Category: Insights

Read all of the insights coming from the experts at confluence financial partners.

  • Redefining Your Retirement

    Redefining Your Retirement

    Today’s retirees are choosing from a variety of retirement styles. What’s yours?

    Although an estimated 10,000 baby boomers reach retirement age every day, how each chooses to spend their free time can be quite different. Today’s retirees wish to forge new identities and seek new experiences, while redefining how they spend their time and money.

    See if one or more of these new retiree profiles resonates with you. Deciding how you’ll stay busy can go a long way toward helping you plan and save for your dream retirement.

    The Giver

    Givers contribute time, talent and, yes, even money to support causes close to their hearts. While the typical American spends 20 minutes a day engaged in volunteer, civic or religious activities, the Giver over age 65 dedicates a half hour or more, according to the Bureau of Labor Statistics.

    One retiree may use her musical talents to play the violin for hospital patients, while another works behind the scenes updating a nonprofit’s website. Either way, it’s all about making a meaningful difference.

    Note: Givers may become too altruistic, spending more time and money than planned, undermining health or financial stability.

    Givers represent 33% of working retirees.

    The Thinker

    Thinkers have a deep desire for lifelong learning. They may retire in a college town, take classes, read for pleasure and engage in contemplative activities.

    Many colleges and universities are designing courses aimed at this new senior class. Campuses can be found in areas with affordable housing, quality education, teaching opportunities, walking and biking trails, and excellent transportation, healthcare and entertainment options.

    Note: If you’ve established a 529 plan for a child or grandchild, you may be able to use unneeded funds for your own continuing education. Ask your financial advisor about potentially withdrawing funds without penalties.

    Cognitively active people are 2.6 times less likely to develop dementia or Alzheimer’s.

    The Entrepreneur

    Entrepreneurs typically start a business that’s different from a past career, bringing decades of experience, success, passion and emotional intelligence to their new ventures.

    Goals include a fulfilling career, increased flexibility and enjoyment in their work. Some hope their new endeavors will becomes self-sustaining, while allowing for work/life balance.

    Note: A small business entails a business plan, startup costs, insurance and a financial plan. Work with a professional tax planner and financial advisor to build a successful venture.

    Nearly 3 out of 5 working retirees consider a different line of work.

    The Explorer

    The Explorer dedicates up to a quarter of their financial resources on travel. These globetrotters invest in experiences and indulge their wanderlust while they have the health, energy and resources.

    Good saving habits help Explorers immerse themselves among other cultures, foods and languages.

    Note: Plan for ongoing travel expenses, desired location, frequency and duration, as well as inflation and foreign exchange rates. Health-related issues may become a limitation in later years.

    There are just as many Explorers over age 75 as there are among younger groups.

    The Part-Timer

    The Part-Timer, like the Entrepreneur, seeks a career change, but may not wish to commit to a full-time position. Some favor mini-retirements – periods of work followed by intermissions for relaxation. Think consulting and contracting, for example.

    Note: Returning to work, even part time, can incur expenses such as new work attire, transportation and dining out. Evaluate the impact of additional income on your current tax bracket, Social Security benefits, healthcare coverage, and potential contributions to retirement plans.

    There are more than 7.1 million Part-Timers age 55 or older.

    The Foodie

    Foodies prefer quality dining and enjoying the experience of the meal. They typically spend about an hour and 20 minutes when dining, relishing how food and drink increases their quality of life. They enjoy experimenting with new creations, introducing new flavors or bringing friends and family together.

    Since the Foodie spends time shopping for and preparing meals, other expenses are typically lower.

    Note: Food connoisseurs need to factor in healthcare costs and inflation, as well as utilities and transportation.

    Foodies spend, on average, 28% of their income on food and beverage.

    The Athlete

    The Athlete may compete in triathlons or play tennis into their 80s and beyond. They stay in top form and enjoy training and competition.

    As the Athlete eventually slows down, or faces sudden illness or injury, healthcare costs can account for a significant share of retirement income, including Medicare expenses, prescriptions or long-term care needs.

    Note: It’s important to budget for proper equipment and training. Select an appropriate Medicare or healthcare policy and account for expenses that aren’t covered. Be sure to factor in inflation and long-term care or assisted living.

