With 2020 coming to an end, we thought it would be a good time to remind everyone of a few tax planning strategies that can be easily overlooked:
- Maximize your 401(K) or other employer plan contributions – Saving funds on a pre-tax basis in a retirement account allows them to grow tax-deferred until they are withdrawn in retirement.
- Contribute to your Health Savings Account (HSA) – An HSA is an often overlooked savings vehicle that allows individuals covered by high-deductible health insurance plans to save money on a pre-tax basis. The funds then grow tax-deferred and if used for medical expenses can be withdrawn tax-free. These are sometimes called the triple tax advantages of an HSA.
- Get going on 529 contributions – If you have children (or grandchildren, nieces, nephews, or anyone that may attend school in the future), a 529 may be the right savings vehicle for you. The tax deductibility of these contributions depends on your state of residence, and any contributions grow tax-free so long as they are used for qualified education expenses.
- Contribute to a cause you care about – If you don’t have a charitable organization that you want to support directly in 2020, you can open a Donor Advised Fund to make the charitable contribution this year, allowing you to gift to your favorite charitable organization later. You receive the tax deduction in the year of contribution to the Donor Fund, and this also allows your funds to stay invested, and potentially grow, so that you can give away greater amounts in the future.
- Think about financial gifts to individuals – While gifts to individuals are not tax deductible, they are a great way to lower your overall estate and reduce the amount that is potentially subject to estate taxes in the future. Cumulative gifts to an individual up to $15,000 [$30,000 for a married couple filing jointly in 2020] are under the annual gift exclusion and do not require a gift tax return to be filed. If you give more than $15,000 to one person, you may have to file a gift tax return and would encourage you to consult with your tax professional.
For some individuals it makes sense to accelerate their tax deductions in 2020, and for others it may make sense to delay their deductions until 2021. One of the things we do at Hill Investment Group is work with our clients’ clients’ CPAs and estate attorneys to ensure they are maximizing not only their portfolio with us, but their complete financial picture. Feel free to give us a call to discuss.
Here at HIG, we are passionate about service and hospitality. What does this really mean to us? In this short post, I’ll share a couple of points on how we approach serving you. Since our founding 15 years ago, we have talked inside our walls about the magic combination of two places: Cheers and the Four Seasons.
If you are under age 35, you might not be familiar with the fictional bar Cheers. For the rest of us, we know Cheers is the home away from home, where everyone knows your name. While we may not scream out your name when you walk through our doors like those famous Cheers regulars, we seek to create a welcoming space at HIG. Our goal is that everyone who walks through the door, from our favorite mail carrier (Saronda we’re talking to you) to our newest prospect, feels this intention.
We also look to the Four Seasons approach, where any staff member is empowered to solve a client’s problem and even anticipate her needs. This means each one of us on the team takes personal responsibility for helping our clients. How does this change your experience? In short – we make it happen. Whatever you need. One recent example, my colleague Abby recently completed a last-minute, socially-distant emergency notarization for a client before their child left for college.
Now that you know more about our aim, we want you to hold us accountable. If you have any suggestions for us, let’s talk. You can book 15 minutes with me here.
With politics being everywhere in this heated time, it’s natural to wonder, do politics belong in your financial plan? A recent article in the New York Times looks into just this question.
The key point: as an investor, your advisor’s views should have no part in your plan. At HIG, you and your personal wealth goals are what matter to us. If you want your politics to be a part of your future goals, we will help you decide how to do that. Our politics will not enter the picture.
If you are not a client of ours, and are worried that your advisor’s political outlook is influencing their advice to you, here are some suggestions taken directly from NYT the piece:
- If you think politics factor into your adviser’s strategy for your nest egg, ask for explanations. A good retirement planner will be able to articulate how the actions taken by politicians can — and can’t — affect your portfolio.
- When emotions are running high, resist the urge to dismiss your adviser on the spot — a knee-jerk reaction when it comes to your retirement security isn’t a great idea. Don’t do anything that’s not part of a long-term investing strategy.
- Talk to your adviser about how specific economic policies affect your portfolio. Politics might be about people, but your investment decisions should be informed by the ramifications of, say, bond-buying or tax-code changes.
- Try to keep an open mind. A different viewpoint from one you hold might give you valuable insight for your long-term savings goals.
- If you want to integrate your political views more directly into your retirement planning, some advisers suggest working with someone who has knowledge and expertise in E.S.G. (environmental, social and governance) investing strategy.
At HIG, we have a single-minded focus on putting the odds of your long term success in your favor. And, as fiduciaries, we are legally bound to work in your best interest. Period. We are passionate about what you need from your plan to help you live the life you want, and give you peace of mind.
So, our message during this period will sound familiar to our long-term followers: focus on what you can control, keep calm, and take the long view. Your nest egg and legacy will thank you.