Contribution Limits
IRS 2026 limits
Contribution Limits
Key annual limits for retirement, health, education, and estate planning. Reflects IRS Rev. Proc. 2025-28 and SECURE 2.0 super catch-up provisions.
401(k) / 403(b)
$23,500
+$11,250 super catch-up (60–63)
IRA / Roth IRA
$7,000
+$1,000 catch-up (50+)
HSA family
$8,550
+$1,000 catch-up (55+)
Annual gift exclusion
$19,000
$38K with gift-splitting
Retirement accounts
401(k) / 403(b) / 457
$23,500
+$7,500 catch-up (50+)
+$11,250 super catch-up (60–63)
IRA / Roth IRA
$7,000
+$1,000 catch-up (50+)
Subject to MAGI phase-outs
SEP-IRA
$70,000
25% of comp, lesser of
SIMPLE IRA
$16,500
+$3,500 catch-up (50+)
+$5,250 super catch-up (60–63)
Solo 401(k) total
$70,000
Employee + employer combined
Defined Benefit (415)
$280,000
Annual benefit limit
Health & education
HSA individual
$4,300
+$1,000 catch-up (55+)
HSA family
$8,550
+$1,000 catch-up (55+)
FSA health
$3,300
$640 rollover max
FSA dependent care
$5,000
Per household ($2,500 MFS)
529 annual exclusion
$19,000
5-yr front-load: $95K/donor
QCD (IRA → charity)
$111,000
2026; age 70½+; satisfies RMD
Estate & gift
Annual gift exclusion
$19,000
Per donee; $38K gift-splitting
Lifetime estate / gift
$15,000,000
OBBBA permanent (indexed for inflation)
GST exemption
$15,000,000
Permanent under OBBBA
Medical / tuition
Unlimited
Paid directly to provider
2026 thresholds
Phase-Outs & Tax Thresholds
MAGI ranges where deductions and contributions phase out, plus key tax rate thresholds and RMD rules.
MAGI phase-out ranges
| Vehicle / deduction | Single / HOH | MFJ | MFS |
|---|---|---|---|
| Roth IRA contribution | $150,000–$165,000 | $236,000–$246,000 | $0–$10,000 |
| Trad IRA deductibility (plan participant) | $79,000–$89,000 | $126,000–$146,000 | $0–$10,000 |
| Trad IRA deductibility (spouse covered) | N/A | $236,000–$246,000 | N/A |
| Student loan interest | $80,000–$95,000 | $165,000–$195,000 | N/A |
| Child Tax Credit | $200,000–$240,000 | $400,000–$440,000 | — |
| Section 199A QBI deduction | $201,750–$251,750 | $403,500–$453,500 | — |
| Passive activity loss (RE Pro) | $100,000–$150,000 (active participation; $25K max) | ||
Key tax rate thresholds
| Rate / tax | Single | MFJ |
|---|---|---|
| Top ordinary income (37%) | > $640,600 | > $768,700 |
| 20% LTCG / qualified dividends | > $545,500 | > $613,700 |
| 3.8% NIIT threshold | > $200,000 | > $250,000 |
| 0.9% additional Medicare | > $200,000 | > $250,000 |
| AMT exemption phase-out begins | $155,900 | $1,247,450 |
| Social Security wage base | $176,100 | |
RMD rules — SECURE 2.0
| Birth year | RMD age | Notes |
|---|---|---|
| Before 1951 | 70½ / 72 | RMDs already in progress |
| 1951–1959 | 73 | SECURE 2.0 age increase |
| 1960 and later | 75 | Full SECURE 2.0 benefit |
| Roth 401(k) | None | No RMDs post-2024 |
| Inherited IRA (non-EDB) | 10-yr rule | Must empty by year 10; annual RMDs if original owner had started |
Medicare premium surcharges
IRMAA
2026 tiers based on 2024 MAGI. Two-year lookback applies — model year-end MAGI every November before large income events.
Base Part B
$185
Per month, per person
Top tier Part B
$629
>$500K single / >$750K MFJ
Max annual penalty
$5,573
Per person at top tier
Lookback year
2024
MAGI sets 2026 premium
Surcharge tiers
| 2024 MAGI — Single | 2024 MAGI — MFJ | Part B monthly | Part D surcharge | Annual add'l (single) |
|---|---|---|---|---|
| ≤ $103,000 | ≤ $206,000 | $185.00 (base) | $0 | $0 |
| $103,001–$129,000 | $206,001–$258,000 | $259.00 | $12.90 | ~$1,007 |
| $129,001–$161,000 | $258,001–$322,000 | $370.00 | $33.30 | ~$2,460 |
| $161,001–$193,000 | $322,001–$386,000 | $480.90 | $53.80 | ~$3,791 |
| $193,001–$500,000 | $386,001–$750,000 | $591.90 | $74.20 | ~$5,124 |
| > $500,000 | > $750,000 | $628.90 | $81.00 | ~$5,573 |
Planning strategies
MAGI reduction tools
QCD: removes IRA distribution from gross income
Roth conversions: front-load before Medicare at 65
Municipal bond interest not included in MAGI
Charitable bunching offsets large income years
Tax-loss harvesting reduces net capital gains
IRMAA cliff watch
Two-year lookback: 2026 premiums set by 2024 MAGI
Life events: file SSA Form SSA-44 to appeal
Roth conversion can push MAGI to next tier — model
RMD + SS + investment income: triple stack triggers T2+
Project MAGI in Nov/Dec before year-end moves
Conversion + IRMAA
Best conversion window: ages 60–64 (pre-Medicare)
At 65+: size conversion to stay within tier
MFJ $240K: $18K more → Tier 2, ~$1,600/yr penalty
Breakeven vs. Roth benefit: typically 3–5 years
Model with eMoney/MoneyGuidePro annually
SS benefit taxation
Up to 85% of SS taxable: combined income >$44K MFJ
Combined = AGI + nontaxable interest + ½ SS
Roth income does NOT count toward combined income
QCD reduces AGI, directly lowers SS taxation
Tax torpedo: large RMDs trigger SS taxation cliff
Advisory intelligence
Decision Frameworks
UHNW-focused guidance on when to use and when to avoid key planning strategies, with a CGT advisor verdict on each.