    Approximately a third of Americans over 65 are considered physically active.

    Next Steps

    • Decide what type or types of retirement styles you’d like to pursue
    • Further explore the necessary steps to achieving your goals
    • Talk to your financial advisor about the best strategy for turning your retirement dream into reality

    Sources: Journal of Financial Planning: “How retirees spend their time”; Bureau of Labor Statistics; Robert S. Wilson, Ph.D., Rush Alzheimer’s Disease Center; Work in Retirement: Myths and Motivation; J.P. Morgan “Cost of Waiting” study; President’s Council on Fitness, Sports & Nutrition

    Earnings in 529 plans are not subject to federal tax, and in most cases, state tax, so long as you use withdrawals for eligible education expenses, such as tuition and room and board. However, if you withdraw money from a 529 plan and do not use it on an eligible education expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings. Investors should consider before investing, whether the investor’s or the designated beneficiary’s home state offers state tax or other benefits only available for investments in such state’s 529 savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors. 529 plans offered outside their resident state may not provide the same tax benefits as those offered within their state.

    RETIREMENT AND LONGEVITY

    August 15, 2018

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    Chuck Zuzak

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  • 2 Things Every Investor Should Know About SECURE Act 2.0

    In late December, a $1.7T omnibus spending package was passed in Congress and subsequently signed into law by President Biden. This bill included some significant updates to the landmark 2019 SECURE Act, such that this portion of the legislation is being referred to as SECURE Act 2.0.

    While there are many important updates in the law, I’d like to focus on two items that we believe are especially significant

    1. Required Minimum Distribution (RMD) Age Increase

    Beginning 1/1/2023, the new beginning age for RMDs will be 73. By 2033, the age for RMDs will be pushed back further to 75.

    This means that investors who will turn 72 in 2023 received a pass on what would have been their first RMD! It also means that the window of opportunity for income planning in retirement is extended.

    Some of the most opportune years in terms of income planning are the years between retirement and when RMDs begin. In these years, individuals tend to be in a relatively low tax bracket, because they no longer have high employment income and they also don’t yet have required income coming from their retirement accounts.

    If these retirees are able to live on Social Security and income from taxable brokerage accounts, they could end up in an unusually low tax bracket. These years can then be used to “harvest” capital gains at a 0% tax rate, or convert portions of a traditional IRA to a Roth IRA. The lower adjusted gross income can also help retirees save on things like Medicare and Social Security taxes.  

    Pushing the RMD age out to 73 and then 75 will give retirees additional time to take advantage of these opportunities.

    2. 529 accounts to Roth IRAs

    For the first time, 529s will be allowed to rollover tax-free to Roth IRAs, albeit with significant restrictions.

    The total amount allowed to be rolled over in aggregate is $35,000, and the rollovers must be done in accordance with the annual Roth contribution limits (currently $6,500 for those under age 50). In addition, the 529 must have been established for at least 15 years.

    This change will help to alleviate investor fears of what may happen to 529 funds if the beneficiary chooses not to pursue higher education.

    The change also allows for a strategy whereby investors begin planned rollovers to a Roth IRA once the beneficiary turns 16. At today’s limits (which will be adjusted up for inflation), a 529 beneficiary could have $35,000 plus earnings saved in a Roth IRA before graduating from college. That is a solid head start!

    If you have questions about how these opportunities could affect your financial planning, please call one of our offices to speak with a wealth manager today.

    See below for additional key provisions in SECURE Act 2.0:

    Randy Holcombe
    About the Author

    The opportunity to make a positive difference in people’s lives is why Randy chose a career in wealth management. He is passionate about helping his clients achieve their goals and cut through the constant noise of the day-to-day financial markets.

    Grove City, Pittsburgh

    724-458-5233
    randall.holcombe@confluencefp.com
    Email Randy

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    Randy Holcombe

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  • Stock Market Recap: October 2023

    Month in Review

    • Stocks fell during the month of October, marking the third straight monthly decline for the S&P 500 Index.
    • Bond markets also fell again during the month, the fifth straight monthly decline for the asset class.
    • Concerns over US government funding helped keep interest rates higher in October, pressuring stock and bond markets again.
    • US corporate earnings season is also in full swing, with over 50% of the S&P 500 having reported by the end of the month. Companies have thus far reported positive earnings growth with mixed outlooks.

