The Z Group

Attention Business Owners: Did you know the Supreme Court has taken away a popular succession tactic? On June 6, 2024, the Supreme Court ruled that life insurance proceeds used to buy a deceased shareholder's stock MUST be included when valuing a corporation for estate tax purposes. What does this mean for business owners? • Your estate could owe more in taxes • Common succession strategies may be in question Don't let this ruling catch you off guard! Here's what you need to do: • Meet with your financial professional, estate attorney, and tax professional ASAP • Review and update your corporate agreements • Get a professional valuation The landscape has changed, but opportunities for your business and legacy remain. If you’re a business owner or know someone who is, make sure they speak to professionals who can help navigate these new changes. Remember, several factors affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments. So, there is much to consider when it’s part of your succession approach

Happy Holidays to you and your family! During this festive season, we cherish our most meaningful connections and spread joy throughout our communities. Whatever traditions you celebrate, may your holidays be filled with happiness, laughter, and time spent with those who matter the most. Wishing you and your loved ones a wonderful holiday season and a bright start to the New Year.

As 2024 wraps up, it's a great time to reflect on what we've learned and prepare for the year ahead. 1.) Market Volatility: Strong overall performance, but with plenty of ups and downs—highlighting the value of staying focused on long-term goals. 2.) Fed's New Direction: Rate cuts to support the labor market have wide-reaching effects, proving how impactful the Federal Reserve's impact is on financial markets. 3.) AI's Rise: The rapid adoption of AI has reshaped industries, driving both opportunities and challenges for investors. 4.) Global Events & Market Sentiment: Unexpected events can quickly sway markets, underscoring the need for adaptable strategies. 2025 will be a year of both new opportunities and challenges. Staying informed will, of course, be key to making the most of what lies ahead. We’ll do our best to continue to share insights and keep you updated as events unfold.

Ever wondered if you've left money behind in old retirement accounts? You're not alone! Recently, we learned about someone who uncovered thousands of forgotten retirement money from previous employers. How? By simply reaching out to their past workplaces. Take action now: • Review your resume to make a comprehensive list of all your past employers • Create a simple form letter requesting information about potential retirement accounts • Send the letter to HR departments or plan administrators of each former employer • Contact them to follow up Remember, it's YOUR money. Don't let it get lost in the shuffle of life's changes. Have you ever rediscovered a forgotten account? Share your story below!

Legacy is more than financial assets—it’s the values, traditions, and memories we pass down, the pieces of ourselves that live on. For many, this time of year can also bring the weight of loss and the absence of loved ones. Yet, the true power of a legacy is in how it continues to shape us, even when those who created it are no longer here. Here are a few ideas families have shared that may inspire you to start some new traditions: • Family Recipe Book: Collect cherished family recipes and print them in an 'Official Family Recipe Book.’ • Annual Family Reunions: Gather regularly at a favorite spot to strengthen bonds and create lasting memories. • Volunteer Together: Each Christmas, pick a family in need of support and teach the value of giving back. • Holiday Crafting or Baking: Bake the same sweets or craft ornaments each year to create tangible memories. The most important legacies are built on love, traditions, and unforgettable experiences—those precious pieces that live on beyond us. What traditions do you hope will continue with future generations?

TRUE or FALSE . . . Healthcare costs are one of the largest expenses most retirees will face. It is TRUE! Healthcare is often a significant and inadequately projected expense. Many people wait until retirement to understand their healthcare options, often because they’re accustomed to employer-sponsored plans. This delay can lead to inadequate savings and uncertainty about covering these significant expenses. Key Considerations, according to a 2024 study by Fidelity: • Healthcare costs continue to outpace general inflation, driven by longer lifespans, medical advancements, and increased demand. • Medicare starts at age 65, but it has gaps that necessitate considering supplemental insurance for broader coverage. • Home healthcare and nursing facilities can be costly. Strategies that anticipate extended care can help. • Documents like a medical power of attorney and living will are critical to managing healthcare decisions and letting your wishes be known. Our Take: Healthcare options are often complex and confusing, so early preparation is key. A well-structured strategy can help you remain prepared and informed throughout retirement.

