Perspectives Blog

The taxman cometh

James Dearborn, Head of Municipal Bonds | March 13, 2014

New and higher taxes will increase what many owe Muni bonds can help mitigate your tax bill Muni yields are attractive vs. many other investment options With tax season fully upon us, many Americans are about to realize the harsh realities of the new tax environment that came into effect January 2013 with the passage of the oddly named American Taxpayer Relief Act of 2012 and the introduction of taxes associated with the Affordable Care Act (A…

Compelling opportunity in municipal bonds

Catherine Stienstra, Senior Portfolio Manager | November 7, 2013

…ot representative of the broad municipal market, and the number of municipal defaults is at its lowest level since at least 2009. Municipal fundamentals continue to improve on the back of increasing sales, income and property taxes. Market movement provides an attractive opportunity to lock in attractive yields Depending on credit quality and maturity, municipal bond investors today may be able to earn taxable-equivalent yields above 8%, far hi…

New taxes require strategies to maximize after-tax return

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

Higher earners with taxable investments are most susceptible to triggering the net investment income tax, a surtax of 3.8% that applies to taxable investments. An asset location 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 Afforda…

Opportunity in lower-quality municipals

Columbia Management, Investment Team | August 15, 2013

…ver the long term. Risk-adjusted performance — strong returns with relatively low volatility — and the attractive risk/return profile of municipal bonds have been very appealing versus other asset classes. What you keep after taxes is what matters Returns of municipal bonds have been magnified by the benefit of their tax-exempt status, most recently by the increase of the highest federal tax rate from 35% to 43.4%.3 In this tax environment, an af…

Capture five tax benefits with a 529 college savings plan

Columbia Management, Investment Team | March 21, 2014

…nt owner, you are always in control of the assets in the 529 plan account. And, 529 account owners can benefit from the following tax advantages: Earnings in your 529 college savings grow exempt from federal and state income taxes, so they have the potential to accumulate faster than they would in comparable taxable investments. There is no federal income tax (and in most states, no state income tax) on withdrawals used to pay for qualified high…

The three tax thresholds of the new tax regime

Abram Claude, Vice President, Columbia Management Learning Center | September 11, 2013

Recent legislation has added new provisions to the Internal Revenue Code that will impose new tax rates beginning in 2013. These taxes will impact many high income individuals, as well as certain estates and trusts. The Columbia Management Learning Center is dedicating a series of blog articles to this important and timely “Navigating the New Tax Regime” topic, which will appear here over the next seven weeks. In 2013, there are new tax rates…

The new tax regime and stock compensation

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

…er, and it is subject to ordinary income tax and generally payroll tax (including Social Security, Medicare and the Medicare surtax, if applicable). Employers are generally required to withhold for payroll and ordinary income taxes. The most well-known stock compensation program involves grants of non-qualified stock options (NQSOs). The grants are issued with a specific exercise price. Most NQSOs do not become compensation until the employee has…