    Last Rate Hike? Now What?

    The Federal Reserve held its November committee meeting, where they kept interest rates unchanged. Following the press conference, investors are now expecting interest rates to be unchanged again in December (only a 15% probability of a December rate hike as of 11/2/2023).  If the Federal Reserve is finished increasing interest rates this cycle, what does that mean for the stock market? Going back to 1929, there are no clear trends, the range of outcomes following the last hike is very wide historically. While various talking heads remain hyper-focused on short-term events such as this, it is more important than ever that investors maintain their focus on long-term fundamentals.  

    What’s on Deck for November?

    • The autoworkers strike appears to be nearing resolution, while a potential government shutdown remains a possibility ahead of the November 17th deadline.
    • Corporate earnings season is nearly two-thirds complete, with companies reporting earnings ahead of estimates on average, and clocking positive growth this quarter. Investors will focus on forward guidance from companies as the season wraps-up.
    • The next Federal Reserve meeting is not until December 13th, so in the interim investors will continue to look for communications and sign-posts for confirmation the Federal Reserve is done increasing interest rates. The Federal Reserve did confirm their on-going effort to reverse their quantitative easing (QE) program, which is expected to keep interest rates elevated.

    Download the October 2023 Market Recap below:

    Market-Recap-Oct-2023Download
    William Winkeler
    About the Author

    Bill has more than 15 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the Investment Advisory Committee and develops and implements investment strategy for clients of the firm, as well as communicates investment content with clients.

    Pittsburgh

    724-719-6600
    bill.winkeler@confluencefp.com
    Email Bill

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    William Winkeler

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  • Building a Secure Retirement: The Confluence 401(k) Service Structure  

    Whether you are a business owner offering a retirement plan to your employees or are an employee participating in a company sponsored retirement plan, managing the benefit & saving for retirement both can feel like an isolating process. Too often we see a lack of guidance or knowledge from financial advisors to be able to serve as a resource to the company or its employees.  

    Confluence understands these challenges with a dedicated team of financial advisors collaborating with employee retirement plans. We have built a comprehensive 401(k) service structure – Confluence Standard of Care, designed to offer peace of mind to the employer, while supporting employees to make informed decisions to reach their financial & retirement goals. 

    Our 401(k) Standard of Care service structure centers on four key pillars: 

    1. Personalized Employer Review Meetings:  “One size fits all” does not work when it comes to 401(k) plans. Through regularly scheduled meetings, we collaborate with employers to monitor the employer plan to make sure it continues to fit the company’s needs and goals.  

    During these meetings we will discuss the following topics: 

    • Plan investment analysis: considering the quantitative and qualitative results to ensure we have skillful managers in place. 
    • Courageous plan design: striving to increase an employer’s benefits return on investment while striving to enhance participant retirement outcomes.  
    • Fee benchmarking: every 3 years we lead an RFP driven process to ensure apple-to-apple comparisons and to help maximize a plan’s negotiating leverage. 
    • Fiduciary guidance: to support the employer and mitigate potential liabilities. 

    2. Employee engagement:  Our education team uses highly customized plan participant content structured to help optimize outcomes and increase financial wellness. We deliver multiple types of meetings throughout the year. These meetings run the spectrum from group education to 1on1 individual consultations, and life stage education designed to meet the employee at their individual career stage.  

    3. Regular investment monitoring & investment analysis:  As a member of the Retirement Plan Advisor Group (RPAG), we have access to their proprietary fund ranking system that aims to enhance outcomes, manage risks, and reduce fiduciary exposure. Employers receive quarterly plan “report cards” detailing investments scores.  In addition to the fund scores, Confluence has an internal Investment Advisor Committee that provides guidance on selected investment managers and incorporates a qualitative layer of oversight to the fund analysis programs used.  

    4. Ongoing communication & support: In addition to the processes outlined above, we deliver a variety of additional touchpoints designed to keep employers and participants informed and engaged. This includes informative webinars, quarterly newsletters, and campaigns to address specific plan demographics or concerns.

