Insight Archive - Aegis Financial

Why Every Newborn Should Have a 529 Account

Provided by Mike Villeneuve, Wealth Manager at AEGIS Financial

529 accounts are not new, but they have undergone several meaningful changes in recent years which make them a great saving vehicle for every child. Many clients express concerns about saving in a 529 account if a child does not attend college. Recent changes expanding how 529 funds can be used and the new option to roll over unused funds to a Roth IRA should negate this concern.

What is a 529 account?

A 529 is “an investment account that offers tax-free withdrawals and other benefits when used to pay for qualified education expenses. You can use a 529 plan to pay for college, K-12 tuition, apprenticeship programs, and even student loan repayments.” 1

What if a child does not go to college or does not use all the funds?

There are several options the 529 owner can choose if there are unused funds in a 529.
Withdraw the funds and pay taxes and penalties on the earnings.
Change the beneficiary on the account to someone who will use the funds.
Keep the unused funds in a 529 where they can remain invested and growing for future use.
New in 2024 – Rollover to a Roth IRA.

Qualifications For Rollover 2

To convert a 529 savings account into a Roth IRA, certain conditions must be met:
Contributions in the five years preceding rollover are ineligible.
The 529 beneficiary must also be the Roth IRA account owner.
The account owner must have earned income in the year of the rollover.
The account owner must be under the annual income limit for Roth IRA contributions.
The annual rollover limit is equal to the annual Roth IRA contribution limit.
Direct contributions and rollover contributions are cumulative towards the annual limit.
The account must have been open for at least 15 years before a Roth rollover request.
Total rollovers from 529 to Roth IRA are limited to $35,000 lifetime.

529 Tax Advantages

Federal

+ Earnings grow tax-free inside the account.

+ Withdrawals are tax-free as long as the money is used for Qualified education expenses.

– Contributions are not deductible.

State

+ Depending on what state you live in, contributions to 529s may be deductible or qualify for a state tax credit.

+ Withdrawals for qualified education expenses may be exempt from state taxes but can vary from Federal rules so it is important to understand what qualifies in your state before withdrawing funds.

– Rollovers to Roth IRA are not qualified in all states meaning it could be subject to state tax.

Qualified Education Expenses

College

Tuition and Fees
Books and Materials
Room & Board (for students enrolled at least half-time)
Computers and related equipment
Internet Access
Special needs equipment for students attending a college, university, or other eligible post-secondary educational institutions.

Other Qualified Expenses

Up to $10,000 per year, per beneficiary for k-12 tuition expenses
$10,000 in student loan repayments (lifetime)
Trade or vocational school or registered apprenticeship program expenses

Important Note: Not all states have adopted the expanded definition of qualified education expenses so withdrawals to pay for K-12 education, student loan payments, and trade/vocational schooling may be subject to state taxes on the earnings portion.

Resources:

1. https://www.savingforcollege.com/intro-to-529s/what-is-a-529-plan

2. https://www.forbes.com/sites/brianboswell/2024/03/04/how-to-roll-529-plan-assets-into-a-roth-ira-account/?sh=45daaa456b62

A Plan for All Seasons Summer 2024

AEGIS Cares Quarter 1 & 2 2024

AEGIS Cares Q2 Giving Plan

For our Quarter 2 Giving Plan, we will sponsor Berkshire Hathaway’s Annual Sunshine Kids Golf Outing at the Oshkosh Country Club on June 26, 2024. The Sunshine Kids Foundation is a non-profit organization that provides a variety of free programs and events for children receiving cancer treatments in hospitals across the United States and North America. We are excited to partner with Berkshire Hathaway to help the cause.

AEGIS Cares Q1 Giving Plan

For our Quarter 1 Giving Plan, we partnered with Feeding America, the state’s leading local hunger relief organization. We assisted in packaging, labeling, and sending food to those in need in Eastern Wisconsin. See some pictures below of our team taking the afternoon to help those in need.

