OBBBA and Your Tax Strategies

Thank you all for joining us.

We’re delighted to have you with us today to talk about all of the new tax law changes and how you can use those strategies, to understand and, enhance your own personal situation.

I’m Cara Duckworth. I’m the managing director of client experience at Mercer Advisors, and I’m very pleased today to be joined by David Oh. David is the vice president of wealth strategy. And what that means is David takes all of the tax rules, the estate planning techniques, and helps us, make them effective for our clients. So, David’s gonna be diving into all of the details that I know you are all anxious to hear about, all nine hundred pages of the new tax bill, and hopefully making those understandable and, applicable.

It’s important to note that the information that we are presenting here today is informational and educational and should not be construed as, personal financial advice for your situation.

We know that we’re gonna be talking about a lot of concepts today that you may be interested in understanding how they apply to your situation, and, we would refer you to your own wealth adviser, to be able to discuss the specifics about how they apply to you.

So, David, I know we have so much to go through today. A lot of it is very technical, so I wanna give you the opportunity to jump in here and and talk about how we’re going to, structure this today and also about all of these important information that we’re gonna be giving to our clients.

Thank you, Kara. This is gonna be so much fun. Now, like Kara mentioned, the tax bill is around nine hundred pages. So if you’ve had a chance to dive into the material and you still feel somewhat confused or maybe some of the provisions aren’t as clear, do not worry because you are not alone. It was Albert Einstein himself who said that the hardest thing in the world to understand is the income tax. So you are in good company. So, you know, the latest tax acts was passed in July fourth of this year, and we’re gonna be highlighting some of the provisions here today.

Now while I was preparing for this presentation, you know, I was trying to think of a really catchy title, for our time together. And, you know, some of our colleagues, have referred to it, as a one big beautiful bill act. That’s not to say that we feel one way or another about this act. It’s just that this is what it was being referred to as it was making its way through the chambers of congress.

But I was really having a tough time because, you know, this, big beautiful bill act doesn’t really roll off the tongue. And so I’ve heard some colleagues refer to as the OBA bill using the acronym, and that’s just sort of sounded blah. You know, the the thing is, you know, the technical name of this actual bill is pretty long. Right?

We don’t really, see this, this acronym in the actual bill. If I wanna tell you the long form of this bill, it’s actually called, and I quote, to prove for reconciliation pursuant to title to house of house concurrent resolution fourteen. Right? And that’s sort of a mouthful.

And so I guess OPA is easier than that, but I prefer, you know, some other acronyms. I like calling it the OPA bill perhaps, or sometimes, you know, I’ll refer to it as OB three or OB trice. Whatever it might be, I’m gonna use these terms interchangeably, but just know that I’m referring to this latest tax act that we passed this year.

As we dive into this material, I want you to keep some things in mind. First off, a lot of these provisions are just an extension of what we passed in twenty seventeen. If you recall during Trump’s first administration, Trump one point o, they passed what was called the tax cut and jobs act. Actually, that’s the informal name.

They tried to name it that, and and the law failed because the name was too short. But we’re gonna call it the tax cut and jobs act for today. And the reason why we had to extend it is because we very rarely have enough votes to make tax laws permanent. Right?

Like, we need at least sixty in the senate, and we just don’t have that. Now that doesn’t mean that we can’t pass tax laws. You can pass it with a slim majority. It’s just that due to the budget reconciliation rules, right, you you need to have these tax bills expire with the budget, and that’s why they’re usually the provision sunset around six to ten years due to the Byrd rule and senator Byrd.

Right? You need to have it fit within a ten year budget.

And so, you know, with our latest tax act, it passed with a vote of fifty one to fifty with the vice president, casting that tie breaking vote. And to give you some context on the tax pen and jobs act about seven years ago, that thing passed fifty one to forty eight. And so, again, so we don’t have the requisite votes. And so when you read the actual bill, it’s gonna say that some of these provisions are permanent, quote, unquote, permanent.

But, know, in reality, a lot of these provisions could be changed as soon as the next administration potentially. And so I don’t wanna say that they’re, you know, permanent and set in stone. Right? The last time we did have, you know, long standing tax reform was in nineteen eighty six under the Reagan administration.

And back then, the vote on that tax bill was seventy four to twenty three. They did have enough votes there.

But since then, there’s just been a cadence and rhythm of just renewing, extending, or making new tax law along the way. So that’s sort of where we are here. Another important thing to note is that we don’t quite yet have all the guidance and regulation yet. So we’re still waiting that from the treasury.

And I wouldn’t hold your breath here because sometimes it takes years for the treasury to issue regulations on the laws that they just passed when sometimes they just altogether don’t issue regulations. So we are waiting on regulations. We’ll see if they come out. IRS notices are probably kind of going to come out as well too as long as, along with revenue ruling.

So as the although we have the actual bill passed, right, we’re gonna have to take a lot of the language at face value and then wait for more guidance along the way. And then finally, you’re gonna notice that as we get through the material, I’m gonna show you what the law was generally speaking, where what it was in the tax cut and jobs act, how the o b three bill changes it, if there’s any change at all, and then I’m gonna provide some common air commentary and some discussion on some takeaways, observations, and perhaps even some planning opportunities. So let’s get into it.

Well, before we start, David, I just wanna mention that if you’ve got questions, please submit them to the q and a. We’re certainly, wanting to answer as many questions as you have.

Many of you have submitted questions in advance as well, which been very helpful, but please use the q and a feature. It’s located on the bottom of your screen to submit any questions here. As we go along, we’ll do our best to answer them.

So we’re gonna cover individual tax rates as a whole. I’m gonna cover the rates and summarize them. We’re gonna go over the standard deduction, go over the new senior personal exemption as well too, so that’s interesting, and then round out this section with the alternative minimum tax.

Now the, you know, somewhat good news with the income tax rates is that they are staying the same. Right? You have, rates between ten at the bottom to thirty seven percent at the highest rate. And, you know, from the tax benefit job, like, this will just move on over with the o b three act as well too.

So there won’t be any change there. Now the brackets will slightly change. The numbers will go up due to inflation. Right?

The income range are gonna vary, but the tax rate themselves will, will remain the same.

I’ve also included the tax rates for trusts and estates. Now these are not for your trust for your revocable, you know, living, foundational estate plan, those types of trusts. Those really just follow your individual tax rates. Right?

The ones that help you avoid probate, help you for incapacity. You know, the one those basic, revocable trusts are not subject to these tax rates, but those non grantor trusts that are irrevocable, they do have a separate income tax rate and and separate tax brackets. And those, can see them on the deck as well too. Something important to know about trusts and estates is that, you know, when your trust incurs income, it actually gets to the top bracket with very little income.