    By utilizing these services, employers can have the confidence in knowing their 401(k) is managed effectively while employees have the opportunity to understand their benefits options.  

    Our team is here to guide you every step of the way. Should you have any questions or require further information on how our service delivery model can benefit your organization, please do not hesitate to contact us or listen to our podcasts today! 

    Confluence Wealth Services, Inc. d/b/a Confluence Financial Partners is a SEC-registered investment adviser. Confluence Financial Partners only transacts business in states where it is properly registered or notice filed or excluded or exempted from registration requirements. The security of electronic mail sent through the Internet is not guaranteed. All email sent to or from this address will be received or otherwise recorded by the Confluence Financial Partners corporate email system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. Confluence Financial Partners recommends you do not send confidential information to us via electronic mail, including social security numbers, account numbers, and personal identification numbers, unless properly encrypted. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request or by visiting the following link:https://live-confluencefp.pantheonsite.io/form-adv-2a/

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    Brian Stout

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  • Stock Market Recap: November 2023

    Month in Review

    • Stocks rose sharply in November, breaking a three-month losing streak. Gains were broad based across major markets.
    • Bond markets also broke a five-month losing streak, posting strong results as short- and long-term interest rates fell significantly during November.
    • Multiple data points illustrated that inflation is in continued decline, raising investor confidence that the Federal Reserve is done hiking and turning its focus to potential rate cuts in 2024. 

    A November to Remember!

    November was a month to remember for investors: The S&P 500 posted its strongest November since 1980 (rising roughly 9%) and the Barclays Aggregate Bond Index had its best month since May 1985 (rising roughly 4.5%).

    What were the catalysts for such a sharp reversal?

    Investor sentiment had become overly negative – a three-month losing streak for stocks and a 5-month losing streak for bonds. This set-up was followed by unexpected positive developments on the fight against inflation. Multiple readings during November showed inflation rising by less than expectations. Federal Reserve officials also affirmed progress towards normalizing inflation, the decline can be seen in the exhibit below. The positive developments on inflation drove interest rates lower, sending stock and bond prices higher, as investors now shift their attention away from rate hikes to rate cuts.  

    Source: BLS, FactSet, J.P. Morgan Asset Management. CPI used is CPI-U and values shown are % change vs. one year ago. Core CPI is defined as CPI excluding food and energy prices. The Personal Consumption Expenditure (PCE) deflator employs an evolving chain-weighted basket of consumer expenditures instead of the fixed-weight basket used in CPI calculations. Guide to the Markets – U.S. Data are as of November 30, 2023.

    What’s on Deck for December?

    • Earnings season is wrapped up and government shutdown issues have been pushed out until January 19th and February 2nd of 2024.
    • The Federal Reserve meeting on December 13th will be watched closely for comments on the timing and magnitude of the first rate cut and the on-going shrinking of the Fed’s balance sheet. At time of writing, futures markets are implying a 50% chance of a 25bps rate cut during the March 20th, 2024 meeting.
    • As we enter 2024, the US Presidential election will once again be a focus. Despite a significant amount of noise, it is important to remember that the S&P 500 has only had negative returns in election years two of the last 20 election years (2000, 2008).

    Download the November 2023 Market Recap below:

    Nov-2023-Market-RecapDownload
    William Winkeler
    About the Author

    Bill has more than 15 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the Investment Advisory Committee and develops and implements investment strategy for clients of the firm, as well as communicates investment content with clients.

    Pittsburgh

    724-719-6600
    bill.winkeler@confluencefp.com
    Email Bill

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    William Winkeler

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  • ISOs vs. RSUs: Strategies to Optimize Your Employee Stock Benefits

    Employers are increasingly offering stock benefits as part of their compensation packages to remain competitive in the job market. These benefits often come in the form of Incentive Stock Options (ISOs) and Restrictive Stock Units (RSUs) which can be powerful tools for building wealth if managed effectively. However, understanding the differences in these benefits is crucial to maximizing their potential and avoiding costly mistakes.

    What Are ISOs and RSUs?

    Incentive Stock Options (ISOs) give the employee the option to purchase company stock at a fixed price, known as the exercise price. If the company’s stock price increases, you can buy shares at the lower exercise price and potentially sell them at the higher market price, resulting in a profit. The key advantage of ISOs is the potential for favorable tax treatment, where upon a qualifying sale, gains could be taxed at the lower long-term capital gains rate rather than as ordinary income.

