Like aircraft flying at very low altitudes, the US tax code does strange things when very low incomes are involved. Most people know about, or have at least heard of, the earned income credit, which phases in quickly as "earned income" (which includes wage and self-employment income) rises, then phases out somewhat more slowly. I think that's bad program design, since it … [Read more...] about Basics of IRA recharacterizations
This week I wrote about the prepaid tuition plans offered by Washington state and Virginia. To close out the week I wanted to share a brief roundup of the other prepaid tuition programs still out there. First, take a look at the overview, then I'll offer some brief commentary: State Plan Premium (discount) to current tuition In-state public benefit In-state … [Read more...] about Prepaid tuition plan roundup
Yesterday I described the best prepaid tuition plan I know of, Washington state's Guaranteed Education Tuition plan, which allows you to place a tax-free bet on the trajectory of tuition inflation at Washington public universities. It's a weird investment vehicle, but you could see how it might play a speculative role in the portfolio of a sufficiently wealthy person, … [Read more...] about How to think about prepaid tuition plans: Virginia Prepaid529
I've written extensively about 529 college savings plans, which are a way for the wealthy to permanently shield intergenerational transfers of appreciated assets from taxation while also allowing those assets to internally compound tax-free. However, there's a second kind of investment vehicle conceived of by section 529 of the Internal Revenue Code: prepaid tuition … [Read more...] about How to think about prepaid tuition plans: Washington’s Guaranteed Education Tuition plan
I've been thinking lately about the role taxes play in calculating investment returns. It's not a question that's very relevant to most people, since for the vast majority of Americans investments are best made in accounts that offer tax-free compounding, whether that's an IRA, 401(k), HSA, or 529 account. But once you start to think about it, there are potentially … [Read more...] about Should long-term taxable investors consider dividend-minimal funds?