Right? As much as, you know, fifteen to sixteen thousand dollars, you’re already in the highest bracket, which is, you know, pretty star it’s a star comparison and and glaring, difference between individuals. Now trustees, what they’ll do is, you know, in order to get around this, they’re gonna make distributions out of the trust so that beneficiaries can pay for the tax on their distribution according to their individual rates. That’s just sort of how trustees get around this pretty high tax rate with low income levels.

But I do want you to keep that in mind as we get go on with this presentation. And then finally, I listed the corporate tax rate here.

Back during twenty seventeen when the Tax Cut and Jobs Act was being discussed, the corporate tax rate was at thirty five percent. What the the bill did in twenty seventeen and, you know, it became law in twenty eighteen was a drop the corporate tax rate from thirty five percent to twenty one percent. Now I’m mentioning this not because I’m gonna go over all the business changes that, the act recently passed. I’m not gonna go over the international provisions either. I’m really gonna focus on the ones that affect your personal financial situation.

But I mentioned this because I’m going to allude to it in two other topics later on. The first one being the qualified small business stock, under section twelve o two. I’m gonna briefly reference it there. And then also for the qualified business income deduction under one ninety nine a. Right? It it somewhat affects those two, and so that’s why I mentioned it here. I just want you to keep that in mind as we go through.

But, David, I do have a question here from Lorna. She’s asking, when did these tax changes go into effect?

Great question, Lauren. You know, some of these will go into effect this year. You know, because of the budget reconciliation process that congress has to go through and, like, all the things you need to fit into the budget to make this tax law revenue neutral, Different provisions are gonna have different starting times and different expiration dates as you will see. So some of those as we go along the way, I’ll, you know, I’ll try to point out when do they start and then when do they expire because they’re not gonna have the same starting times or, finishing finishing times either.

Right? And I think that’s that’s why Albert Einstein thinks that income tax is more difficult than the theory of relativity. Right? So so that’s where we are here.

So it’s it’s somewhat of all over the place type of situation, which is why it’s very important to do the planning with your wealth adviser. This deck seems like there’s a lot on it, but I love illustrations. If I were to break it down simply, on the left side, you have your single filers. On your right side, you have married filing jointly.

As you go up on, the middle right in the middle section, you have all your tax rates, and on the outside, you have your income tax bracket ranges. Right? If you go from the bottom up and follow the colors, right, from the light purple to the dark purple, these are your capital gains tax ranges.

And then you’ll notice the dotted lines. This is your net investment income threshold. So if you make over a certain amount, like two hundred thousand dollars, then they’re, they’re also gonna tax you on your investment income, three point eight percent. So that’s that range too. So I like this illustration because it encompasses your individual tax situation pretty nicely and supports the prior slide.

So, before we move on to this, because I that little box that you had on that top of the pyramid about Roth conversions, getting a bunch of questions about that, kind of what is the impact on Roth conversions? What is what what does Roth conversion opportunity mean here from Jackie? Maybe you can talk about that a little bit.

Yeah. Good question. You know, I think that, you know, financial planning is just so important here at Mercer. And so, you know, when you sit down with your planner and your adviser, we should be taking a look at, the tax rates and finding those opportunistic periods of time where perhaps your income drops, and we can take advantage of the Roth conversion opportunity.

Now, because the tax rates have to stay the same, they’re gonna be indexed for inflation. They’re gonna go up. So the good news is that, you know, your planning from, you know, back since twenty eighteen is gonna still ring true. So I would bring out that plan, take a look at those, times in your, in your income earning years to see when you can actually convert to Roth.

Maybe take the tax set when your income is a little bit lower so that you can take advantage, of working up through these progressive tax rates along the way when you have to pay tax during the conversion. Good question.

Let’s head on to the standard deduction. So what is this actual standard deduction, and why is it a big deal? Why are we talking about it? Now the standard deduction, if you take a step back, is this freebie deduction that all taxpayers get.

No questions asked. Right? The government, if you earn money, the government is gonna give you this deduction. And if you take the standard deduction, then, you get to offset your income with this.

Right? And you don’t have to itemize. You don’t have to do anything special. You don’t have to fill schedule for it.

They’re just gonna give it to you. So, again, very low audit risk. It’s something that it’s a blanket deduction that everyone gets. And what we did in at the end of twenty seventeen, beginning of twenty eighteen is we essentially or congress essentially doubled the standard deduction with the Tax Cut and Jobs Act.

Right? And so as you can imagine, if you double this big deduction, it’s just more likely since it’s free to everyone that more people are gonna use it. So prior to the Tax Cut and Jobs Act in twenty seventeen, about seventy percent of taxpayers were utilizing the standard deduction. When you raise the standard deduction or doubled it, about ninety percent of taxpayers in our country now are utilizing the standard deduction, and that makes sense.

Right? If the if the IRS isn’t gonna question you for taking it, you don’t have to prove anything, and it’s difficult now to itemize to exceed the standard deduction, then why not take it? And so that’s what we have in here. When you look at o b three, what this new act did was it just extended these rules.

So for this year, single filers, the standard deduction will be fifteen thousand seven fifty.

You double it for married filing jointly, and then head of household is twenty three thousand six hundred twenty five. Something to take away from here is if you are regularly taking the standard deduction, and let’s say that, you know, you you possibly could itemize, but you’re just on the cusp every year between taking the standard or itemizing. Something for you to think about is accelerating your deductions from future years into the current year and then taking the itemized deductions for that singular year to increase your tax benefit. And then every subsequent year, since you’ve accelerated all your deductions, just take the standard deduction like you normally would.

In this way, you can maximize and optimize your tax situation by bunching your, your deductions together all at once, and concentrating them so, again, so that you can utilize the standard deduction in in future years as you normally would. So I’ll probably mention this technique again when we talk about charitable contributions, but that’s something for you to think about.

So I’ve got another question here about, standard deductions. David Carroll is asking, I know we’re probably gonna talk about the salt tax. I know that that you probably heard that on the news, the state and local tax deduction, we’ll address here in a minute. But she’s asking if you take the if you don’t itemize, meaning you’re gonna take that standard deduction, can you still take a deduction for state and local taxes?

It’s a good question.

Is this the state and local tax deduction, the SALT deduction has been a hot topic. To answer that question, no. You need to itemize to take that. And so what you’re saying is, you know, if you don’t wanna take the standard deduction, your your your position is I can itemize enough deductions to exceed that to better my tax outcome. And so part of that is taking the SALT deduction as well as some of the other ones that we’re gonna talk about in the next session, but you do need to itemize in order to benefit from that. Otherwise, you might as well just take the standard and and be done with it and simplify your tax life. So good question there.

