President Trump campaigned on a good many issues – but taxes were high on the list. He proposed no income tax on Social Security, overtime pay, or tips. The tax cuts enacted in the 2017 Tax Cuts and Jobs Act (TCJA) would be made permanent or at least extended.

Costly proposals, all of them! And at present, the President and Congressional Republicans, along with the ubiquitous Elon Musk, the unpaid head of the newly created Department of Governmental Efficiency (DOGE) are exploring the ways they might cut – spending cuts in energy, transportation, education, health, welfare, customs, immigration, infrastructure, federal workforce levels are being discussed. So are income taxes and tax breaks.

According to reports, a number of time-honored tax breaks (and some newer ones, too) are under consideration for amendment or elimination.

Among these are:

Home Mortgage Interest Deduction

Prior to enactment of the TCJA, home mortgage interest on mortgage indebtedness for a primary or secondary family home of up to $1,000,000 was tax deductible via itemization on Schedule A of an individual income tax return.

The TCJA pared that back on residences acquired after December 15, 2017 – currently, for these properties, interest on $750,000 is deductible.

If Congress takes no action with respect to taxes, the lower TCJA cap would expire, and interest in $1,000,000 of family home mortgage debt would again be allowed.

However, on Capitol Hill they are discussing further lowering the mortgage debt cap to $500,000.

We can hope they don’t eliminate this deduction altogether – but we don’t think that’s likely.

SALT Deduction

Prior to the TCJA, taxpayers could deduct income, sales, and property taxes paid at the state or local level (state and local taxes = SALT)

The TCJA capped the deduction at $10,000.

The deduction used to have its own line item on individual income tax returns; now, to receive the deduction, the taxpayer has to itemize deductions on Schedule A.

This cap, like many provisions of the TCJA, is set to expire as of midnight, December 31, 2025.

Options being discussed on this subject include:

• A bipartisan bill to repeal al caps on SALT deductions was introduced in the U.S. House of Representatives just a few weeks ago.
• Total elimination of the deduction is another option under discussion.
• Some proposals would keep or increase the cap – by extending the $10,000 limit, but allowing married taxpayers to deduct $20,000, or increasing the cap to $15,000 for single filers, and allowing deductions up to $30,000 for married joint filers.

 

We consider some version of the last item more likely than either wholesale elimination of the deduction or full passage by both House and Senate of the bipartisan House bill.

Education Tax Breaks

There’s some enthusiasm and momentum behind a push to eliminate several higher-education-related tax breaks and/or credits:

• The $2,000 Lifetime Learning Credit for qualified tuition and related expenses for college and postgraduate students. This credit is available annually, with no limit on the number of years it can be claimed, to eligible students enrolled in an eligible educational institution.
• The American Opportunity Tax Credit (AOTC), a partially refundable $2,500 tax credit to help with tuition and other expenses such as certain required fees and course materials (but not including room and board). This credit is only available during the first four years of a student’s post-secondary education.
• The individual income tax return lime item credit of up to $2,500 for student loan interest.

 

Also being discussed is making grants for scholarships and fellowships taxable.

Whether any of these proposals will become effective is anyone’s guess – but I’d think not all of them, if indeed, any, are likely to survive.

Tax Breaks For Families

Also on the chopping block are some tax breaks targeted to families with dependent children:

• The child and dependent care credit. The child must be under age 13, and the dependent can be a spouse or other dependent of any age who is either physically or mentally unable to care for themselves, or who is a full-time student and also disabled. Taxpayers who pay outside caregivers while working or looking for work can claim this credit, but earned income of some amount is necessary.
• The head-of-household filing status – individuals now qualifying for this status would have to file as ordinary individuals. This would mean they get a lower standard deduction (in 2025, the individual standard deduction is $15.000, while the head-of-household’s is $22,500), and loss of the special tax brackets for current head-of-household filers.

 

There’s also discussion of requiring social security numbers for parents claiming the $2,000-per-child tax credit. At present, social security numbers are only required for the child or children.

But this last is certainly revenue neutral.

