The Saver’s Match Program
The Department of the Treasury and the IRS have issued guidance regarding replacing the current saver’s credit on form 1040 with a retirement account match for low-income individuals. The match would be 50% of the first $2,000 contributed to a retirement account as reported on the 1040, up to $1,000 total. This amount, much like the existing credit, will phase out as income rises. This change effectively moves some tax refund dollars from individuals who were already making retirement contributions (such as into an IRA, Roth IRA, 401(k) or 403(b)) directly into their retirement accounts. It appears the match may be made directly into a new form of an IRA that is low-cost. The website for finding institutions that offer such accounts is expected to be up and running by January 1.
530A Accounts Employee Contributions
Last week the IRS announced regulations for employee contributions to 530A accounts. In addition to the employer being able to make up to $2,500 in contributions to an employee’s dependents 530A account, employees can make up to $2,500 in total annual contributions to dependents 530A accounts through a Section 125 plan. These contributions would be excluded from an employee’s gross income (like 401(k) contributions) but wouldn’t add to the basis of the account. However, it is an opportunity for employees to reduce income at their own tax rate and have the child convert at theirs if they do a Roth conversion later on. This would be subject to the employer setting up the ability to do this through a Section 125 plan.
U.S. Debt
The Gross U.S. debt has surpassed $40 trillion this week, reaching a threshold that is well over the U.S. GDP in 2025 of $31 trillion. Tax breaks, higher interest payments on existing debt, tariff refunds, and Department of Defense spending are all drivers of the rising debt burden. Investors responded by demanding higher yields on long-term government debt with the 30-year U.S. Treasury bond yield spiking to near its highest level in 20 years.
Gear Up for School
At the beginning of August, members of the Milestone team took a trip to Manchester, NH to participate in the annual Gear Up for School charity event, put on by the Hooksett Area Rotary Club. At this event, they stocked hundreds of backpacks with school supplies, providing kids with back-to-school necessities who wouldn’t otherwise have access to them. Our team was thrilled to connect with the greater Manchester community to support such a valuable cause and can’t wait to participate in more community events soon.
Taxes and financial planning are complex, but you don’t have to navigate them alone. A financial advisor can help you stay informed about tax law changes, optimize your savings and investments, and avoid costly mistakes. If you need tailored guidance, our team is here to help. Talk to an advisor or call (603) 589-8010 to integrate tax planning into your comprehensive financial strategy.
Disclaimer: This is not to be considered investment, tax, or financial advice. Please review your personal situation with your tax and/or financial advisor. Milestone Financial Planning, LLC (Milestone) is a fee-only financial planning firm and registered investment advisor in Bedford, NH. Milestone works with clients on a long-term, ongoing basis. Our fees are based on the assets that we manage and may include an annual financial planning subscription fee. Clients receive financial planning, tax planning, retirement planning, and investment management services and have unlimited access to our advisors. We receive no commissions or referral fees. We put our client’s interests first. If you need assistance with your investments or financial planning, please reach out to one of our fee-only advisors. Advisory services are only offered to clients or prospective clients where Milestone and its representatives are properly licensed or exempt from licensure. Past performance shown is not indicative of future results, which could differ substantially.