If there are any organizations or causes that you would like us to support, please call Courtney Deitte at (920) 233-4650 or email her at courtney.deitte@aegis4me.com

What’s New at AEGIS | Quarter 2, 2024

What’s Happening at AEGIS Financial

Welcome Megan Van Driel!

Megan joined our team as the Client Experience Concierge / Event Planner in April 2024! She creates a welcoming experience for clients, performs various client services, and is the initial point of contact for clients. She will also be managing our client events!

Welcome Megan!

To learn more about Megan click HERE

Congratulations Alyssa Doro!

Alyssa was recently promoted to Operations Associate in April 2024! Her new role includes performing various client services, providing internal office support, and more!

Congrats Alyssa!

To learn more about Alyssa and her new role click HERE

AEGIS Testimonials

A few of our clients have volunteered to film testimonial videos with us, sharing how AEGIS Financial has impacted their financial life! Click on the link below to check out their stories and feel free to share it with others!

https://www.youtube.com/playlist?list=PLs01pbearDM9BbaO_a9dGsA_wsnCQmdmV

Past Events

Quarter 2 Professional Development Day

On Wednesday, May 2nd, the AEGIS team convened for our quarterly professional development day. This quarter’s focus? Sharpening our presentation skills for maximum impact. And to cultivate team camaraderie, we ventured to Appleton Axe for a friendly bout of axe throwing, revealing our competitive sides in the process. Check out some pictures below!

AEGIS Introducing Text Messaging!

Exciting news! We’re introducing text messaging for managing appointments in the coming months. It’s a quicker, more convenient way to confirm, reschedule, or cancel appointments. If you prefer not to receive texts, you’ll have the opportunity to opt-out. Expect smoother scheduling and improved communication moving forward. Thanks for your support!

AEGIS Documents Becoming Automated and Esignable!

We have started using Formstack to automate our AEGIS documents, allowing them to be signed electronically either via email or in person at our office. All of these documents are encrypted to ensure maximum security. Some of you may have already received an updated Wealth Management Agreement via email. Going forward, AEGIS Financial plans to rely more heavily on email for secure document transmission, to eliminate the inconvenience of physical paperwork, speed up our processing times, and reduce the risk of identity fraud associated with traditional mail services.

Social Media:

Visit us on our Facebook page, “AEGIS Financial,” and find out what’s happening around the office! We will be posting frequently with birthdays and important events for our team members as well as sharing some helpful articles that could help you with your finances!

Market Update Videos!

Bill Bowman, CPA, and Brian Rogers, CFP, frequently share the Investment Committee’s insights on the market and economy. These videos are emailed to you and available on our YouTube Channel, “AEGIS Financial,” and our Facebook and LinkedIn pages, be sure to like and subscribe.

Sunsetting Tax Cuts and Jobs Act (TCJA) | Advice4Life

Provided by Kenji Callahan, Associate Wealth Manager at AEGIS Financial

An essential aspect of a financial plan is effective tax planning. The Tax Cuts and Jobs Act (TCJA) was implemented in 2017. The TCJA changed the standard deduction, tax brackets, tax credits, and other personal and business tax provisions. We should all be aware that the TCJA expires on December 31, 2025, when the tax code will return to its previous state.

Tax Brackets

One aspect you should be prepared for is that the tax brackets for all filers will revert to pre-TCJA brackets. Below is a comparison of what you can expect if you file as Married Filing Jointly or as a Single Filer. The taxable income brackets will likely increase with inflation adjustments.

Married Filing Jointly

Taxable Income (2024)	Marginal Tax Rates 2024	Marginal Tax Rates Pre and Post TCJA
$0 to $23,200	10%	10%
$23,201 to $94,300	12%	15%
$94,301 to $180,000	22%	25%
$180,001 to $201,050	22%	28%
$201,051 to $274,400	24%	28%
$274,401 to $383,900	24%	33%
$383,901 to $487,450	32%	33%
$487,451 to $490,000	35%	33%
$490,001 to $553,600	35%	35%
$553,601 to $731,200	35%	39.6%
$731,201 and more	37%	39.6%

