How does the federal budget act affect retirement plans?

The Bipartisan Budget Act of 2018 will affect hardship distributions, multiemployer plans and income tax returns for individuals over 65

Jon VoglerTime to read: 3 min

On Feb. 9, President Donald Trump signed into law the Bipartisan Budget Act of 2018 (the BBA), a two-year budget agreement that increases federal spending and funds the government through March 23. The BBA includes several budget provisions that affect retirement plans. So what do they mean to retirement savers? Let’s explore the key provisions in greater depth.


TCJA: An unintended consequence for 401(k) hardship withdrawals?

Amendments to application of ‘safe harbor’ standards for hardship distributions are under scrutiny by retirement groups

Jon VoglerTime to read: 2 min

Sometimes when new tax laws, such as the recent Tax Cuts and Jobs Act (TCJA), are enacted, there are so many moving parts that unintended consequences may arise in practice. This seems to be the case with respect to a revision to the personal casualty loss deduction under Internal Revenue Code Section 165, which will impact 401(k) plans and 403(b) plans that follow the “safe harbor” standards for allowing participants to receive hardship distributions.

The hardship distribution safe harbor regulations include a list of events that are


Show your love with a 529 contribution

This Valentine’s Day, consider the gift of college savings for a special child in your life

Time to read: 2 min

In the beginning, Valentine’s Day was associated with romantic couples only, but in recent times the day is seen in a much larger perspective. Now, people take the opportunity to wish a happy Valentine’s Day to anyone they love, including friends and family. The idea is to celebrate love, and in that spirit, I believe the best Valentine’s Day gift for a special child in your life is a 529 contribution.

Here’s why.


Using 529s for K–12 costs: Five things to consider

Tax reform has expanded the scope of 529 plans. Is your saving strategy ready?

Time to read: 3 min

529 savings plans aren’t just for college anymore. Due to changes in federal tax law passed by Congress in 2017, families with children in grades K–12 can now take federal tax-free withdrawals of up to $10,000 a year to pay for tuition at an elementary or secondary public, private or religious school.1 Whether K–12 tuition will qualify for state tax benefits is determined on a state-by-state basis.

This can be a valuable benefit for many families — contributions to a 529 account grow tax-deferred, and withdrawals are tax-free as long as they’re applied toward qualified educational expenses.1 But, making sure your money can potentially last from the first day of kindergarten to the last day of college requires a diligent and consistent saving strategy. Otherwise, families may find themselves with a shortage of college funds after using their savings on elementary through high school costs.

Below are five things to keep in mind as you consider using 529 funds for your little ones.


College savings: This holiday season’s perfect gift

Is your family calling you for kids’ gift ideas? Point them toward your child’s 529 plan.

Time to read: 2 min

The holidays are nearly here again, and many new parents will be fielding the first of many requests for gift ideas for their young children. From grandparents, aunts and uncles to godparents and family friends, there’s no shortage of loved ones looking to brighten your child’s holiday with a standout present. Are you ready with a good answer? You won’t see it advertised in your Sunday paper circulars, but I believe this season’s most extraordinary gift is also the most enduring one — the lifelong gift of a college education.

Think outside the (toy) box


How could tax reform impact your college savings?

What you need to know about tax reform and education savings plans

Jon VoglerTime to read: 2 min

The tax reform process has drawn national attention for its proposed corporate and individual tax cuts, as well as the potential deduction and rule changes intended to raise revenue to at least partially offset them. We recently touched on the retirement-related effects of these proposed revisions. Now, let’s consider the possible effects of tax reform changes on education savings plans.

The tax reform bill passed by the House of Representatives on Nov. 16 would make changes to both 529 plans and Coverdell accounts. The tax reform bill from the Senate, which was passed by the Senate Finance Committee on Nov. 16, but has not been brought before the full Senate for a vote as of this writing, would also revise 529 plans. Let’s explore the key implications on both types of savings plans.