Other Tax Breaks Under Review

Other proposals concerning tax breaks which are being scrutinized for possible elimination include:

• Green energy initiatives enacted as part of the Inflation Reduction Act of 2022 might well vanish.
• Changes to the Affordable Care Act’s healthcare insurance premium subsidies are being looked at.
• The employee tax exclusion for employer-paid meals, transportation, and other perquisites could be eliminated.
• Private colleges currently pay a 1.4% excise tax on net investment income of private colleges; on the table is an increase to 14%.
• The exclusion of private individual donations to non-profit healthcare organizations, including hospitals, from the list of deductible charitable contributions.

 

We don’t know what is going to happen with all of this – or any of it. As Yogi Berra famously said,

“It’s tough to make predictions, especially about the future.”

 

These discussions are unusual – it’s more common – with both parties – to put forth proposed tax cuts or tax breaks of other kinds than to propose eliminating them once they are part of the tax code.

But we will certainly keep our ear to the ground, and what we hear we will report to you, our faithful readers.

If you have, or develop, any concerns about your tax situation, please call Rigby Financial Group. We have an expert tax team ready to help answer any questions and resolve any concerns you have.

Please click here to email me directly – I and my team are always here for you!

Until next time –

Peace,

Eric

When did you last take a careful review of your retirement planning?

Have you even started making plans – beyond saving, which we assume you are all doing?

Because retirement can be an extraordinary opportunity to live your dreams – but only if you’ve funded those dreams!

In our latest whitepaper, we offer suggestions on making the most of your retirement income – and if you need to plan, reach out to us – we are experts at retirement planning, and will be delighted to help assure you can reach every goal and aspiration you desire,

To help you start planning, Rigby Financial Group is delighted to offer you a free copy of our latest whitepaper – 5 Tips to Make the Most of Your Post-Retirement Income!

Find out more – click here to get your free copy!

Until next time –

Peace,

Eric

Seneca wrote, “There is no more stupefying thing than anger, nothing more bent on its own strength. If successful, none more arrogant, if foiled, none more insane—since it’s not driven back by weariness even in defeat, when fortune removes its adversary, it turns its teeth on itself.”

As a person of Irish descent, I know a little bit about anger, and it can really a short-term motivator, can’t it? Anger can make us feel powerful and impatient for action – and this has to be a good thing, right?

Or is it? Remember that anger is an emotional state, which releases epinephrine, also known as adrenaline, mainly from the medulla of the adrenal gland into the body, which impedes reasonable thought. Now, acting from such a state, surely, is not a good thing under most circumstances.

If I act out of anger, I’m not rationally arriving at the practical solutions. I’m not calmly addressing a team member’s needs and concerns – in fact, my anger is almost certainly counterproductive.

Anger, in fact, can blind us to the path we need to take to get out of the situation or problem which angered us.

It’s a fuel, all right, but toxic fuel, and if we make that fuel our go-to, we’re going to find ourselves with burned out motors.

Those angry brain chemicals leave a bad taste in the soul. An unwholesome feeling in the heart and mind.

Ambrose Bierce wrote:

“Speak when you are angry and you will make the best speech you will ever regret.”

It’s akin to hate, and, in the words of Dr. Martin Luther King, Jr.:

“Hate is too great a burden to bear.”

So is anger.

Let’s jettison our anger. Restrain ourselves—take a few minutes to breathe, pray, or meditate until we are cool-headed and can address whatever problems face us from a place of reason, calm, and strength.

How do you counter anger, when you feel it looming?

Please click here to email me directly – I’d love to know your strategies.

Until next time –

Peace,

Eric

The SECURE 2.0 Act, signed into law on December 29, 2022, built on the foundational changes to retirement plans enacted in the Setting Every Community Up for Retirement Enhancement Act (SECURE) in December of 2019, made a few significant changes to the rules governing the administration of and contributions to retirement plans.

Initially planned to be effective beginning January 1, 2025 or later, the IRS has postponed some of these changes’ effective date until January 1, 2026.

Some of the changes will be newly effective; whether in 2025 or 2026; these include:

401(k) Plans

As we noted in December of last year, the 2025 contribution limit for 401(k), 403(b), and most 457 plans will rise from $23,000 in 2024 to $23,500 for employees under 50. For those over 50, a catch-up contribution of up to $7,500 annually is permitted – no change from 2024 – allowing you to contribute up to $31,000, assuming your employer-sponsored retirement plan is structured to allow catch-up contributions.