Single Filer

Taxable Income (2024)	Marginal Tax Rates 2024	Marginal Tax Rates Pre and Post TCJA
$0 to $11,600	10%	10%
$11,601 to $47,150	12%	15%
$47,151 to $100,525	22%	25%
$100,526 to $108,000	24%	25%
$108,001 to $191,950	24%	28%
$191,951 to $225,400	32%	28%
$225,401 to $243,725	32%	33%
$243,725 to $490,000	35%	33%
$490,001 to $492,000	35%	35%
$492,001 to $609,350	35%	39.6%
$609,351 and more	37%	39.6%

Standard Deductions

The second aspect to be aware of is that the standard deduction will also be reverting. In 2017, the TCJA had nearly doubled the standard deduction from $6,500 per person to $12,000 for single filers, $13,000 to $24,000 for joint filers, and $9,550 to $18,000 for those filing as head of household. In 2026, the current standard deduction for each filing status will revert to an inflation-adjusted pre/post-TCJA amount. The exact amount of the deduction for 2026 is not known yet, but without any changes to the expected sunsetting, it will decrease.

Estate and Gift Tax Exemptions

Estate and gift tax limits are the third aspect that affects families and individuals with higher net worth. Like the standard deduction and tax bracket changes, the TCJA adjustment to the Estate exclusion amount was advantageous for Americans. Pre-TCJA, the exclusion amount in 2017 was $5,490,000. This increased to $11,180,000 in 2018, and now, in 2024, it sits at $13,610,000. This exclusion amount will continue to be indexed for inflation but will be sunset to a decreased amount in 2026.

Planning Ahead

We cannot change the TCJA sunsetting, but we can help you take advantage of it while it is still here. Options to consider are delaying deductible expenses to take advantage of the higher standard deduction, completing Roth contributions or conversions, and harvesting capital gains. Delaying certain itemized deductions into one year is a tax strategy known as bunching.

If you would like any help with these areas or potential strategies or have any questions or concerns, please contact us here at AEGIS Financial. We are always happy to help.

References and information provided by:

https://www.irs.gov/newsroom/estate-and-gift-tax-faqs
https://taxfoundation.org/data/all/federal/2017-tax-brackets/
https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024#:~:text=Marginal%20rates%3A%20For%20tax%20year,for%20married%20couples%20filing%20jointly).&text=The%20lowest%20rate%20is%2010,for%20married%20couples%20filing%20jointly).
https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets
https://www.taxpolicycenter.org/briefing-book/how-did-tcja-change-standard-deduction-and-itemized-deductions#:~:text=The%20Tax%20Cuts%20and%20Jobs%20Act%20(TCJA)%20increased%20the%20standard,are%20indexed%20annually%20for%20inflation.
https://www.irs.gov/newsroom/final-regulations-confirm-making-large-gifts-now-wont-harm-estates-after-2025

A Plan for All Seasons | Spring 2024

What’s New at AEGIS | Quarter 1 2024

AEGIS Testimonials

https://www.youtube.com/playlist?list=PLs01pbearDM9BbaO_a9dGsA_wsnCQmdmV

Past Events

Quarter 1 Professional Development Day

On Thursday, February 8, 2024 we had our first quarter professional development day. This quarter, we trained on Effective Business Writing provided by the Fox Valley Tech. Following lunch, we enjoyed bowling as a team at 10^th Frame in Appleton!

Check out some pictures below!

2024 AEGIS Financial Forum

On February 20^th, we hosted our 2024 AEGIS Financial Forum at the Best Western in Neenah! The event included Educational Breakout Sessions, a Dinner Buffet, and AEGIS’s Economic Forecast Presentation by President Bill Bowman, CPA followed by a panel of our Wealth Managers.

Thank you to all those who attended!

Making Appointments Online

Attention all valued clients! You now have the convenient option to schedule your investment portfolio reviews online. Keep an eye out for an email that will include the link to schedule your appointment yourself. Act fast if you require immediate assistance.

