Perspectives Blog

Retirement plan design for the new tax regime

Abram Claude, Vice President, Columbia Management Learning Center | October 2, 2013

Small business owners can potentially mitigate the effect of the new 3.8% net investment income tax (NIIT) by establishing or updating a retirement plan for their business. Strategic use of tax-advantaged retirement plans may prevent one from breaking through the MAGI income threshold for the NIIT strategy. The Columbia Management Learning Center is dedicating a series of blog articles to this important and timely “Navigating the New Tax Regime…

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

Abram Claude, Vice President, Columbia Management Learning Center | September 25, 2013

The net investment income tax (NIIT) is a new, permanent tax that is effective beginning 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 b…

The role of asset location

Abram Claude, Vice President, Columbia Management Learning Center | October 23, 2013

…le fixed-income is taxed at ordinary income rates, as are taxable distributions from IRAs and qualified plans, the benefit of tax-deferred growth while in the IRA may be attractive. Plus, distributions from IRAs and qualified retirement plans are not included under net investment income, and since the net investment income tax applies to the lesser of the amount over a triggering threshold and the amount of net investment income, this could be a…

Trust accounts and the net investment income tax

Abram Claude, Vice President, Columbia Management Learning Center | October 9, 2013

…400,000 in taxable income in 2013. 2013 estate and trust income tax brackets Next in this series: Asset allocation and asset location: How both contribute to after-tax return Asset location: Its role in after-tax return and retirement planning What you may have missed: Strategies for business owners to reduce net investment income tax Retirement plan design for the new tax regime Maximizing workplace retirement plans to reduce or eliminate th…

Strategies for business owners to reduce net investment income tax

Abram Claude, Vice President, Columbia Management Learning Center | October 2, 2013

Self-employment income may be included in an individual’s net investment income, or may raise modified adjusted gross income beyond the net investment income threshold. Business owners may be able to reduce exposure to the net investment income tax by establishing a qualified retirement plan, and characterizing a portion of business earnings as pretax contributions to the plan. The Columbia Management Learning Center is dedicating a series of b…

The new tax regime and stock compensation

Abram Claude, Vice President, Columbia Management Learning Center | October 30, 2013

…or is there a way to offset the additional income? If a restricted stock award or restricted stock unit grant vests or is paid out next year, can it be partially or fully offset by increasing pretax contributions to workplace retirement plans, including a non-qualified deferred compensation plan? Remember that non-qualified deferred compensation elections must be made in the prior year, so elections for 2014 must be made in 2013. For more detaile…

Another look at disability and labor force participation

Zach Pandl, Portfolio Manager and Strategist | April 7, 2014

In searching for explanations for the steep decline in the U.S. labor force participation rate analysts have rightly stressed the importance of retiring baby boomers. Increase in disability share accounts for 20-25% of the drop in the labor force participation rate since 2007 (vs ~45% for retirements). We expect this shift to be essentially permanent, but growth in the disability share will also probably slow down. In searching for explanation…