In addition, starting this year, for employees between ages 60 and 63, an additional catch-up of the greater of $10,000 or 150% of the 2024 catch-up limit of $7,500, or $11,250. This bring the total contribution permitted for those ages 60, 61, 62, and 63 to $34,750, or the base contribution limit of $23,500 plus the maximum catch-up for those ages of $11,250.
A further change for 2025 is that, for 401(k) plans established on or after December 29, 2022, employees must be automatically enrolled in the plans. Initial automatic contribution levels must represent at least 3% of compensation, but not more than 10%, with a 1% increase annually until the contribution level reaches at least 10% but not more than 15%.

Employees are required to be automatically enrolled but are not required to participate or to contribute – they can change their contribution rate to 0% if they choose.

SIMPLE IRAs

For SIMPLE IRAs (Savings Incentive Match Plan for Employees) the 2025 maximum contribution will rise to $16,500, up from $16,000 for 2024. If you are over 50, a catch-up contribution of up to $3,500 – unchanged from 2024 – is permitted.

In addition, beginning in 2025, SIMPLE IRA account owners between the ages of 60 and 63 can make catch-up contributions of the greater of $5,000 or 150% of the over-50 catch-up, which would be $5,250. For 2025, those aged 60-63 can make total contributions of $21,750 ($16,500 basic contribution limit plus $5,250 catch up for those 60-63) to SIMPLE IRAs. Cost of living adjustments will be made to this catch-up limit starting in 2026.

10-Year Rule for Inherited IRAs to Become Effective in 2026

The SECURE Act of 2019 initially established a rule whereby inherited IRAs, unless inherited by certain “eligible designated beneficiaries,” must be fully paid out within 10 years of the original account owner’s death. Previously, beneficiaries of inherited IRAs could withdraw the account’s funds over their lifetimes.

However, the new 10-year payout rule created significant confusion, resulting in appeals to the IRS, which has not been rigorously enforcing this provision and, indeed, has been forgiving some penalties for not withdrawing inherited IRA funds.

But this can has almost reached the end of the road. Inheriting owners of IRAs must begin taking their required minimum distributions by December 31, 2026 and, if they do not, a penalty of 25% of the RMD not taken will be imposed.

Eligible designated beneficiaries, who need not take distribution of inherited IRAs within 10 years are:

• The deceased account owner’s spouse.
• A disabled beneficiary.
• A chronically ill beneficiary.
• A beneficiary not more than 10 years younger than the deceased account owner.
• A minor beneficiary who is the child of the deceased account owner. The 10-year rule will become effective when such a beneficiary reaches majority.

 

Final Thoughts:

The changes impacting RMDs on inherited IRAs are postponed until January of 2026, though taxpayers are exhorted to “apply a reasonable, good-faith interpretation of the statutory provisions underlying the amendments.”

However, the special catch-up contribution allowance for those between ages 60 and 63 is effective for 2025., as is the requirement that all eligible employees be automatically enrolled into an employer’s 401(k) plan, if that plan commenced on or after December 29, 2022.

While the IRS will be penalizing those beneficiaries of inherited IRAs for not taking required minimum distributions from these accounts starting in 2026, confusion on this issue has yet to be entirely dispelled.

If you have any questions about an inherited IRA, or about leveraging these new contribution limits to maximize your retirement assets, reduce your tax liabilities, and plan for a secure and happy retirement, our vCFOs / financial planners are always here to help.

Please click here to email us directly – let us help you navigate the new changes – that’s what we are here to do!.

Until next time –

Peace,

Eric

For more on the SECURE and SECURE 2.0 acts, see:

SECURE 2.0 Enacted – Key Highlights

Payout Rules for Beneficiaries of Inherited IRAsHow the SECURE Act Changed Retirement Plans

The SECURE Act of 2019

While we at Rigby Financial Group advise all our clients to have wills drafted and to update them regularly for any life-changing event (e.g., the birth of a child or grandchild, divorce, marriage or remarriage, the death of a loved one), not everyone has a will in place.

In fact, some 43% of people aged 50 and older are on track to die intestate (i.e., the State will step in to divvy up the assets left behind). For those over 50 who live alone and are childless, the percentage is even higher, at 50%.

This can have surprising results – surprising, at least, for recipients who may be relations, however distant, but have never met – or, in some cases, even heard of – the relation from whom they are inheriting.

Since people cannot be expected to feel much grief at the passing of someone they have never known, and since everyone can be expected to react happily to an unexpected windfall, such beneficiaries are called “laughing heirs.” And why not? They are, after all, laughing – all the way to their bank!