    Restricted Stock Units (RSUs), on the other hand, are company shares granted to employees as part of their compensation. Unlike ISOs, RSUs are not options to buy stock; instead, they are actual shares that you receive usually after a certain vesting period. Once vested, RSUs are considered and taxed at their fair market value as ordinary income.

    The Power of ISOs and How to Manage Them

    ISOs can be an attractive benefit, especially in a growing company. However, their complexity means they require careful planning. Here are a few tips:

    Avoid the Alternative Minimum Tax (AMT) Trap: Exercising ISOs can trigger the Alternative Minimum Tax (AMT), an additional tax that applies when certain tax preferences make your regular income tax too low. This can be a surprise come tax time, so it’s essential to plan your exercises carefully, possibly spreading them over multiple years and consulting with your financial advisor and tax advisor.

    Know Your Timeline: ISOs typically have a vesting schedule, meaning you can only exercise a portion of your options each year. Additionally, once you leave your company, you usually have a limited time to exercise your vested options.

    Understand the Tax Implications: ISOs offer a potential tax advantage, but they come with conditions. To qualify for long-term capital gains tax, you need to hold the shares for at least one year after exercising the option and two years after the grant date. Otherwise, your profits may be taxed as ordinary income.

    Maximizing RSUs for Long-Term Wealth

    RSUs, while more straightforward than ISOs, still require strategic thinking:

    1. Plan for the Tax Hit: When your RSUs vest, they’re taxed as ordinary income. This means you might face a significant tax bill when your shares vest, even if you haven’t sold them yet. Some companies offer to withhold shares to cover taxes, but you’ll need to plan for any additional tax liability.  If you decide to hold on to the shares after vesting, you may be exposed to additional capital gains taxes if the stock appreciates and you sell at a later date.
    2. Consider Your Investment Strategy: Once your RSUs vest, you can choose to hold or sell the shares. Holding them can be a great way to participate in the company’s long-term success, but it also increases your exposure to the company’s stock. Balancing this with other investments in your portfolio is crucial to managing risk.
    3. Diversify Your Portfolio: It’s easy to get caught up in the success of your company, but putting too many eggs in one basket can be risky. Consider selling some of your vested RSUs to diversify your investments and reduce your exposure to company-specific risks.

    Final Thoughts

    ISOs and RSUs are valuable components of a compensation package, offering the potential to build substantial wealth. However, understanding the details, planning for taxes, and integrating them into a broader financial strategy are essential steps to make the most of these benefits.

    At Confluence Financial Partners, we specialize in helping individuals navigate these complexities, ensuring that your stock benefits work in concert with your overall financial plan. If you have ISOs or RSUs and are unsure how to manage them, let’s have a conversation.

    Jackson Elizondo
    About the Author

    Jackson Elizondo is dedicated to making a positive impact in his community, a commitment that led him to a career in wealth management.

    Pittsburgh

    412-391-0377
    jackson.elizondo@confluencefp.com
    Email Jackson

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    Jackson Elizondo

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  • Stock Market Recap: December 2023

    Month in Review

    • Stock and bond markets extended their rally in December, capping off a strong fourth quarter with broad-based gains. Value stocks and US small cap stocks led equity markets higher during the month.
    • Major US bond markets finished in positive territory, preventing what would have been a record-breaking third consecutive calendar year loss.
    • The continued decline in inflationary data and increased likelihood of a rate cut by the Federal Reserve were key catalysts for markets during the month.

    Narrow Market Leadership

    The S&P 500 and growth stocks benefitted from continued strong results from technology companies during 2023. The outsized results of these companies pushed their valuations even higher, with Apple finishing the year as roughly 7% of the S&P 500’s value. This is the largest single weighting in the last 30-years and follows three previous years where Apple represented at least 6% of the S&P 500’s market capitalization. While Apple and six other companies were responsible for the lion’s share of the US stock market’s results in 2023, there are opportunities for broader participation as we head into 2024.

    Source: FactSet and Goldman Sachs Asset Management. As of December 31, 2023.