Next up, we have the, I wanna talk a little bit about the personal exemption, and I know there’s something new for this year. But the personal exemption, you know, in general, right, before we get so excited about doubling the standard deduction, in in response to that as well, the government also took away our personal exemption was was was another deduction that you had based on your family relationships, like having kids as dependents, which is too bad because I thought that’s why we had kids to get the deduction. Like, especially at the end of the year, it’s just very good tax planning.

But, you know, it went away, and so that’s okay. But this was the whole idea of the personal exemption. As, you know, if you had a dependent, if you had a child, we gave you an extra deduction for it. That’s was suspended with the Tax Cut and Jobs Act.

O b three, makes this suspension permanent. So now the personal exemption is gone. However, right, due to this, promise on the campaign trail of no longer taxing Social Security, right, that stuff didn’t happen. Like, Social Security is still taxable if you meet income income thresholds.

So let’s be clear with that. However, to sort of partially address, this promise, they created a senior personal exemption where if you are sixty five and older, you are entitled to the senior personal exemption of six thousand dollars. Right? If you’re sixty five and older, this starts phasing out, however, when you start making seventy five thousand dollars of modified adjusted gross income.

It will begin to phase out then, and this is only in effect from this year through twenty twenty eight. Right? And so for the next couple of years, you’re gonna be able to enjoy the senior personal exemption, and then we’ll see what happens with the next administration. So, just keep that in mind for this new exemption.

So I’ve got a couple of questions on this senior exemption here and maybe specifics while we’re talking about the phase out. So someone’s asking assuming that someone had Philip’s asking if you have a, modified adjusted gross income above two hundred and fifty thousand dollars, is there any benefit, or is that completely phased out here with the senior personal?

Yes. So what I would say to that is for your for everyone’s personal, you know, income situation, what I would do is I would sit down with your adviser and really crank out, you know, what that implications would be for you with respect to this. You know, for joint filers, you know, again, I don’t know, Philip’s situation, but, you know, if you’re a joint filer, it’s gonna begin phasing at one fifty. I would I would imagine that, you know, I don’t know their situation.

I would imagine that most of that would phase out, you know, at two fifty. But again, you would probably have to take a look at the entire return, see what their investment income is, see all their sources, and see whether or not it would. But just, hearing it off, you know, a very surface level, I probably would think that most of it would be phased out. Steph?

Yeah. So certainly detailed tax planning there is is your friend. And one more question before we move on, related to you mentioned here that the Social Security benefits here remain taxable if you’re over certain income thresholds. But Steve is asking, can you get the additional senior deduction if your income is below the threshold, but you’re not collecting Social Security?

Oh, good question. Yes. You don’t have to be collecting Social Security. This was just to address a separate issue. Social Security will be separate. If you’re sixty five and over and you meet these income thresholds, yes, you are entitled to this exemption. So, good question there.

And so last one on this before we move on. James is asking, is the senior deduction in addition to the standard deduction?

Oh, good question. Yes. It is. So, you will get a personal exemption for seniors as well as the standard deduction.

You can take them together. So that’s a that’s a good good point to clarify as well. Great. Thanks.

Alright. So let’s go on to the alternative minimum tax, and then, you know, that’ll round out this particular section before we move on. The alternative minimum tax, if you think about it, holistically, like, why does the alternative minimum tax exist, and why is it there to complicate our lives? The alternative minimum tax exists for this reason.

If you make too much money and you take too much in itemized deductions, sometimes, like, you’d overly take a lot of deduction. Sometimes you end up paying less tax than a lot of people who make less money than you, and the government thought that that wasn’t fair. They’re like, wait a minute. You make a lot of money.

You took all these deductions, and now your tax liability is less than, you know, some people some taxpayers in the middle class. Right? And so in those situations, we wanna level the playing field. So congress came came up with this system of the alternative minimum tax, which is another way to calculate your tax liability.

So you may not be aware, but your tax situation is always subject to two formulas. You have your conventional formula, the one you see on your tax return, and, you know, it’s pretty straightforward. You calculate all your income, calculate all your deductions, then you have your taxable life you know, taxable income, and you multiply it by those rates on that chart in the instructions, and now you have your tax bill that you have to pay April next year. Right?

That’s the conventional way. But there’s a second formula that’s parallel and sort of invisible to that. And what they’re doing is they’re taking all your income. They’re not taking out most of your deductions, and they are, taxing you at flatter rates and with less tax rates as well too, like twenty six percent and twenty eight percent.

And they compare these two formulas, everyone. And if your formula for the AMT is more, right, that is the tax that you’re gonna pay. So if the second formula ends up being more than your first formula, we say you’re subject to AMT, and, of course, the government wants to collect, the higher amount. And so that’s what it means to be an AMT.

What did the Tax Cut and Jobs Act do? In summary, it just made it harder for taxpayers to be subject to AMT, which, you know, could be a good thing because it just simplifies your life. No one wants the news that they are gonna pay more tax.

And, again, dealing with a separate formula isn’t always fun. So Tax Cut and Jobs Act back in twenty seventeen, twenty eighteen made it more difficult to be subject to EMT. It gave you a bigger exemption, and, you know, the phase out was slower. What does o b three do in response to that?

Well, it extends the rules, but it’s slightly different. Right? It’s I would say it’s not as good. And the reason why is because this.

The, yes, the general rules are going to apply moving forward. They’re made permanent, moving forward. However, it’s a mixed bag because of this. You know, all those thresholds that were established in twenty eighteen, all the exemption amounts, right, they grow over time.

Right? So from twenty eighteen to twenty twenty five, they’ve been growing index for inflation. But what o b three does is it resets those exemption amounts back to twenty eighteen levels. So, yes, although the rules will extend, the threshold are gonna take a you’re gonna hit the reset button, and you’re gonna go back to twenty eighteen, which isn’t necessarily good because they’ve risen over time with inflation.

Well, they’re gonna be reset.

The second thing about AMT is as you, you know, as you enjoy this exemption, as you make more money, the rate in which you phase out of this exemption is also gonna accelerate. It’s gonna accelerate from twenty five percent to fifty percent. So, you know, that’s why I think it’s sort of mixed. Yes. The general rules will be extended, but, however, the thresholds are gonna go back to twenty eighteen, and you’re gonna accelerate out of them faster. So, again, alternative minimum tax can sometimes be complex.