However, it’s easy enough to avoid enriching those distant relations and/or connections you have no acquaintance with (such as your fifth cousin’s adopted son’s widow, perhaps).

Here are some suggestions:

Make a Will!

It’s of first importance to make your will. Have an experienced estate attorney draw it up for you – if you don’t have one, let us make a recommendation; we work with a number of excellent estate attorneys.

Choose your heirs carefully – if you are married and have children, that’s where you start. But there are other bequests – to charity, to friends, etc., which you may want to specify as well.

Keep your will up to date. Review it carefully on a periodic basis, even if you think nothing in your situation or wishes has changed. You may surprise yourself and want to make changes without having realized it before you actually look at your will.

In addition, review your will upon:

• The birth of a child or grandchild
• Divorce (yours or one of your beneficiaries’)
• Marriage, or remarriage (again, whether it’s your own or a beneficiary’s)
• The death of a loved one, whether they were one of your chosen heirs or not. Sometimes the death of someone close can change the way you want your assets handled when you are gone.

 

Designate Beneficiaries Wherever Possible

For many assets, including insurance policies, retirement accounts and many non-qualified investment accounts, you can designate beneficiaries. Appropriate beneficiary designations should be in effect for any asset that allows such designations (even some bank accounts can have beneficiaries designated for them).

Having designated beneficiaries (provided you keep such designations up to date, and avoid having accounts designated for beneficiaries who have either pre-deceased you or are no longer the people you want to inherit the account or insurance proceeds removes these assets from probate – and the courts governing estates concern themselves only with probate assets.

But accounts and insurance policies which can, but do not, designate beneficiaries must go through probate.

So, make sure you have your beneficiary designations in place and up to date at all times. Review them (along with all components of your estate plan) periodically, and upon life-altering events such as those listed above.

Have a Comprehensive Estate Plan

Especially if you have substantial assets to leave, we strongly urge you to have an estate plan (if you don’t already), and again, to ensure it is kept up to date.

An estate plan is the best way to ensure that all your assets are designated to those you want them to go to.

Begin with your virtual CFO, or other trusted financial advisor. We at RFG have been advising on estate and financial planning for many years and would be delighted to be your first step on your own estate planning journey.

Your estate attorney, too, is invaluable in ensuring your wills, powers of attorney, and any trusts you want set up are exactly as you want them.

Final Thoughts

While life will always be unpredictable – that’s part of its beauty – not everything needs to remain uncertain.

We highly recommend avoiding uncertainty as to where your assets will end up when you no longer have use for them.

Please – we urge you – make 2025 the year you visit your financial advisor and your estate attorney, draw up your will, your powers of attorney, and any trusts advisable for your unique, individual situation.

And if you already have these in place, make this the year you review them very thoroughly to ensure they are still as you need and want them to be.

Please click here to email us directly – Rigby Financial Group’s trusted financial and estate advisors are always at your service – that’s what we are here for!.

Until next time –

Peace,

Eric

Well, here they are – and maybe there they go, at least a couple of them. Tariffs figured significantly in President Trump’s campaign, and he wasted little time in springing them.

Of course, we’ve been hearing about them in prospect, and since President Trump announced, on February 1, 2025, which was a Saturday, that tariffs of 25% would be imposed on Canadian and Mexican imports, and of 10% on Chinese imports, effective at 12:01 AM Tuesday, February 4, we might be forgiven for channeling our inner Jan Brady (it dates, us, but don’t most of us remember, “Marcia, Marcia, Marcia!”).

We might also be forgiven for feeling a touch of mental whiplash. By the end of Monday, February 3, announcements from President Trump, Mexico’s President Claudia Sheinbaum, and Canada’s Prime Minister (still, if temporarily) Justin Trudeau confirmed that, following negotiations, concessions from Mexico and Canada on border issues, and agreements between these countries and the U.S., that the tariffs imposed on these countries have been paused for 30 days.

During that time, working groups on both sides, in each case, will work toward a more permanent agreement to avoid the imposition of these tariffs.

Predictably, China is another cup of tea entirely. More on that below.

However, there is much that needs to be hammered out, and 30 days is a short window of time.

And we strongly recommend you take precautions now to protect your business as much as possible:

How Can I Protect My Business Against Tariffs’ Impacts?

