Roth IRA, 529, insurance: What’s best for college savings?
Clients can use a 529 college savings plan, a Roth IRA or insurance to save for college education costs, according to this article on MarketWatch. Each of these savings vehicles has pros and cons, and the best option depends on the clients' financial situation. For example, clients who owned a Roth IRA for at least five years are entitled to tax and penalty-free withdrawals for education expenses. They also have a broader menu of investments to choose from, compared with a 529 plan. However, Roth investors still owe income taxes on investment earnings and withdrawals to cover educations expenses can hurt their retirement prospects.
This tweak to the GOP health care bill will make Medicare less stable
GOP lawmakers modified legislation that would replace the Affordable Care Act to include provisions that would repeal a Medicare tax on high-earning taxpayers starting this year, according to this article from Money. The proposed changes were aimed at winning more legislators to support the bill, but could cost the federal government about $10 billion in lost revenue. “Here you have a bill where Congress is voting to actively undermine the trust fund, and it’s singularly for the purpose of providing tax breaks for the wealthy,” says an expert.
Senate should rein in states' retirement plans
GOP lawmakers in the House may have made a decision to shoot down the previous administration's policy that would have allowed states to run their own retirement plans, according to this article on Bloomberg. A state-run retirement program could have unfavorable outcomes, such as fewer employers' participation in 401(k)s, opponents say. The federal government should even regulate these programs in case some states insist. "Congress should clarify that states can offer these IRAs, but that their plans will come under ERISA rules. Devolution is often a good idea, but this time Congress should say no," the opinion article concludes.
'Gig' workers falling behind on retirement savings
Some 40% of self-employed workers polled by advocacy group Small Business Majority claimed that they are not saving in an IRA or other retirement account, according to this article on CNBC. These workers are not contributing to a retirement plan either because they don't earn much or they don't get their paid regularly, says an expert with the group. "Not knowing if you'll have a really good month or a really bad month makes it difficult for them to save on a predictable basis."
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