Friday Financial Five – June 17, 2016
Friday, June 17, 2016
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: Massachusetts Business Rankings
See how Massachusetts stacked up.
Massachusetts has 2015's 28th highest insurance premium penalties for high risk drivers, according to a WalletHub report.
Mass is behind Colorado and New Mexico who come in at 26 and 27 spots respectively while Mass is ahead of Tennessee and the District of Columbia who rank 29 and 30 respectively.
Massachusetts ranks 14th overall in the category of DUI conviction annual premium increase with an amount of $756.
Massachusetts ranks 20th overall in the category of speeding over 20 mph annual premium increase with a total of $261 while ranking 21 overall in the category of two accidents annual premium increase with a total of $1,364.
Massachusetts has been ranked as the 5th most eco-friendly state in the country, according to a recent study by WalletHub.
Mass ranks tenth in environmental quality and fourth in Eco-Friendly Behaviors landing them in 8th overall.
Mass is behind Minnesota and New York who are in the fourth and third spots respectively, and in front of Washington and New Hampshire who come in at the six and seven spots.
Small Business Friendliness Grade: D+
The Economist grades states on an A+ to F grading scale for its small business climate. Massachusetts ranks near the bottom of the nation, joining New Mexico and New York in receiving D+ grades. 9 states scored worse than a D+ in the Economist rankings.
Overbearing bureaucracy and excessive licensing is stifling small business in America.
Forbes ranks each state in business costs, economic climate, and growth prospects.
The most damning in the commentary:
Massachusetts’ business costs, including labor, energy and taxes, are the highest of the 48 contiguous states—only Hawaii is higher—at 20% above the national average.
ChiefExecutive.net ranks each state in taxations and regulations, workforce quality, and living environment.
The most damning in the commentary:
Taxation and regulation are always the key barometers. Massachusetts and Oregon are the worst.
ALEC ranks each state in economic performance and outlook.
Although Massachusetts ranked low in economic performance, a forward-looking forecast is based on the state’s standing in 15 important state policy variables. Some of these variables include top marginal personal income tax rate and sales tax burden.
#18 Free Enterprise
Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.
Massachusetts's reputation as a hotspot for science and technology endures in this year's rankings. The commonwealth is a center for STEM jobs and university research and development, ranking 4th and 2nd, respectively, in those two categories. It also ranks 6th as a center for high-tech establishments. Massachusetts is taking aggressive steps to bolster economic activity with high-impact university-industry R&D projects and new tools for tech-based startup companies.
The Pew Charitable Trusts
#45 The Pew Charitable Trusts
The Pew Charitable Trusts ranks each state in job growth and job creation.
Massachusetts added 38,368 jobs in 2014.
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