You may know, or you may not, whether your suppliers rely on Canadian, Mexican, or Chinese imports.

Find out.

Review all contracts carefully – if you have any questions, run them by your virtual CFO or other trusted business advisor.

This is especially critical to those with long-term pricing commitments.

Check the provisions in your contracts on force majeure and any other provisions which might open up the possibility of re-negotiation.

Get in touch with your suppliers:

• Discuss any options for sourcing products or raw materials either domestically or from countries not subject to tariffs.
• Negotiate with those suppliers affected by the tariffs – can they perhaps absorb the increased cost? Possibilities include price concessions and/or volume discounts.
• Discuss potential timing and logistical concerns (think increased U.S. Customs scrutiny) with your suppliers.
• Be in contact with logistics providers to ensure you dot every ‘i” and cross every “t” you can.

 

Cultivate and discuss your concerns and issues with transfer pricing experts, consultants with expertise in tariffs, and international tax professionals. Do this as soon as possible. They can potentially help you with rules on:

• Country of origin
• Product classification
• Exemption requests.

 

All these were critical in developing effective strategies for businesses back in 2018, when then-and-now President Trump imposed tariffs before.

Last, but not least in importance, ensure you have a consistent communication strategy – with your suppliers, your customers / clients, and your team. Every stakeholder concerned in this issue should have the same clear understanding of your stance and strategy.

Now, what response to President Trump’s tariffs did each country make? What concessions, if any, were offered?

Mexico

President Scheinbaum has announced the dispatch of 10,000 Mexican National Guard members to the U.S. border.

They will be charged with helping curb both illegal immigration and the inflow of fentanyl across the border.

Mexico has also agreed to accept reinstatement of the “Remain in Mexico” policy which requires asylum seekers to apply for that privilege from a nation outside the U.S., waiting there until their case has been adjudicated.

Canada

Prime Minister Trudeau is implementing a $1.3 billion border-security effort. This project was announced in December of 2024.

Canada has also promised to create a “fentanyl czar” to develop policies to address the drug’s impact, both internally and in regard to smuggling operations which send the dangerous substance across the U.S. border.

Canada has been ramping up efforts to increase border security over the past year (give or take a few months), and has shown significant progress with respect to illegal border crossings – the findings were shared with the new Administration here in the U.S.

China

China, of course, is a notorious non-appeaser. They hit back – and hard.

In response to the imposition of the new tariff, which did go into effect at 12:01 AM on Tuesday, February 4, 2025, the ruling Chinese Communist Party (CCP) announced that they will challenge this new tariff with the World Trade Organization.

In addition, China has imposed a retaliatory tariff of 15% on coal and liquified natural gas imported from the U.S.

New restrictions on exports to the U.S. of certain minerals used in manufacturing high-tech products have been imposed as well.

And China is initiating an investigation into Google, ostensibly in connection with concerns over its supposed “monopoly.”

We believe President Trump is playing a potentially dangerous game; we will not attempt (certainly not at this point!) to predict long-term “winners” and / or “losers.”

But tariffs so often result in higher prices that the real losers may be American businesses and consumers – at least in the short-term.

We urge you to work as diligently and swiftly as possible to “tariff-proof” you business, to the degree that is feasible.

If you have any questions on how tariffs might impact your bottom line, please give us a call – Rigby Financial Group is here to help you answer those questions and provide expert guidance.

But don’t neglect your other consulting needs with respect to tariffs – and we may be able to help you find the right contacts, too!

Please click here to email me directly – I and my team are always here for you!

Until next time –

Peace,

Eric

We’ve written before about preparing for the unexpected – and often in relation to weather. But in New Orleans, unexpected weather usually means hurricanes.

But from late Monday through Tuesday, January 20-21, 2025, New Orleans experienced record-breaking snowfall – it was at least 10 inches, and the previous New Orleans record was 2.7 inches – a record which had held since back in December of 1963.

The snow was accompanied by high winds which, along with colder than usual temperatures – below freezing – brought windchill factors into the truly dangerous range.

The Mayor declared a public emergency on Monday. Schools, government offices, roads, and many businesses were shut down (some were shut down for days). Monday, many celebrations and events planned for Martin Luther King, Jr. Day had to be cancelled.

