Tax Reform Impacts Worth Discussing by Year-End

Tax Reform Questions to Ask Your Advisors Before the New Year 1. Should we create and prefund a 529 plan? Each benefactor–whether parents, grandparents, or mentors-can now prefund up to five years of 529 contributions gift-tax free. That adds up to $75,000 per beneficiary (so a couple can open a 529 plan with $150,000). Consider whether preloading five years of each benefactor's $15k yearly gifting allowance in one step is a wise strategy for you, particularly now that the plans can be used for some primary or secondary schools in addition to college. 2. Am I taking advantage of the higher estate and gift tax exclusion? The exclusion doubled to $11.18M per person ($22.36M for married couples), but it is set to expire in 2025: you may want to revisit your planned gifts and discuss with your tax advisor about the best times and methods to take advantage of the higher exclusion. 3. Should I review my estate plan? Pay close attention to the titling of your assets. Also ask whether your home state is one that has

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Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors does not provide tax or legal advice. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.

*Please consider the investment objectives, risks, charges, and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest.

  • Section 529 plans are subject to enrollment, maintenance, administrative, and management fees and expenses.
  • Nonqualified withdrawals are subject to federal and state income tax and a 10 percent penalty.
  • College savings plans offered by each state differ significantly in features and benefits. The optimal plan for each investor depends on his or her individual objectives and circumstances. In comparing plans, each investor should consider each plan's investment options, fees, and state tax implications.

An investor should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other state benefits, such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's 529 college savings plan.

This information is provided for educational and illustrative purposes only.


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