Perspectives Blog

Capture five tax benefits with a 529 college savings plan

Columbia Management, Investment Team | March 21, 2014

By contributing to a 529 plan, you may benefit from tax advantages — without giving up control of plan assets. As an estate planning tool, 529 plans may allow removal of significant assets from your taxable estate. Investment growth in a 529 plan, as well as distributions, is not subject to the new 3.8% net investment income surtax. Owning a home. A financially secure retirement. A college education for a child or grandchild. These are a…

Five college savings myths set straight

Columbia Management, Investment Team | August 6, 2014

For college savers, 529 plans offer various tax benefits, flexibility and control. 529 account owners have a choice of state plans, regardless of residency or income level. 529 account beneficiaries can use funds at any eligible educational institution and for a number of expenses in addition to tuition. A 529 college savings plan is one of the smartest ways you can save for college, offering tax benefits, flexibility and control. Unfortunatel…

Could a 529 plan help you pay less for college?

Columbia Management, Investment Team | May 22, 2014

College savings plans offer an important tool for managing the cost of higher education. Saving in advance could offer a significant cost savings compared to taking loans during college. Use our 529 Savings vs. Loans Calculator to run your own personalized estimate. Saving for college early on can greatly benefit you in the long run. By saving in an investment vehicle such as a 529 college savings plan, you may be able to avoid relying on loan…

Maximizing workplace retirement plans to reduce or eliminate the net investment income tax

Abram Claude, Vice President, Columbia Management Learning Center | November 6, 2014

…The net investment income tax (NIIT) is a new, permanent tax that began in 2013. Investors’ workplace retirement plans, such as 401(k) plans, may offer several opportunities to reduce exposure to the tax. The Columbia Management Learning Center is dedicating a series of blog articles to this important and timely “Navigating the New Tax Regime” topic. Many higher-income investors with taxable investments encountered a new tax that began 2013: the…

Retirement plan design for the new tax regime

Abram Claude, Vice President, Columbia Management Learning Center | November 12, 2014

…reaking through the MAGI income threshold merit consideration as a NIIT strategy — and tax-advantaged retirement plans are great vehicles to facilitate the moves. Common tax-favored retirement plan types for small business owners include savings incentive match plans for employees (SIMPLE) IRA plans, simplified employee pension (SEP) plans and 401(k)/profit sharing plans. Pretax contributions to qualified retirement plans lower MAGI upfront, and…

Ahead of the trends – Washington update on retirement savings initiatives

Columbia Management Learning Center , | July 31, 2014

…iance assistance programs, which include the DOL’s Voluntary Fiduciary Correction Program and the IRS’s Employee Plans Compliance Resolution System. Defined benefit (DB) plan trends: Pension de-risking—a leading trend among DB plans—consists of a series of plan design, investment and settlement strategies engineered to help reduce volatility with respect to a corporation’s DB pension plan obligations and balance sheet. 75% of DB plan sponsors say…

New taxes require strategies to maximize after-tax return

Abram Claude, Vice President, Columbia Management Learning Center | March 18, 2014

…he account, including the NIIT. And distributions of taxable income from tax-deferred IRAs, defined contribution plans and non-qualified deferred compensation plans are not included in net investment income. The taxable portion of distributions will push up your MAGI, but will not count as NII. Since the surtax applies to the lesser amount, this could be a tax-savings factor during the distribution years. NOTE: One exception is the distribution o…