Just know that, you know, my thoughts here is, you know, I I think that the permanent rules will make it harder for you to be subject to AMT, but perhaps not as good as what the Tax Cut and Jobs Act did.

So that’s your standard deduction. If you don’t take the standard deduction, then you’re gonna itemize. Right? And, you know, like I said before, when you itemize, you’re taking the position that I can add up more deductions that exceed the standard deduction so that I can pay less in tax, and that’s what we’re doing here.

So we’re gonna go over the state and local tax deduction. That’s been the hot topic. Terrible contributions are also changing too, so you wanna pay attention for that. Home mortgage interest deduction, I’ll briefly touch on this because not much has changed there. And then we’re gonna talk about limiting the itemized deductions, how, you know, they might be limited if especially if you’re in the highest income tax bracket.

So let’s tackle the SALT deduction. Do you remember back in twenty seventeen, especially in those high income state high income tax states as well as those states with high property tax, you know, there was a deduct there’s a deduction that you can take on your federal return, which is paying for these, you know, state income taxes and the property taxes. Well, that deduction used to be unlimited, and now, I mean, in twenty seventeen, what they did was they capped it to five thousand dollars per tax filer, ten thousand dollars per joint. And there was a, you know, pretty big uproar.

A lot of people were trying to scramble, you know, prepaying property taxes and trying to get their tax liability paid before the law changed, but that’s what we’ve been dealing with. We’ve been dealing with this ten thousand dollars SALT deduction chat for a while, which, was too bad for a lot of taxpayers who again had high state income tax liability. So as congress was discussing this this year, you know, they decided to increase this deduction to forty thousand dollars for twenty twenty five, and this is going to increase one percent annually until twenty twenty nine, at which point in twenty thirty, we’re gonna revert back to ten thousand dollars.

Right? As if this bill wasn’t confusing enough, you know, you’re gonna have to keep track of these timelines. Again, why is it like this? Why do they make, you know, all the start dates and the the ending dates different?

Again, budget reconciliation. We can’t afford to make all of these permanent, so some of them are gonna have to expire. The thing with this SALT deduction though is you begin to lose it if you make too much money. So as soon as you have five hundred thousand dollars of modified adjusted gross income, this thing is gonna phase out.

If once you hit that six hundred thousand dollar marker, then you’ve completely phased out and your deduction goes from forty thousand back down to ten thousand. If you go beyond that, your deduction will not go below ten thousand dollars, but that’s the range that I want you to keep track of, five hundred to six hundred thousand dollars, like that’s when it’s gonna start phasing out.

Something to think about here on from a planning standpoint and a takeaway. Yes. You know, ten thousand dollars, you know, a lot of taxpayers didn’t think that was enough. Forty thousand dollars might be okay, but if you make too much money, that’s gonna go away.

What are some other ways to get around this? Well, one of the ways is through pass through entities. You know, you can create a pass through entity and then pay the, the property tax and the state income tax through the entity on the entity level and then deduct that from your federal return. A lot of people thought that congress was gonna shut this down.

And they, you know, they they still might, but they didn’t address this in the bill. And they know that it exists. So that’s something that I want you to take a look at. Pass through entities are another way because entities enjoy their own salt deduction as well too.

And then non grantor trust. Right? A non grantor trust, trust enjoy their own SALT deduction as well. It involves estate planning implications though, but, you know, entities, trust, it’s a way to multiply the SALT deduction if you don’t have enough.

And so that’s the planning comment, with with the SALT deduction.

So just a just a question here on that too, David. You talked about strategies here, and, DDA, my apologies if I mispronounced your name, is saying several provisions, as you mentioned, expire in four years. How should you do long term planning based on that? What advice are you giving to our clients on strategy?

That’s a good question. You know, we are regularly subject to legislative changes, to, different, you know, regulations coming out. All we can do really is to plan for what the law is today. Right?

And be flexible enough with your planning so that we can change it moving forward. And so we’re always thinking about that. Right? Are we gonna, you know, take a technique?

Is it worth the hassle? Does it benefit you? And how flexible is it? Like, you boxing yourself in?

And so what we do and approach that we take is knowing what the laws are today, that’s how we’re gonna plan. Right? Because that’s what we have to work with. There’s no one who can predict, you know, what’s gonna happen in four years, ten years, or whatever, you know, time frame is down the line.

What we can do is we can plan for today and then have that planning as flexible as possible so that we can, you know, get in and get in it or get out of it, you know, collapse it or go into something else. And so that’s a really good question. I think it’s gonna apply to some of these other techniques that we’re gonna talk about. So that’s great.

And one last question before we move off on this. Walt is asking, is the SALT deduction separate from the standard deduction? So maybe just clarifying the difference between the two.

Oh, good question. So a assault deduction is an itemized deduction. So if you are taking the standard deduction, you’re saying, I’m not gonna itemize. Just give me the blanket deduction.

I will not fill out, you know, the schedule of deduction. I’m not gonna itemize anything. And so charitable contributions, you’re not gonna be, you know, taking if you take the standard. SALT deduction, you’re not gonna be taking when you take the standard.

Right? There there is a slight change to the charitable contribution deduction, so I think it’s a good way good segue into this because this one’s slightly different.

But generally speaking, if you’re gonna take the standard, you’re not gonna itemize, and assault deduction is a major itemized deduction. It’s a good question, Walt.

Now let’s get into some charitable contributions.

You know, like, I wanna take a step back and talk about the the charitable contribution deduction. If you remember in twenty seventeen, there were some changes to the amount that you can contribute to charities and, deduct from your adjusted gross income, your AGI. And back then, it would the amount was fifty percent of AGI you can deduct for cash gifts to charities in twenty seventeen. Well, what happened though with the Tax Cut and Jobs Act is it doubled the standard deduction. And when you double the standard deduction, less people are incentivized or less people benefit from giving to charity. Right? Because charitable contributions are itemized.

The number of or the percentage of taxpayers going from itemizing to the standard. Right? It was seventy percent taking the standard deduction. It got bumped up to ninety percent.

Less people have incentive to give to charity, and the government knew this. Like, congress knew this. They knew that less people were gonna itemize, less people are, encouraged to give to charity, so they bumped up this adjusted gross income limit. So it went from fifty percent in twenty seventeen to sixty percent with the Tax Cut and Jobs Act because they thought the charitable giving would dip, and it did.

You know, after the Tax Cut and Jobs Act charitable giving, dipped.

What OB three does is it makes a sixty percent adjusted gross income limit. It makes it permanent. Right? So as much as sixty percent of your income can be deducted if you give cash gifts to charities.