We were told that much of the city might be snowed in for at least a couple of days. New Orleans, thankfully, does have some snowplows, but more had to be contracted from Indiana to handle this level of snow.

When I’m in Park City, Utah, during the winter, I expect significant snow. But I’ve been in New Orleans, and here, I don’t expect that – none of us does.

For the very good reason that it almost never happens.

So, how do we deal with this?

Preparation is Key

If you’re a close acquaintance of mine, you have likely heard me use the phrase, “Proper preparation prevents poor performance.” I use it a lot.

But I use it because it’s good advice – for myself, for my family, for my team. And definitely for RFG’s clients!

On Monday, ahead of the storm, grocery stores saw New Orleanians stocking up on groceries, baby supplies, water. One store had a sign above the carrots, reminding shoppers to get noses for the snowmen they’d build!

Homeowners caulked, covered siding in plastic sheeting, wrapped pipes.

Everyone cranked up their heat.

That’s preparation, absolutely. But the wisest did more, and before the threat of cold and snow.

Here are some things we can do to help prepare for any severe weather-related event:

• Ensure your home is in repair – and make sure the roof is in tip-top shape.
• Insulate – insulation protects against both cold and heat and you’ll be glad of it if/when electric power falls victim to a blizzard or a hurricane, no matter the season.
• Wrap your pipes – you won’t need to redo this often, and any time the temperatures (including windchill factors) drop precipitously, you’ll thank yourself.
• Buy water, fill any empty water jugs or bottles from your taps, fill your bathtub. If the event causes water to be shut off, you’ll need plenty – to drink, to wash with, to clean dishes, to flush the toilet.
• Have sources of light and heat on hand – preferably not electric, in case the event causes a power outage. Candles, flashlights (have a least several of these, keep a few around the house, one in each of your cars, and make sure batteries are all working), oil lamps (all of which provide at least a little heat, and some of which are designed specifically to do so), propane or gas heaters all operate without electricity (but be sure you follow all safety instructions!).
• Food! Ensure you have plenty on hand to feed your household – preferably for at least a week.

 

I would further recommend the purchase of a snow broom to clear your car. They aren’t expensive, and come in very handy in events like this New Orleans blizzard.

If you’re a business owner, set up all your team to work remotely. Even if you normally require office presence, sometimes it’s better and safer to let people work from home. Be ready to work from home yourself.

Because you do need to stay in business – and if roads are impassible but power is on, or if you all have had to evacuate, and your team and your business can still function if you and your people can still work.

In case of school closures, bring out the cards, the board games, the jigsaw puzzles. If power is knocked out, there’s no television, and too many of our children’s hours, in any event, are spent in front of what people used to call (with reason) “the boob tube” or other screens,

And, if you’re anything like me, make sure you have some good wine on hand to sweeten the experience you’ll be having.

Let’s hope we don’t approach the new snowfall record again for a very long time!

What preparations did you, my fellow Deep-Southerners, make for this snowstorm?

Please click here to email me directly – I’d love to hear your strategies!

Until next time –

Peace,

Eric

We advise every client who comes to us intestate to have a will drafted, and we ask those with wills to provide copies so we can review them.

But what, properly speaking, really should be left out of your will?

Here are some examples:

Jointly Held Property

Jointly held property will, upon your death, become the sole property of the other property owner(s). Some examples of property which may be jointly held are:

• Real Estate: many spouses own their primary residences in joint tenancy. Some also own investment properties together, though at Rigby Financial Group we recommend investment properties be placed in LLCs, preferably one LLC dedicated to each investment property owned.
• Brokerage and Bank Accounts: joint investment and bank accounts are common among married couples. Such accounts can often be given designated beneficiaries in the event they are not held jointly. Beneficiary-designated accounts will allow your loved ones access to cash prior to your will going through the probate process – don’t leave them caught short!

 

Assets With Designated Beneficiaries

Don’t include assets with beneficiary designations in your will – these designations on such assets take precedence over any testamentary disposal of those assets to the contrary:

Some examples of assets with beneficiary designations are:

• Life insurance policies
• Disability insurance policies
• Retirement accounts, such as IRAs, 401(k)s, 403(b)s and 457(b)s
• Some stocks and bonds may be “held in beneficiary”
• Investment and bank accounts can, in most cases, have a designated beneficiary

 

Provisions for a Beneficiary with Special Needs

Leaving assets in your will to a beneficiary with special needs is usually inadvisable, for two principal reasons:

• First, leaving assets directly to an individual with special needs can jeopardize governmental assistance (such as Social Security and Medicaid) – at least, until those assets are spent down to a small balance.
• Second, there are better ways to protect the future of any of your loved ones with special needs, such as a trust for their benefit.