    What’s on Deck for January?

    • Earnings season starts, analysts expect S&P 500 companies to report the second straight quarter of earnings growth.
    • The Federal Reserve meeting on January 31st, where it is expected to hold interest rates steady. Investors will be focused on commentary and projections regarding the timing of the first interest rate cut. Cooling inflation supports a less restrictive approach from the Federal Reserve.
    • The US government is set to enter a phased shut-down on January 19th barring a new spending bill. Bipartisan negotiations are reported as active at time of writing.   

    Download the December 2023 Market Recap below:

    Dec.-2023-Market-RecapDownload
    William Winkeler
    About the Author

    Bill has more than 15 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the Investment Advisory Committee and develops and implements investment strategy for clients of the firm, as well as communicates investment content with clients.

    Pittsburgh

    724-719-6600
    bill.winkeler@confluencefp.com
    Email Bill

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    William Winkeler

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  • Stock Market Recap: September 2024

    Month in Review

    • Stock and bond markets continued to rally in September, following the Federal Reserve’s first interest rate cut.
    • Gains expanded beyond market leaders, such as large cap growth and technology stocks, with broader participation within the S&P 500, large cap value, small cap stocks, and international stocks.
    • The S&P 500 Index total return of +22.08% year-to-date as of September 30th represents its best start to a year since 1997, and the best start to a Presidential election year in its history.

    What Happens Next: Market Rotation Following Rate Cuts?

    The Federal Reserve reduced the Federal Funds Rate by 0.50% as expected in September, ending the rate hiking cycle that began in March 2022 and featured over 5% worth of interest rate increases. 

    The market’s outlook largely shifted in early July, when the June inflation report affirmed the outlook for declining inflation, clearing the way for the September rate cut. Since that period, stock and bond market leadership has shifted as the economic and fundamental outlook has changed.

    Since June 30th (after the inflation report and rate cut), market leadership has broadened beyond the Magnificent 7 stocks. The Equal-Weighted S&P 500 Index rose +9.60%, ahead of the market-cap weighted S&P 500 TR Index (+5.89%). Within large cap stocks, large cap value gained +9.43%, ahead of large cap growth’s +3.19% gain. Small cap stocks also participated in broadening, with the Russell 2000 TR Index rising +9.27% during the third quarter. Lastly, core bonds (Barclays US Agg Bond TR Index) rose +5.20%, pulling ahead of money market funds in 2024 as short-term rates begin to decline. The changing environment highlights how dynamic financial markets can be and serves as a reminder of the importance of maintaining a diversified approach to investing.

    Sources: Morningstar, June 30th to September 30th . Average S&P 500 Stock = S&P 500 Equal Weighted TR Index, Large Cap Value = Russell 1000 Value TR Index, Small Cap = Russell 2000 TR Index, Developed International = MSCI EAFE NR Index, S&P 500 = S&P 500 TR Index, Core Bonds = Bloomberg US Agg Bond TR Index, Large Cap Growth = Russell 1000 Growth TR Index.

    What’s on Deck for October?

    • Labor market data will be watched closely as investors look for information ahead of the Federal Reserve’s meetings in November and December.  
    William Winkeler
    About the Author

    Bill has more than 15 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the Investment Advisory Committee and develops and implements investment strategy for clients of the firm, as well as communicates investment content with clients.

    Pittsburgh

    724-719-6600
    bill.winkeler@confluencefp.com
    Email Bill
    Sept 2024 Market RecapDownload

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    William Winkeler

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  • 529 Plans: Advanced Strategies for Education and Wealth Transfer

    When someone thinks about socking away money in a college fund for children or grandchildren, the first thing that comes to mind is a 529 plan – a savings plan for qualified educational expenses, which may include not only tuition, but also room and board, books, and other school supplies.  But did you know that a 529 can also be an attractive consideration for transferring generational wealth?