However, there’s a new change for next year, and this is gonna make your charitable giving perhaps less impactful because it’s gonna begin to set a point five percent floor on your charitable giving. So what does that mean? Right? It means this.

Take all of your charitable gifts, and then also take all of your income. Take your income and calculate half a percent of your adjusted gross income. Now take your charitable gifts. Any of those gifts that are below this half a percent of your adjusted gross income will not no longer be deductible.

Only the amount that you give above this point five percent AGI floor is gonna be deductible. So it’s gonna take a portion of your terrible giving. Right? The point five percent under your AGI, it’s not gonna count it.

So, you know, it’s gonna take everything in excess, and you’re gonna be able to deduct that. Right? So that’s the big change here. The other change is that, you know, if you if you don’t itemize, in other words, if you take the standard deduction, there there’s an exception here.

You can take an a thousand dollar additional deduction for charitable gifts, but they can’t be to donor advised funds. So, yes, you can get an additional gift to or additional tax benefit for for giving to charity even though you take the standard deduction. So this is a big deal. This is gonna change, you know, the impact of charitable giving to your tax situation.

With that said, there are some takeaways here for you to think about from a planning perspective. Number one, accelerate your charitable gifts to this year. Right? This doesn’t go until next year. If you want a bigger charitable deduction and you’re able to accelerate your charitable gifts, do it in twenty twenty five as opposed to next year when this floor is implemented.

The second thing I want you to think about is accelerating, your charitable gifts in those years that you want to itemize. And, again, I I call this bunching with the standard deduction section, but the the idea here is the same. Take all of your charitable gifts that you can take, focus on a singular year that you’re gonna itemize, and in subsequent years, just take the standard deduction because the government just gives that to you for free. Right?

You don’t have to give to charity at all to enjoy the standard deduction. So accelerate your your deductions, get all the charitable giving done in a particular year so that you can benefit and itemize that year, and then the rest of the years, you can take the blanket standard. And the third thing that I want you to think about is taking is making qualified charitable distribution. You know, once you turn seventy and a half, you can send, a certain amount of your retirement account.

And, again, it’s an annual amount that changes everywhere, indexed every year, indexed for inflation. But you can send it directly from your retirement account to the charity of your choice. Right? Cut the check and it goes out, and that amount doesn’t hit your tax return.

It doesn’t get calculated into your AGI. It’s not subject to the AGI floor of point five percent. It’s not subject to the sixty percent limitation that you have for cash gifts to charities either. So in that way, you can just bypass both of the floor and the cab and get, get money to the charities that you care about.

So those are some takeaways with the new laws, on the charitable contribution deduction.

We’ve got before we move on, just, actually quite a number of questions about this floor, that we talked about, that half a percent. Mainly, the most questions are about is that floor per donation or the total amount of donations that you do maybe to various organizations throughout the, throughout the year?

Yeah. Good question. You know, the tax return really is a reflection of everything that you’ve done during the year. It’s their snapshot.

All the money you’ve made, all the money deducted, all the gifts that you’ve made to charity. So it’s gonna calculate at the end of the year all of your AGI. It’s gonna establish that floor, and then it’s gonna look at all your charitable contributions, and then it’s gonna see which one, you know, how much of it exceeds the point five percent. So it’s not gonna be on a gift by gift basis.

You’re gonna tally all that up on the tax return, and then it’s gonna go from there. If you want an example, other way other places that it might apply, the medical expense deduction. Right? You can’t generally, deduct medical expenses unless it exceeds seven and a half percent of your AGS.

Same idea here except the floor is much lower. It’s gonna be at point five percent. So you’re gonna tally it up at the end of the year.

And then one last question here. We’ve talked about the we talked about the nonitemizers. So that means people who are taking the standard deduction can claim up to the thousand dollars, two thousand filing jointly, but they’re asking so that’s on that’s an additional, on top of the standard deduction. Is that correct?

That is correct.

Okay. And is that subject to the floor, that point five percent?

No. Because you’re not itemizing. They’re just gonna if you make a cash gift not to donor advised fund, you’re just gonna add that to your standard deduction, and you’re gonna be able to benefit from that, have a better tax outcome from that. Good question.

Great. Thank you.

Next up, home mortgage interest deduction.

The big news here is that there’s not much news at all. Not much change has gone here. If you recall in twenty seventeen prior to the tax cut and jobs act, you used to be able to deduct the home mortgage interest on a loan of of indebtedness of up to a million dollars.

On top of that, you can take your home equity of, like, a hundred thousand dollars and spend it on whatever you like, and you can deduct the interest on that loan as well too. So a million dollars plus a hundred thousand dollars of home equity spent on whatever you want. The tax cut and jobs act changed that. Right?

It it decreased the amount of indebtedness to seven hundred fifty thousand dollars, which again hurt those states with high property values because you need bigger loans out there. And it also did away with that hundred thousand dollar, free spend, you know, deduction for the interest off that loan secured by home equity. Obi three makes this permanent. So, again, we’re gonna have this it’s it’s gonna take the suspension of the rules, make it permanent.

So, again, we’re still at seven hundred and fifty thousand dollars. You still cannot take home equity as a loan and and deduct the, the interest off of that loan for the the hundred thousand either. But a new wrinkle is that you can take mortgage interest insurance premiums and deduct that with your mortgage interest. So, that’s added and that and that’s new.

So keep an eye out for that when you do your tax return.

And then finally, wanna talk about, limiting your itemized deduction. Again, I’m gonna go back to why this, why this came about, why it exists. But, you know, back, back again, before even the Tax Cut and Jobs Act, the whole idea is if you had a high income earner and they aggressively took and and I’m saying legally, they’re they’re aggressively taking itemized deductions, their tax liability ends up being very low. And, like, why is it fair that a high income earner would pay less tax than someone who made a lot less money than them?

So in order to address this, we had a, member of the House of Representatives from Ohio. His name was Donald Pease. He came up with this idea with we need to limit these itemized deductions to make it fair. And so that’s what we did.

And this limitation, we called it the Pease limitation, used to, limit the amount of itemized deductions you could take by a formula if you made too much money. That was in essence what happened. What the tax cut and jobs act did was it came in and they said, you know what? We don’t like this limitation.

We’re gonna get we’re gonna suspend it. And that’s what it did. The peace limitation was suspended.

The o b three bill came in, made that suspension permanent. So section sixty eight is now, you know, done away with for now. That suspension is permanent, but they replaced it with another limitation formula.

