Friday Financial Five – June 17, 2016

Friday, June 17, 2016

Dan Forbes, GoLocal Contributor

Obamacare premiums expected to rise

The Affordable Care Act was meant to stem premium increases that were wreaking havoc with participants’ budgets. According to a study by Kaiser Family Health, 2017 will see the opposite result for many insurers’ plans. “Silver plans” are lower cost and are the most common plans selected. According to the study, the two lowest cost Silver plans are increasing by an average of ten percent. (Providence happens to be one city expecting a sizeable decrease). This double digit percentage rise doubles the five percent increases in 2016. Fewer insurers are expected to participate next year, with United Health the most publicized company exiting many exchanges.

Gift tax break for 529 plans

For those wondering about maximum contributions to 529 plans, each state has its own ceiling. When contributing on behalf of a child or grandchild, the transfer is subject to gift tax rules. The current annual gift tax exclusion is $14,000 per recipient, or $28,000 for a joint gift by a married couple. Gifting more than that amount will reduce your lifetime exemption from gift and estate taxes. Fortunately, tax rules allow a one-time contribution to a 529 plan that is treated as if the money was given over five years. A person can contribute the equivalent of five years' worth of contributions in one year (up to $70,000 or $140,000 from a couple) without gift tax issues. There can be no additional funds given for five years without affecting gift and estate tax exemptions, but those amounts might cover a large percentage of a beneficiary's education costs.

Congress mulling 529 flexibility

The BOOST Saving for College Act was proposed by two senators and appears to have bipartisan support. The bill incentivizes lower income families to save for college. Within income limits, lower earners would be able to take an income tax credit and employers could match up to $1,000 without that match counting as gross income. Most importantly, excess 529 savings could be rolled into a Roth IRA for the participant or the beneficiary, as long as the account is ten years old.

Brexit decision looms

In less than a week, Britain will hold a referendum on whether to “leave” the European Union or “remain”. Those favoring “leave” are against immigration and the EU’s expanding bureaucracy. The “remain” crowd believes leaving would weaken the value of the pound and stunt economic growth, taking over a decade to recover. It could be a situation where undecideds come out strong in the end to keep the status quo and remain in the EU.

CFP Board promotes Father’s Day financial literacy

While being adored by children and spouses this weekend, dads are encouraged by the CFP Board to do their part to promote financial literacy to children. The concepts discussed seem pretty rudimentary, but the country continues to lag in mastering even the most basic financial principles. This includes the concepts of saving and spending, as well as differentiating the use of credit from having the funds available in the bank to purchase. The CFP Board also suggests making money fun by allowing kids to plan a part of a family vacation within a budget, forcing decisions to come from financial awareness.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].

Related Slideshow: Oregon Business Rankings in US

See how Oregon stacked up against the other states in the U.S.

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ThumbTack

Oregon gets a C+ for small business friendliness from Thumbtack, in conjunction with the Kauffman Foundation.

According to the ranking:

Overall friendliness C+

Ease of starting a business B
Ease of hiring D+
Regulations D
Health & safety D
Employment, labor & hiring D
Tax code D+
Licensing C-
Environmental D
Zoning D+
Training & networking programs B+