by utilizing already existing technology. Homebuyers can search for lenders, compare interest rates, and apply for mortgages online. In addition, mortgage lenders are able to do alternative appraisals, perform safe home inspections, and conduct closings electronically.