 

Two types of trusts can be arranged for those with special needs:

Special Needs Trust – this is a first-party trust whereby assets are gifted to the beneficiary and placed in trust for his/her benefit. This trust protects the beneficiary’s rights to governmental assistance, but must:

• Be created and funded before the beneficiary turns 65.
• Provide that Medicaid is to be reimbursed for funds received by the beneficiary at his or her death or the termination of the trust, whichever comes first.

 

Supplemental Needs Trust – this is a third-party trust, funded entirely by the grantor’s assets (no assets owned by the beneficiary may be used to fund this type of trust), such as gifts or life insurance proceeds (naming the trust as beneficiary of the policy or policies in question), This trust also:

• Protects the rights of the beneficiary to governmental assistance.
• Requires no repayment to Medicaid.
• Allows any remaining funds within the trust no longer needed for the beneficiary’s welfare to be distributed according to the specifications of the grantor.

 

Your Business

If you are a business owner, your business may represent a significant portion of your assets. However, no matter how you want your business’s future handled, it’s best not to dispose of it via your will.

A much better way is to have a business succession plan in place, and to execute that plan prior to your planned retirement. We recommend this whether you plan your business’ succession as transferring control to:

• Family members,
• Existing partners,
• Management and/or other key employees, or
• And outside buyer or buyers.

 

You can also set up a trust to hold the business, in case events overtake you before you have a chance to execute your business’ succession plan.

Provisions Concerning Pets

We love our pets, they are members of our family, and, if you think you are likely to predecease your beloved animal companion, it’s natural to want to make provisions for yours.

However, under the law, pets cannot inherit a penny – they aren’t recognized as the individuals we understand them to be – legally, they are merely property.

If you want to ensure your pet is taken care of, you can either set up a trust for that pet’s benefit, or designate a guardian, providing funds to ensure the care you want for your animal.

Usually the latter is sufficient – while we are big fans of using trusts when appropriate, they can be expensive, and if you already have more than one trust, either set up or in prospect, we don’t necessarily recommend a pet trust.

Guns

If you are a gun owner, and especially if you have more than one firearm, we recommend not leaving them to your beneficiaries in your will – a public, legal document, subject to probate court scrutiny.

Gun owners, including those who inherit, are subject to federal and state requirements as to minimum age, mental capacity, and sometimes other restrictions.

We strongly recommend setting up a trust to dispose of any firearms you own, by which means you can avoid running afoul of the law.

Other Items to Leave Out of Your Will

Don’t include:

• Sensitive information, such as social security numbers, for either yourself or any beneficiary.
• Your last wishes and instructions. Leave guidance on the service you want, if any, or memorial celebrations, in a separate letter of instruction for those who will be tasked with this.

 

These are only some examples of what to leave out of your will. We urge you to consult with your virtual CFO or other trusted financial advisor, as well as your estate attorney, to ensure your will is updated and appropriate, and that any trusts appropriate to protect your family, your legacy, and your assets, are set up.

Please click here to email us directly – our expertise is broad and deep, and our commitment to helping you dispose of your assets according to your unique goals and wishes equally so.

Until next time –

Peace,

Eric

On Friday, January 10, 2025, the Internal Revenue Service released its proposed regulations (REG-101268-24) on catch-up contributions to employer-sponsored retirement plans (specifically 401(k), 403(b), SEP and SIMPLE plans), with particular reference to the changes to such catch-up contributions enacted under SECURE 2.0, signed into law as part of an omnibus package by President Biden on December 29, 2022.

The provisions of SECURE 2,0 were effective beginning January 1, 2023, but, per IRS prior guidance, the tax years 2023 and 2024 were considered “transitional,” and many provisions will be enforced for the first time in 2025.

Key highlights include:

Roth-Only Catch-up Contributions

For employer-sponsored 401(k) and 403(b) plans with participants earning over $145,000 in FICA wages during a given year, any catch-up contributions by those over 50 must be made via Roth contributions in after-tax dollars. The earnings threshold will be adjusted for inflation going forward.