Now the formula is pretty complex. Essentially, what it says is if you are in the highest tax bracket, you you’re in the thirty seven percent, we’re gonna start limiting your itemized deductions. Right? And, you know, we can go over, the the complex formula offline and see how it affects your personal situation, but that’s essentially the the summary of this, of this limitation.

If you’re in the highest bracket, thirty seven percent, then we’re gonna limit it. So what’s the takeaway? What’s the planning technique here? Try to stay out of the thirty seven percent bracket.

Right? Take advantage of your retirement account, all of your employer benefits. Take a look at how your investments are producing income. Right?

Maybe consider some tax exempt vehicles, tax exempt investments, so take a look at that. And then try to shift your deductions into schedule c and e. These are your your business schedules. Right?

Schedule c for sole prop, schedule e for your pass throughs because deductions are not limited on these schedules. But once they hit your individual situation, then the the limitation will start applying. So those are some takeaways there on the limitation of itemized deductions.

So that’s round out that section. We’re gonna go ahead and move on to some additional extensions, some other topics that have that will continue on. And so these these are some exciting topics to go over here. I wanna start off with the qualified business income deduction under section one ninety nine a.

This is a new creature of the law or a relatively new creature of the law. It was created back in twenty seventeen with the Tax Cut and Jobs Act. And at the time, congress, in its infinite wisdom, decided that or determined that there were these special class of taxpayers that were severely disadvantaged, distressed, you know, the and they were in need of a, of a twenty percent deduction. Right?

Like, they were, the deck was always stacked against them. They couldn’t catch a break. And this special class of the taxpayers, the severely disadvantaged taxpayers, including your your doctors, your lawyers, and your real estate moguls. Right?

Like, these are the yeah. I mean, these taxpayers do enjoy this deduction.

But in all seriousness, like, why did we come up with this? Right? The reason why is because this. Earlier in this presentation, I alluded to a twenty one percent corporate tax rate, and that’s, you know, relatively low.

And the thing is with small businesses, like an s corp, LLCs, partnerships, sole props, what’s their highest tax rate? Well, they’re taxed at individual taxes. So the highest tax rate is at thirty seven percent. So if you compare a small mom and pop business, right, thirty seven percent, you compare it to a corporate tax rate of twenty one percent, how is that fair?

Like, how are you supposed to compete with that? And so in response to this disparity, congress is like, well, we should get another deduction for these small businesses. And so this is why they created one ninety nine a. And so if you take this twenty percent deduction, and there were some conversations about changing it as we were, as as the as congress was moving this bill through, the chambers, maybe as high as twenty three percent, but it remained at twenty.

If you take twenty percent off the highest in individual income tax rate, that’s still, you know, thirty seven percent, take off twenty percent. That’s still twenty nine point six percent. So, yes, it got better, twenty one percent versus twenty nine point six percent, but still not completely there. So, so that’s why it came about.

This is why we have it. The o b three bill extends the Tax Cut and Jobs Act rule for it. So now it’s still twenty percent. The slight change in here though is that the range in which you’re able to qualify for the QBI deduction is gonna increase.

And so what does that mean and how does it affect you? It’s going it means that more people are gonna be able to, qualify for it even if you make more money. So the range in in which you would be able to qualify for this deduction, the range used to be fifty thousand dollars for a single filer. Now it’s gonna increase to seventy five thousand dollars.

And for joint, the the range is gonna increase to a hundred and fifty thousand dollars, which, again, just means that, you know, you have more room to make income and still qualify for this deduction. And so that’s what’s gonna continue on here. You’ll notice it on your tax return. But again, I I suggest that you do some planning, make sure that you meet with your adviser to see how it, it affects your personal tax situation.

Next up, we have the wealth transfer tax exemption. This one’s near and dear to my heart because I’m an estate planning attorney by background. But the three you know, the trinity of your wealth transfer taxes include your gift tax, your estate tax, and your generation skipping transfer tax. And all of those exemption amounts were at thirteen point nine nine million dollars, per taxpayer. You would double that for for married.

And as this was, you know, being discussed in congress, just there was discussions surrounding whether or not we should get rid of it. Right? Like, John Thune is the senate majority leader. In all the pieces of legislation he throws out there, he wants to get rid of the estate tax.

It’s just something that he likes to do. Now, given that, and, you know, I think both proposals had this idea of eliminating the estate tax, you know, the chances of it really going away probably not so great. The estate tax has been, you know, successively running for the past hundred and ten years, and so getting rid of that would have been a pretty big deal. I know in twenty ten, it went away for a little bit, but for the most part, it’s been going pretty strong.

And so what we have here is with the o b three bill, the o b three act, we’ve increased the exemption from fourteen, about fourteen million per person to fifteen million dollars per person. So now, again, we just have an extension. Not much difference has been there, but, but what does this mean for our our personal situation? How do we plan for this?

What do we do?

For, for our taxpayers who are well above this exemption, right, far above the fifteen million dollars per person, planning stays the same. Like, all the techniques and strategies of gifting and all the different types of trust that you can utilize to mitigate that forty percent gift tax, that forty percent estate tax, and the generation skipping transfer tax, they’re all there available to you and you go on business per usual. Right? Like, you can still employ them. You should consider them. Again, because forty percent is is pretty high. It’s pretty significant.

For those who are under the exemption amount and, you know, you’re not really concerned about the wealth transfer taxes, then you should really focus on using estate planning for income tax situation. So my clients here who are gonna have a big liquidation event or if you have a concentrated position in a particular stock, charitable remainder trusts are a great technique to defer and mitigate your income tax situation. Or let’s say that you have, assets that have appreciated in value a lot and you don’t wanna sell it because you don’t wanna pay the tax, you can use estate planning to help you mitigate, the built in gain.

What you can do is you can gift assets through estate planning to a senior generation like a parent and have them hold on to it because when they pass away and they you reinherit those assets, all your capital gains disappear. We call this technique upstream gifting, and we utilize, the step up in basis under section ten fourteen in order to wipe out your income tax liability. So those are just some ideas there. With the huge, you know, exemption that we have per person, gifting, upwards may be a viable option.

Again, it’s not for everyone, but just something for you to think about, and I talk about it because it’s so difficult to get rid of capital gains.

So, David, as we’re talking about the wealth transfer tax, we got a question from Barry asking, are there any estate planning updates advised on this passing? And if I’m understanding what you’re saying is the numbers may have changed as a result of this new bill, but your advice is still we continue to find value in estate planning, in gift planning, and doing all of this regardless of what this number is. Am I understanding what you said correctly?

Yeah. That’s absolutely correct. You know, you know, it’s our it’s our position at Mercer that everyone needs an estate plan. So basic estate plan, needs.

