REQUIRED MINIMUM DISTRIBUTION AGE CHANGES:
The starting age for required minimum distributions for IRAs and pension plans went from 72 years old to 73 years old after December 31, 2022.
After December 31, 2032 that age changes to 75 years old. COLORADO 529 PLAN AUDITS:
I have received information from other Colorado CPAs that the Colorado Department of Revenue is auditing 529 plans. Some owners of Colorado 529 plans are being asked to prove that 529 plan distributions are being used for qualified educational expenses. If you are using a 529 plan to pay for higher education, be prepared to furnish receipts if requested.
2026 ESTATE TAX CHANGE:
You rarely hear of "estate tax”, because very few people die with more than $13 million. (The current estate tax exemption amount is $13 million.) Without any law changes, the estate tax exemption amount drops to $5 million in 2026. Dying with $5 million is significantly more common than dying with $13 million.
The estate tax rate is around 40%!
Married couples can reduce the risk of estate tax by using an exemption "portability election”. The "portability election” allows spouses to combine their exemption amounts.
Here is an example without a portability election. Assume a $5 million exemption amount. The husband dies first with no assets. When the wife dies, she has $11 million. The wife's estate pays $2.4 million in estate tax ([$11 million $-5 million]x.40).
Here is an example with a portability election. A portability election is filed within nine months of the husband's death. The wife's estate pays $0.4 million in estate tax ([$11 million
$-5 million for the wife $-5 million for the husband]x.4).
In this example the portability election saves the heirs $2 million dollars. Have a wonderful 4rth of July holiday!
If you have any questions, do not hesitate to contact me. Dave
David M. Kaufmann, C.P.A.
Voice: 720-493-4804 Fax: 303-796-7768
Mailing Address:
PO Box 700
Fruita, CO 81521-0700
Physical Address:
1466 Adobe Falls Way Fruita, CO 81521 Referrals are appreciated!
This newsletter provides business, financial and tax information to clients and friends of our firm. This general information should not be acted upon without first determining its application to your specific situation. Professional advice may be required. Before using any of the information supplied on this newsletter, please consult your professional tax advisor. For further details on any article, please contact us at 720-493-4804.
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