Do you have children on your holiday list? Think beyond the traditional retail offerings.

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Consider financial gifts that can bestow benefits for many years to come.

 

 

Some financial gift options you might consider:

  • S. savings bonds. While paper bonds are a relic of the past, you can gift “electronic” bonds by purchasing them through the U.S. Department of Treasury website (www.TreasuryDirect.gov).
  • IRAs (regular or Roth). For 2015, you can contribute the lower of $5,500 or the earned income of the child. An early financial start can produce amazing benefits from compounded interest accumulated over several decades.
  • Stocks or mutual funds. Equities are a good way to introduce a child to the investment world. If you give appreciated securities to an adult child or grandchild, your gift could allow the child to enjoy beneficial capital gain rates when the shares are sold.
  • Vintage stock certificates. Vintage framed certificates are available for many companies. A historic or collectible stock certificate can provide a colorful reminder of the importance of investing for the future.
  • Postage stamps or coin collection kits can provide years of enjoyment and form the basis for a life-long hobby. Consider starting a child’s collection with an official U.S. Mint proof coin set for the year the child was born.

Please call us if you would like to review the tax issues related to any of these financial gift options, especially if you are considering a larger amount.

PTO contribution arrangements can help prevent the year-end vacation-time scramble

post-it-819682_640From the Thanksgiving kick-off of the holiday season through December 31, many businesses find themselves short-staffed as employees take time off to spend with family and friends. But if you limit how many vacation days employees can roll over to the new year, you might find your workplace to be nearly a ghost town as employees scramble to use their time off rather than lose it.

A paid time off (PTO) contribution arrangement may be the solution. It allows employees with unused vacation hours to elect to convert them to retirement plan contributions. If the plan has a 401(k) feature, it can treat these amounts as a pretax benefit, similar to normal employee deferrals. Alternatively, the plan can treat the amounts as employer profit sharing, converting the excess PTO amounts to employer contributions.

A PTO contribution arrangement can be a better option than increasing the number of days employees can roll over. Why? Larger rollover limits can result in employees building up large balances that create a significant liability on your books.

To offer a PTO contribution arrangement, you simply need to amend your plan. However, you must still follow the plan document’s eligibility, vesting, rollover, distribution and loan terms, and additional rules apply.

To learn more about PTO contribution arrangements, including their tax implications, please contact us.