    The Basics:

    • Money invested in a 529 plan grows tax free and the growth is exempt from federal taxes upon withdrawal, as long as the funds are used for qualified educational expenses.
    • You can open up a 529 plan before you become a parent or grandparent, which provides a head start on building generational wealth that you can pass down to future family members.
    • You can open a 529 plan in your name and change the beneficiary later on; and you may open multiple 529 plans to save for the education of multiple children or grandchildren. 
    • Most plans have lifetime contribution limits of about $350,000 and up (annual and all-time contribution limits vary by state).
    • Expanded use of funds:  Money in a 529 plan can be used for education related expenses at any accredited college, community college or graduate school; for certified apprenticeship programs; for student loan repayment (student loan repayment has a $10,000 lifetime limit per 529 plan beneficiary and $10,000 per each of the beneficiary’s siblings); and for K-12 tuition expenses up to $10,000 per year.

    The Advanced:

    • Contributions are considered completed gifts.  You can annually give $18,000 (for 2024) per donor per beneficiary, or $36,000 per couple per beneficiary, without being subject to the gift tax.
    • “Super funding” – Contributions can be front-loaded, up to $85,000 (up to $170,000 for married couples)– or five years’ worth of contributions at once.  If you decide to do this, you can’t fund the account for the next four years.
    • You can name a trust as the account owner, which will give you control even after you’re gone.  Trustees can make decisions for the account that are advantageous to the beneficiaries and ensure your wishes for the account are carried out.
    • Contributions to a 529 plan reduce the taxable value of your estate and because contributions are treated as completed gifts, they are immediately removed from the donor’s estate and exempt from the current federal estate tax limit ($12.92 million per person or $25.84 million per couple).
    • Another new benefit starting 2024 (per Secure Act 2.0), it is now permissible to rollover up to a lifetime limit of $35,000 tax free from a 529 plan to a Roth IRA.  The money must be moved to a Roth IRA for the beneficiary of the 529 as opposed to the owner of the 529 account; and the account must have been in existence for at least 15 years. Only funds in the plan for at least 5 years are eligible for rollover. (Please note that annual Roth contribution limits will apply based on the rules included in the legislation and the IRS could interpret differently upon implementation.) 

    Whether you want to reap the ‘basic’ benefits of a 529 savings account, or want to discuss the ‘advanced’ benefits – the best approach is reaching out to your Confluence Wealth Manager or starting the conversation altogether. We look forward to helping you and your family with education planning in 2024.

    Zac Saunders
    About the Author

    Known for his professionalism and calming demeanor, Zac is focused on helping his clients reach their financial goals through comprehensive financial planning and unbiased guidance.  Zac and his team support and care for the overall financial well-being of their clients.

    Sewickley

    724-719-6609
    zac.saunders@confluencefp.com
    Email Zac

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    Zac Saunders

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  • 2024 Starts Here: Reflect, Plan, and Measure for a Purposeful Year

    The beginning of a new year is an exciting time to reflect, dream, and plan for the future. January is a month filled with anticipation and the good news is that we have control over 2024 and we can be the architects of our year.

    To do so effectively, we need to do 3 things:

    1. Reflect.
      1. To lay the foundation for an exceptional 2024, it’s important to get yourself in a positive state. The state you’re in matters! If you don’t take the time to reflect, you will likely come up short. Take a moment to flip through your phone’s photo album, review your calendar, and take inventory of what all you accomplished in 2023. Putting yourself in a positive state will help you dream and plan for the year ahead with excitement.
    2. Plan.
      1. What does an awesome 2024 look like for you? The more specific, the better! A good way to do this is to think about each quarter and what 3 or 5 things you want to accomplish. Dig into the ‘why’ behind these goals; make it emotional and powerful. The significance of your ‘why’ will inherently help you find the ‘how.’
    3. Measure and stay focused.
      1. To turn your dreams into accomplishments, it’s crucial to establish specific metrics and maintain your focus. In the hustle and bustle of life, staying focused on your ‘why’ can be challenging. Regularly revisit your goals, assess your progress, and adjust course if needed.

    By implementing the Reflect, Plan, Measure framework, we will become active participants in the creation of a year filled with intention and excitement.

    Great Days Ahead!

    Greg Weimer
    About the Author

    At the core of his personal and professional life, Greg is passionate about helping individuals and families maximize their lives and legacies. His dedication to this mission shines through as an individual, wealth manager, and leader.

    McMurray, Naples

    724-271-8801
    greg.weimer@confluencefp.com
    Email Greg

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    Greg Weimer

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