You know, advanced planning deals with saving on taxes. All of those things that applied back when the exemption, when the exemption here today at fourteen million dollars, all of these same techniques we have, the same options will apply next year too. I mean, you know, the exemption will have increased the million dollars. Yes.

But, you know, if had we just gone on with a fourteen million dollar amount and if it was index inflation, we probably would have been close to fifteen million anyways. Not quite there, but we would have been there anyways. And so, you know, consider that. Right?

Forty percent tax at every generation in your family is pretty significant. If you can do something about it, and there are some, strategies out there that are pretty high reward, low risk, and, you know, and and we can help you with the administration of it, I think you should consider it. You know, I think you should consider it. Sit down with your adviser.

Let’s talk about it.

Great. Thanks. Speaking of capital gains tax, I wanna talk about qualified opportunity zones.

You know? And and, you know, we talk about these strategies because, again, like, it’s it’s so difficult to get rid of capital gains tax because the government already feels like they’re giving us a tax break on it. Hey. Just hold the asset for a year, and we’re gonna give you lower tax rate.

Why should we help you or allow you to get rid of it altogether? Right? And that’s why when we come up with these strategies like upstream gifting, like charitable remainder trust, like qualified opportunity zones, it’s worth mentioning again because getting rid of capital gains tax is so difficult. So when you sell on any asset, like, when do you owe the tax on that thing?

Right? You sell it for a gain. You realize the gain. When do you have to pay tax on it?

You have to pay tax on it April of next year. Right?

Even if you extend your return, you owe the tax on April fifteen. That said, wouldn’t it be nice if we could take the proceeds from the sale and just, like, defer the defer the payment of that tax? That’s what qualified opportunity zones allow you to do.

Now back in twenty seventeen under under the tax cut and jobs act, what, we had created was this, sort of program where each state in this country would recognize neighborhoods and areas within their state that could be designated as a qualified opportunity zone. And if you were to invest in these different neighborhoods and areas that were up and coming and they just required some capital infusion to get their local economy up and started, then we were gonna give you some tax benefit for it. And oftentimes, these, this infusion of capital and these investments came in the form of real estate. Right? And so if you went into one of these, opportunity zone funds and, you know, you sold something, you have a hundred and eighty days to enter into an investment.

And if you held these investments long enough, we’re gonna give you a tax break. Ten percent if you held it for five years, another five percent if you held it for an additional two, so fifteen percent if you hold it for seven. And, oh, by the way, you don’t have to pay your tax bill until you get out of it, plus any appreciation of these investments that you’re going into are tax exempt. Like, from a tax perspective, this is a win win.

Win win win win. Right? Some of the dangers of qualified opportunity zone funds include, you know, how do you know if the investment’s gonna do well? You you don’t.

It’s like any other investment. You can’t guarantee its success. Right? So if it goes to zero, what good are the tax benefits?

None. Right? Also, fees. Right? As you go along the way, have to pay fees and the illiquidity.

Right? You have to hold these in for pretty long time periods. Right? Five years, seven years, ten years to take full advantage of all the tax benefits.

So so those were sort of the downsides, but at least they were available. Obi three makes, what what Obi three is doing is as this first batch of qualified opportunity zone funds expire, again, they were started in twenty eighteen, they’re gonna expire at the end of twenty twenty six. A new batch is gonna be introduced January one of twenty twenty seven, and from there on out, there are gonna be new rolling opportunity zone funds every ten years. And again, so the rules are pretty similar.

If you have a pretty if you realize a pretty big capital gain, you can think about investing in one of these zone funds to get into, you know, probably a real estate investment that helps you defer, your capital gain. Something new, however, for this new round that’s coming up is that you can go into rural areas now. And if you go into a rural area, because sort of the the knock on qualified opportunity opportunity zone funds where, hey. You’re just going into a hot area anyways, and you’re deferring tax to get all these tax benefits.

But, you know, it’s a it’s a really popular neighborhood. It’s not really one that’s in need of capital. Like, there was some criticism about that, but, which I think led to this sort of change of, hey. If you go into a rural area and you hold it for long enough, we’ll give you a thirty percent, break on your capital gains if you hold it long enough for that five year holding period.

So there’s gonna be a distinction there. This isn’t coming out till twenty twenty seven, so we have some time. And, also, all the rules around it aren’t quite, you know, all there yet. You know, there’s regulations that aren’t out.

Guidance isn’t out. I’m sure there’ll be more or help there will be more released as they come out more details to come. But qualified opportunity zone funds are coming back. And so that’s the takeaway here.

So that rounds out some, you know, provisions that have been extended. Let’s talk about some new provisions. A lot of these we heard on the campaign trail and, you know, how are these gonna be treated? What are the rules around them? So let’s go over some of the new provisions that the o b three introduces.

First off, no tax on tips. Right? So the prior rule is that tips are usually taxable. You self report them.

You have to pay tax on them. They’re a form of income. Congress can tax you on them. Right?

That’s the old rule. Here with the l b three, no taxes are, no tips are taxed to a certain limit. Right? And the amount of tax that you can sort of avoid in the form of tips is twenty five thousand dollars.

So long as you don’t make, you know, over a certain income threshold, and that income threshold is a hundred and fifty thousand dollars for single filers, three hundred thousand for joint. So once you start making over that amount, this deduction that you get for these tips that you’ve accrued will start going away. Now this is going to, last until December thirty first twenty twenty eight, which is when, you know, the current administration, is going to end. So I don’t think it’s any coincidence that they timed it like this, but this is one of those that is going to sunset pretty soon, right, the end of twenty twenty eight.

So there’s no tax on tips.

You know, it’s something that was promised and, you know, this is what we this is the result of of the discussions that congress has had. Now before you go out and attempt to recharacterize all your income as tip income, something to keep in mind is that, it has the rules explain that it has to be employment that customarily receives tip. Right? So you can’t just take your nine to five and, you know, tell your employer that I wanna consider some of these tips.

Right? It has to be employment that usually generally customarily receives tips. So that’s something to keep in mind there. Also, service fees.

You know, whether or not service fees are going to count as tips, are in question.

You know, I think the the code says that you need to have tips be on a voluntary basis. And if you go in with a party more than six, a lot of these services, service fees are mandatory. They just put it on the bottom line and they’re you know? So it’s not really voluntary in that nature, so you’re gonna have to keep an eye out for that.

It’ll be interesting to see what employers do. Right? Like, do they keep the service fee and allow, you know, the allow their employees not to enjoy this tax benefit, or do they get rid of it and allow employees to enjoy this benefit? We’ll have to see.