We appreciate your patience and understanding as we move to our online platform. As always, if you have any questions or concerns, please contact us. We are more than happy to help.

Exciting News! AEGIS Documents to Become Automated and Esignable!

Team Member Spotlight – Jessica Dontje

Have you met Jessica? Click on the video below to learn more about her and her role at AEGIS!

Social Media:

https://www.facebook.com/aegisfinancialplanners

Market Update Videos!

AEGIS Cares | Quarter 1 2024 & Quarter 4 2023

AEGIS Cares Q1 Giving Plan

For our Quarter 1 Giving Plan, we will partner with Feeding America, the state’s leading local hunger relief organization. We will assist in packaging, labeling, and sending food to those in need in Eastern Wisconsin.

If there are any organizations or causes that you would like us to support, please call Courtney Deitte at (920) 233-4650 or email her at courtney.deitte@aegis4me.com

AEGIS Cares Q4 Giving Plan

The holiday season can be challenging for local families struggling to make ends meet. That’s why we at AEGIS have chosen to “Adopt a Family” for Christmas. “Adopt a Family” is a Christmas-sharing initiative that pairs community members with financially disadvantaged families to fulfill their holiday needs. To learn more about how you can help donate, give our office a call at (920) 233-4650 or contact Alyssa directly at alyssa.doro@aegis4me.com

As AEGIS tradition, we donated turkeys for Thanksgiving and hams for Christmas to Father Carr’s of Oshkosh and St. Joe’s Food program. See some pictures below!

If there are any organizations or causes that you would like us to support, please call Courtney Deitte at (920) 233-4650 or email her at courtney.deitte@aegis4me.com

2023 Year-End Tax Tips

Here are some things to consider as you weigh potential tax moves between now and the end of the year.

1. Defer income to next year

Consider opportunities to defer income to 2024, particularly if you think you may be in a lower tax bracket

then. For example, you may be able to defer a year-end bonus or delay the collection of business debts,

rents, and payments for services. Doing so may enable you to postpone payment of tax on the income until

next year.

2. Accelerate deductions

You might also look for opportunities to accelerate deductions into the current tax year. If you itemize

deductions, making payments for deductible expenses such as qualifying interest, state taxes, and medical

expenses before the end of the year (instead of paying them in early 2024) could make a difference on your

2023 return.

3. Make deductible charitable contributions

If you itemize deductions on your federal income tax return, you can generally deduct charitable

contributions, but the deduction is limited to 50% (currently increased to 60% for cash contributions to

public charities), 30%, or 20% of your adjusted gross income (AGI), depending on the type of property you

give and the type of organization to which you contribute. (Excess amounts can be carried over for up to

five years.)

4. Bump up withholding to cover a tax shortfall

If it looks as though you will owe federal income tax for the year, consider increasing your withholding on

Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for employees to request

a Form W-4 change and for their employers to implement it in time for 2023. The biggest advantage in

doing so is that withholding is considered as having been paid evenly throughout the year instead of when

the dollars are actually taken from your paycheck. This strategy can be used to make up for low or missing

quarterly estimated tax payments.

5. Save more for retirement

Deductible contributions to a traditional IRA and pre-tax contributions to an employer-sponsored retirement

plan such as a 401(k) can reduce your 2023 taxable income. If you haven’t already contributed up to the

maximum amount allowed, consider doing so. For 2023, you can contribute up to $22,500 to a 401(k) plan

($30,000 if you’re age 50 or older) and up to $6,500 to traditional and Roth IRAs combined ($7,500 if you’re

age 50 or older).* The window to make 2023 contributions to an employer plan generally closes at the end

of the year, while you have until April 15, 2024, to make 2023 IRA contributions.

*Roth contributions are not deductible, but Roth qualified distributions are not taxable.

6. Take the required minimum distributions

If you are age 73 or older, you generally must take required minimum distributions (RMDs) from traditional

IRAs and employer-sponsored retirement plans (special rules apply if you’re still working and participating

in your employer’s retirement plan). You have to make the withdrawals by the date required — the end of the

year for most individuals. The penalty for failing to do so is substantial: 25% of any amount that you failed

to distribute as required (10% if corrected in a timely manner).