However, such plans are not required by law or by the proposed regulations to offer such a Roth option.

The proposed regulations clarify that an employer-sponsored 401(k) or 403(b) plan need not offer Roth contribution options to participants. However, if a plan does not offer a Roth option, those participants who earn over the Roth-only catch-up threshold will be ineligible to make any catch-up contributions to their accounts, even if they are eligible on all other scores. Eligible participants earning less than that threshold may make catch-up contributions in pre-tax dollars.

Further clarification comes into play with earnings tied specifically to FICA salary/wages. An employer may choose to compensate a high-earning employee in other ways than FICA salary/wages. If a retirement plan participant receives compensation over the Roth-only catch-up threshold, but that compensation is not in the form of FICA earnings, the Roth-only catch-up contribution limitation will not apply.

In addition, for those who work for two or more employers and participate in more than one employer-sponsored retirement plan, the Roth-only catch-up threshold applies only to the earnings from each employer, not the participant’s aggregate earnings from all employers. It is, therefore, possible, under such a scenario, for an individual to earn over $145,000 in aggregate without triggering the Roth-only catch-up requirement.

It’s important to remember, though, that catch-up contributions, like all contributions to similar plans, are subject to the contribution limits governing plan type(s).

For example, the 2025 limit on contributions to 401(k) and 403(b) plans is $23,500, with a catch-up of $7,500 permitted for those over age 50. For those aged 60 to 63, the allowable catch-up increases to 150% of the otherwise available catch-up, indexed to the 2024 catch-up limit of $7,500 (this amount is unchanged for 2025) – or $11,250 – but if an employee participates in both types of plan, either with a single employer or more than one, contributions to both plans, including catch-ups, can amount to no more than $34,750 (for those between ages 60 and 63).

SIMPLE Plans

A Savings Incentive Match Plan for Employees (SIMPLE) can be either an IRA plan or a 401(k) plan.

For a SIMPLE 401(k) plan, as with any other 401(k), the participant may, but is not required to, elect to defer compensation. But for a SIMPLE 401(k), the employer must make fully-vested contributions of either:

• A matching contribution of up to 3% of each employees pay, or
• A non-elective contribution of 2% of each eligible employee’s pay.

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For both SIMPLE 401(k)s and SIMPLE IRAs, the 2025 contribution limit is $16,500, plus a catch-up of $3,500 for those over age 50. For 2025, there is again an additional catch-up available to those between ages 60 and 63. For these participants, this increased catch-up is the greater of:

• $5,000, or
• 150% of the 2025 over-50 catch-up limit, which comes to $5,250.

 

Note that while for employer-sponsored plans other than SIMPLE plans, the additional catch-up is based on the 2024 catch-up limits, SIMPLE plans use 2025’s limit. For the moment, this is a distinction without a difference, as the IRS did not increase the 2024 catch-up limits for 2025.

Of course, the proposed regulations contain much more than we have highlighted – predictably, this includes increased paperwork requirements for plan administrators.

There are special proposals that would govern the timing of the applicability of the final regulations for employer-sponsored retirement plans subject to collective bargaining agreements.

Not all the proposed regulations have even been articulated yet in REG-101268-24.

The IRS will hold a public hearing to discuss the proposed regulations at 10:00 AM on April 7, 2025. Written submissions must be received by the IRS no later than March 14, 2024. Telephone access to the hearing will be available. Notice of intent to participate in person must be received by the IRS by April 3, 2025.

If you are concerned about the impact of these regulations on your business or your retirement planning, please click here to email us directly – Rigby Financial Group’s experts are here to help!

Until next time –

Peace,

Eric

Today, January 17, 2025, marks Customer Service Day.

So, today, Rigby Financial Group celebrates our clients, colleagues and readers!

We pride ourselves on our customer service but are always looking for ways to improve it further. We aspire to provide the Four Seasons, white-glove version of service to all our clients, and our best information and pointers to our readership.

RFG celebrates with gratitude the opportunities we have to serve you – as client, as colleague, reader, as member of our community, online and in real life.

Serving you, solving your problems, resolving your questions, empowering your future, these all feed our passion for what we do.

So, please reach out to Rigby Financial Group for your answers and solutions – that’s what we’re here for, and we love doing it! Click here to email me directly – let us know how we can help you!

Until next time –

Peace,

Eric