The other thing employers need to worry about is how are they gonna report this income on their tax forms? W twos, ten ninety nines, how is the the amount of tips going to be reported for those employers? Something that they’ll have to figure out with the forms, but that’s the whole, summary on no tax on tips.

Likewise, no tax on overtime. The deduction amount is half that that we just saw for tips, but you can get a deduction for overtime pay of up to twelve thousand five hundred dollars, twenty five thousand for joint. And again, the the phase out income threshold is the same, which is why I’m grouping them together, a hundred and fifty thousand dollars. Once you start making above that amount, then it’s gonna begin to phase out.

So, similar to, the deduction on tips, it’s gonna expire December thirty first twenty twenty eight. So, the takeaway here is, again, keep an eye out for this on your tax forms. You’re gonna have to report this properly on your return to get this benefit. How will your employer report that as well too?

How if you prepare tax returns on your own, take a look at your w w two, take a look at your ten nine ten ninety nine, that could be changing. So when you prepare your return for things like tips and overtime, you’re gonna probably have to fill that in a separate field. So keep an eye out for that.

And then next up, we have no tax on new car loan interest. This one’s exciting because who doesn’t like the smell of a new car. Right? So for new cars, if you purchase one, you can get a deduction so long as you meet certain rules.

Right? And these rules include, you know, final assembly in the US. Now this ten thousand dollar deduction is for is a total sum. So if you can’t just go out there and buy five new cars and expect ten thousand dollars of deduction on the loans for these cars for each automobile.

Right? This is a totality thing. For all of those new car loans that you have, you can deduct up to ten thousand dollars of that loan interest. It’s avail available for taxpayers who make a hundred thousand dollars of income and begins to phase out.

Two hundred, a hundred and fifty thousand dollars for joint.

But this is new. Right? And so you get this deduction. Planning takeaway for this is interesting.

We are gonna, if it’s not out already, we’re gonna release an article soon comparing, you know, using this new deduction and buying a new car and comparing it with by just buying a certified pre owned car. And I think, you know, at the end of the day, just buying a used car due to the depreciation still wins out, but keep an eye out for that article as well too. You know, it’ll compare your financial implications of going either path and, you know, what it means for you. So this is new for the the o b three act.

Scholarship credits. This is an interesting one. As you as we discussed earlier on with charitable contributions, that’s gonna be limited. You know, we’ve always had sort of that cap on adjusted gross income of sixty percent or prior to that fifty percent.

But with that new point five percent AGI floor, it sort of complicates things. It makes your charitable giving a little bit less effective. And so this is something new to help address, you know, scholarship, contribution. So what you can do is instead of taking the charitable contribution, if you go directly to a scholarship organization, and, again, you know, states are gonna have to comply with certain rules with the treasury to qualify for this program.

But if your state does, you can go give to a scholarship program instead of, you know, giving to the school, go to an actual program, give for the, the the purpose of the organization, you can get up to a seventeen hundred dollar credit, that’s applied to your taxable income just for this particular carved out scenario. Right? So, usually, we would go through the charitable contribution route. You gave to a scholarship organization.

This is something new. This is something separate. And, again, it’s a tax credit. It’s not a deduction.

And so instead of going through the charitable contribution route, take a look at this. If your state applies, that’s the big thing. You know, take make sure that your state participates in this before you do make this contribution. Otherwise, you might be stuck with the charitable contribution deduction.

And then, I wanna talk a little bit about Trump accounts. These are, you know, essentially IRAs for youngsters. Right? Like, for kids, we’re gonna follow IRA rules.

But, essentially, what this, new provision of the o b three does is it gives you a thousand dollars if your child is born between twenty twenty five and twenty twenty eight. Now there are several rules involved, and so I’ll try to summarize them here. You need to claim this account before your child turns eight. The maximum amount that you can contribute in totality to this account is five thousand dollars per year, and this thing will grow like an IRA.

Like, it’s gonna grow tax exempt.

If you withdraw from it, then, again, you’re gonna be penalized, and then you’re gonna have to pay the income tax on it as well too. Soon, employers are gonna be able to contribute to them as well to up to twenty five hundred a year. That will not be part of an employee’s income. However, it will count towards the five thousand dollar maximum contribution that you can do it. So my thoughts on the Trump account, if you qualify for it, if you have a child born, you know, in this year to twenty twenty eight, take advantage of it. Go claim it. The logistics of it are, you know, still up in the air, but I imagine that you would go to a financial institution, show, you know, proper documentation to claim it, open up an account.

Most likely, this account will be, invested in a low cost mutual fund, probably tracking a major index like an S and P or, you know, the whole market, and then it can grow tax free until, you know, and and until your youngster is ready to take it out.

My planning takeaway here is I still like five twenty nine plans. You know, definitely claim the thousand dollar the government’s giving you in seeding these accounts with a thousand dollars. Definitely claim it. But for future contributions, five twenty nine plans are something for you to think about just because, you know, there isn’t any, limit that you can put in per year.

I mean, there’s a limit overall for the plan, but not for a particular year. And, also, I like them over UTMA accounts as well too because UTMA accounts, you have to pay tax on. Five twenty nine plans, you don’t. So I think the grow the uses of five twenty nine plans and the flexibility of them are just growing over time more and more, and I’m about to talk about them next.

But, but I would consider that. You know, sit down with your advisers, see which one of these accounts for your youngster makes sense. I just tend to lean towards five twenty nine plans more than the others.

And we just have one minute left here, and I know we’ve got a lot of things, left to go through. So, I thought it might be helpful just to say for everyone now, we have recorded this.

We will be posting it on our website, Mercer Advisors dot com, on our insights tab for the replay so that this information will be available to you. In addition to that, we have recorded all of the questions that we haven’t had an opportunity to get to, and we’ll be forwarding them with if we if you put in your name, we’ll be forwarding them to your adviser so that they can follow-up with you.

And we also have other materials available. We’ll be doing an overview summary of, some of all the provisions that we talked about today as well that were will be available to you to review.

And, David, there’s so much. This is such dense con content.

And so I I think that you will agree with me that our best advice on out of this is this is a time to really do detailed tax planning with your adviser. Understand your personal situation, how all of these things apply to your situation and have the best possible outcome for you.

Absolutely. There’s so much to talk about. And just to get your arms around this thing, I think, you know, meeting with your adviser just to discuss how it affects you personally. But, but it’s very exciting. You know, the planning opportunities are there, and so, I I would encourage you to to speak to someone at Mercer.

Thank you all for attending. We appreciate your interest, and, we’ll have more to come. Thank you so much.