7. Weigh year-end investment moves

You shouldn’t let tax considerations drive your investment decisions. However, it’s worth considering the

tax implications of any year-end investment moves that you make. For example, if you have realized net

capital gains from selling securities at a profit, you might avoid being taxed on some or all of those gains by

selling losing positions. Any losses over and above the amount of your gains can be used to offset up to

$3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to

reduce your taxes in future years.

This information was developed by Broadridge, an independent third party. It is general in nature, is not a

complete statement of all information necessary for making an investment decision, and is not a

recommendation or a solicitation to buy or sell any security. Investments and strategies mentioned may not

be suitable for all investors. Past performance may not be indicative of future results.

Social Security Increases Benefits by 3.2% for 2024

The Social Security Administration has announced a cost-of-living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income benefits. More than 65 million Americans will see the 3.2% increase in their payments beginning in January 2024.

The increase – significantly lower than last year’s 8.79% COLA which was the largest since the 11.2% adjustment in 1981 – is tied to the consumer price index for urban wage earners and clerical workers and was put in place to ensure the purchasing power of these benefits isn’t eroded by inflation. The increase of 3.2% is designed to provide benefit recipients with a COLA commensurate with overall inflation. The increase amount for 2024 is far lower than 2023’s 8.7% or 2022’s 5.9%, but still provides recipients with a nice “raise” in the next year.

According to the Social Security Administration, on average, retired workers currently collect $1,840.27 per month in Social Security payments, or roughly $22,083.24 per year. The 3.2% COLA will add about $58.88 per month to those payments or $706.66 for the year.

Keep in mind all federal benefits must be direct deposited. So, if you haven’t already started receiving benefits, you need to establish electronic transfers to your bank or financial institution. We are happy to help you get set up if needed.

You may also like to know that we’re now in the annual open enrollment period for Medicare. You have until December 7 to review your benefit choices and costs and elect new coverage if you like. Please take the time to go over your options. If you haven’t yet enrolled in Medicare, keep in mind you must do so within the seven-month period around your 65th birthday. Feel free to contact if you have any questions or need assistance.

The end of the year is a good time to review your financial plan to help ensure you’re well-positioned for next year and beyond. A disciplined, comprehensive strategy remains the best approach to help you achieve your long-term financial goals. If you have any questions or concerns about your overall financial plan, please give us a call.

Material prepared by Raymond James for use by its advisors. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk, and you may incur a profit or loss regardless of the strategy selected.

The consumer price index for urban wage earners and clerical workers (CPI-W) is a monthly measure of the average change over time in the prices paid by urban wage earners and clerical workers for a market basket of consumer goods and services.

A Plan for All Seasons | Winter 2024

AEGIS Cares | Q3 & Q4 2023

AEGIS Cares Q3 Giving Plan

For our Quarter 3 Giving Plan we partnered with Habitat for Humanity to help build a house for a family in need. On the hottest day of the year, August 23, 2023 we went to the construction site and assisted the team in building walls for a family in need of housing in the community. See some pictures below!

If you wish to volunteer your time or learn more about Habitat for Humanity, visit their website: https://www.foxcitieshabitat.org/

AEGIS Cares Q4 Giving Plan

The holiday season can be challenging for local families struggling to make ends meet. That’s why we at AEGIS have chosen to “Adopt a Family” for Christmas. “Adopt a Family” is a Christmas-sharing initiative that pairs community members with financially disadvantaged families to fulfill their holiday needs to learn more about how you can help donate give our office a call at (920) 233-4650 or contact Alyssa directly at alyssa.doro@aegis4me.com

As AEGIS tradition, we donated turkeys for Thanksgiving and will be donating hams for Christmas to Father Carr’s of Oshkosh and St. Joe’s Food program. See some pictures below!

If there are any organizations or causes that you would like us to support, please call Courtney Deitte at (920) 233-4650 or email her at courtney.deitte@aegis4me.com