TIP 1 Veteran’s Day
As Veteran’s Day approaches and we remember the sacrifices made to safeguard this nation and our freedoms, an associate of ours recently shared his story and how it helped put things in perspective for him.
He gave us permission to share it as well, and we hope you take a moment to read our latest blogpost “A Story for Veteran’s Day” and have a blessed day of remembrance.
TIP 2 Increase In Estate Tax Exemption Amount
Given the highs of inflation, tax figures that are indexed to inflation are going to have automatic big changes as well.
Starting in 2023, individuals can transfer up to $12.92 million to heirs, without triggering a federal estate-tax bill, up from $12.06 million this year. That is an additional $860 thousand per person, or $1.72 million per married couple. Note that this exemption is set to drastically decrease in 2026 unless Congress changes the current law, so it may be worth considering locking in those tax savings while the larger exemption exists.
Another increase is in the annual exclusion that allows tax-free gifts to be made each year. It is increasing from $16,000 to $17,000 per donee. Utilizing this exclusion over multiple years among multiple beneficiaries can end up in significant preservation of the family fortune.
If you are interested in tax-efficient strategies for transferring substantial wealth, A Garden State Trust officer would be pleased to elaborate. It is one of the things we specialize in.
TIP 3 Thanksgiving
We look for ways to improve the world and may not find them every day. Some days we excel beyond ourselves and are extraordinary. Some days, others help pull our weight when we struggle. Each year, we are faced with additional challenges to overcome as individuals, as communities, and as a world.
Each day, we take a little too much for granted, and we are often reminded of that whenever someone we cherish disappears from our lives. This Thanksgiving, let us remind ourselves of all those people and achievements that facilitate our success. Let us create goals that we will achieve next year. Let us celebrate this past year, and the potential that we can bring to bear next year.
At Garden State Trust Company, we are grateful for our clients, employees, partners, and communities for trusting us and allowing us to an have impact in their lives.
Happy Thanksgiving everyone!
TIP 4 401(k) Contributions
The third-quarter market perceptions study by Allianz Life Insurance of North America reported that a survey of 1,004 workers found that 54% halted or reduced their 401(k) and other retirement savings contributions between July and September, and 43% admitted dipping into retirement nest eggs.
There may be no other alternative when times get really tough, but such action should be very carefully considered, a last resort. The obvious problem is that you don’t want to sell at market lows. What’s more, you really want to buy at market lows, so ceasing contributions has an additional opportunity cost. You aren’t allowing yourself entry when you can get more shares than you could have at the beginning of the year for the same price. There may also be tax penalties for premature retirement plan distributions, based on your age.
There may be other alternatives compared to taking money out of a 401(k). For example, some providers may allow for limited plan loans, avoiding the early withdrawal penalty as long as you’re able to pay yourself back.
If you are on the other side of the table and doing very well – don’t forget to max out your IRA and HSA contributions too, as the year comes to a close.