Attention parents with multiple 529 accounts! We recently encountered a situation that serves as an important lesson: A parent used funds from their daughter's 529 to pay for their son's college expenses, assuming the accounts were interchangeable. However, the daughter's account was overfunded, while the son's was underfunded. The result? The withdrawal was treated as a non-qualified distribution! Key takeaway: While you can transfer funds between 529 accounts or change beneficiaries, consider working with a financial professional who understands 529 plans and can help navigate these complex rules. A 529 plan is a tax-advantaged college savings plan. Before choosing a plan, it's important to consider not only the state tax treatment but also any associated fees and expenses. Availability of a state tax deduction will depend on your state of residence, as state tax laws and treatment may vary from federal tax laws. And as this parent learned, if you make non-qualified distributions, earnings will be subject to income tax and a 10% federal penalty tax. If you have more questions, a tax, legal, or accounting professional may be able to provide you with some real-life advice.

As the year winds down, here are 7 year-end tax ideas to consider: 1.) Check your retirement contributions to your 401(k), IRA, and HSA limits. Are you hitting the limits? 2.) Charitable giving: Have you considered donating appreciated securities and other options? 3.) Investment portfolio review: Talk with your financial professional about any rebalancing that may be needed and if there are any tax-loss harvesting opportunities. This post is not a replacement for real-life advice. Consult your tax, legal, and accounting professionals before modifying your tax strategy. 4.) Business owners: Now is a great time to review estimated tax payments and determine whether you need to purchase any equipment. Your tax professional may also help here. 5.) Estate management check-up: Have you utilized annual gift exclusions? Is your trust funding on track? 6.) Roth conversion opportunities: Have you analyzed potential long-term tax benefits? 7.) Review required minimum distributions (RMDs): Don't forget inherited accounts! Here are some housekeeping items to remember: 1.) Once you reach age 73, you must begin taking required minimum distributions (RMDs) from your 401(k), IRA, or any other defined contribution plan in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. 2.) If you spend your HSA funds on non-qualified expenses before age 65, ordinary income taxes may apply, and it may result in a 20% penalty. But, after age 65, you may be required to pay ordinary income tax if the funds are used for non-qualified expenses. Also, keep in mind that contributions are exempt from federal income tax but, in some cases, are not exempt from state tax. 3.) To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a 5-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner's death. The original Roth IRA owner is not required to take minimum annual withdrawals. Questions? Your financial future is worth the conversation.

Important update: The IRS has finalized regulations on the 10-year rule for inherited retirement accounts. Key points to understand: 1.) Two versions of the rule: If the account owner dies before the Required Beginning Date (RBD), beneficiaries have 10 years to distribute the entire account. If death occurs after the RBD, beneficiaries must take annual distributions AND empty the account within 10 years. 2.) The RBD is generally April 1st, following the year the account owner turns 73. 3.) Good news: There's a penalty waiver for missed 2024 distributions. Potential strategies to consider: • Leaving retirement funds to beneficiaries in lower tax brackets • Converting traditional IRAs to Roth IRAs • Using Qualified Charitable Distributions for those over 70½ • Beneficiaries: Think about timing your distributions over the 10-year period to optimize your tax situation. These changes may impact your long-term financial and estate strategies. It might be time to review your approach to see if it aligns with these new regulations and optimizes your legacy goals. Some housekeeping items to remember: Once you reach age 73, you must begin taking Required Minimum Distribution (RMDs) from a traditional IRA in most circumstances. Withdrawals from traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a 5-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner's death. The original Roth IRA owner is not required to take minimum annual withdrawals. Questions about how this impacts your specific situation? Let's discuss.

Did you know last year, on Giving Tuesday, U.S. Donors gave $3.1 billion, according to a 2024 report by Neon One? 1.) What is Giving Tuesday? • A global movement celebrating generosity • Follows Black Friday and Cyber Monday • Encourages giving back to causes you care about 2.) Why it matters: • Neon One said 34 million adults participated last year • Supports countless charities and communities worldwide Giving Tuesday reminds us of the power of collective generosity. Questions about how to incorporate charitable giving into your financial strategy? 💬 Let's chat