Perspectives Blog

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

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

…y deferrals, is a standard after-tax contribution account in their 401(k) plan. Over 56% of defined contribution plans, according to the Plan Sponsor Council of America, have so-called after-tax accounts, which are separate from designated Roth contribution accounts. Here’s how a standard after-tax contribution account can help. Let’s say Tina and Terry, a married couple, max out their pre-tax contributions in their workplace retirement plans in…

Retirement plan design for the new tax regime

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

…n 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” topic. According to 201…

Ahead of the trends – Washington update on retirement savings initiatives

Columbia Management Learning Center , | July 31, 2014

…fied adjusted gross income and/or reduce NII that counts toward the application of the tax (e.g., through 401(k) plans and nonqualified deferred compensation plans). This rearranging can potentially reduce or eliminate altogether the impact of NIIT. New retirement programs and proposals: By the end of 2014, My Retirement Accounts (MyRAs) will be available for lower income workers whose employers do not offer traditional retirement plans, like 401…

The role of asset location

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

…rom taxable 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 co…

New taxes require strategies to maximize after-tax return

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

…n strategy involves placing a greater percentage of the most tax-sensitive investments in tax-deferred accounts. Retirement plans offer significant opportunities for participants and business owners to reduce taxable income. In 2013, new taxes associated with the Affordable Care Act of 2010 and the American Taxpayer Relief Act of 2012 took effect. Unlike the major tax legislation enacted over the last 12 years, the core tax provisions were passe…

The new tax regime and stock compensation

Abram Claude, Vice President, Columbia Management Learning Center | November 21, 2014

For many employees in corporate America, a portion of compensation comes from one or more forms of stock plans or stock option plans. Compensation income from stock incentives contributes to adjusted gross income, but not net investment income for purposes of calculating the new 3.8% tax on net investment income. The Columbia Management Learning Center

Five college savings myths set straight

Columbia Management, Investment Team | August 6, 2014

…ions as to which state’s 529 plan you can invest in. Our side-by-side comparison tool can help you compare state plans. 4. Myth: I make too much money to open a 529 plan account. Truth: Unlike some retirement savings vehicles, where tax advantages are phased out at higher incomes, 529 college savings plans are available to anyone regardless of income level. Bonus tip: Age is not a factor either — the beneficiary of a 529 account can be a ch…