Side-by-side analysis
Strategy Comparator
Select a planning fork for a structured side-by-side breakdown.
Optimization framework
Social Security
Claiming strategy, spousal and survivor planning, SS + Roth conversion interplay, and solvency risk for stress-testing.
Age 62 benefit
70–75%
Of FRA (permanent)
FRA (born 1960+)
Age 67
= 100% of PIA
Age 70 benefit
124%
+8%/yr delayed credits
Break-even vs. 67
~80–81
Age delay to 70 wins
Claiming & strategy
Claiming age impact
Age 62: 70–75% of FRA (permanent reduction)
FRA (born 1960+): age 67 = 100% of PIA
Age 70: 124% of FRA — maximum benefit
Delayed credits: +8%/yr from FRA to 70
Early reduction: ~6.67%/yr first 3 yrs, 5%/yr after
Break-even analysis
Age 62 vs. 67: break-even ~age 77–78
Age 67 vs. 70: break-even ~age 80–81
Expected longevity past 80: delay to 70 wins
Health concerns or short expectancy: claim early
Survivor benefit: higher earner should always delay
Spousal & survivor
Spousal: up to 50% of higher earner's PIA at FRA
Survivor: up to 100% of deceased spouse's benefit
Lower earner claims early; higher earner delays to 70
Divorced (10+ yr marriage): eligible for spousal
Widow(er): survivor at 60; own benefit at 70
SS + Roth conversion
Delay SS → draw down IRA → Roth conversion window
Roth income doesn't count toward SS combined income
COLA: SS is inflation-indexed; bonds/cash are not
Dual benefit: lower RMDs + maximize SS
Model with planning software annually
Decision checklist
1. Assess health and longevity expectation honestly
2. Model survivor impact — higher earner always delays
3. Identify bridge income (IRA, brokerage, pension)
4. Project IRMAA from pre-SS Roth conversions
5. Run break-even at 3–4% real discount rate
Solvency risk watch
OASI depletion projected ~2033–2035 (SSA trustees)
At depletion: ~79% of benefits payable from payroll
WEP/GPO repealed — SS Fairness Act (2025)
Stress-test plans at 75–80% SS benefit level
Means-testing risk for higher-income clients
Children's investment accounts
Investing for Children
Comparative guide to UTMA/UGMA, 529, Trump Accounts (530A IRA), and custodial Roth IRA — covering tax treatment, FAFSA impact, contribution rules, and the right vehicle by client profile.
Trump Accounts launched July 4, 2026 — rules updated
UGMA / UTMA
Custodial brokerage. Most flexible — no restrictions on use of funds. Irrevocable gift once contributed.
Annual limitUnlimited (gift tax rules)
Gift exclusion$19,000/donor (2026)
Tax on growthKiddie tax applies
Withdrawal restrictionNone — any purpose
Child takes controlAge 18–21 (state law)
FAFSA rate~20% (student asset)
Reversible?No — irrevocable gift
Investment optionsUnlimited
Earned income required?No
529 Plan
Education savings. Best FAFSA treatment. Now has 529→Roth IRA rollover via SECURE 2.0 ($35K lifetime).
Annual limit$19,000 / $95K 5-yr front-load
State lifetime maxVaries (~$550K FL)
Tax on growthTax-free (qualified)
Withdrawal restrictionEducation (K-12, college)
Non-qualified withdrawalTax + 10% penalty on earnings
FAFSA rate5.64% max (parent asset)
Reversible?Yes — owner retains control
Unused → Roth rollover$35K lifetime (SECURE 2.0)
New · July 4, 2026
Trump Account 530A IRA
Custodial IRA for minors under OBBBA 2025. $1,000 government seed for children born 2025–2028. Available July 4, 2026.
Annual limit$5,000/yr (individuals + employers)
Employer contributionUp to $2,500 (not taxable income)
Government seed$1,000 (born 2025–2028)
Tax on growthTax-deferred (traditional IRA)
Withdrawal before 18None — locked until 18
After 18Traditional IRA rules apply
FAFSA rate~20% est. (IRA at 18) — guidance pending
Investment optionsIndex funds / ETFs only (0.10% cap)
Earned income required?No — key advantage over Roth IRA
Custodial Roth IRA
Roth IRA in the child's name. Requires earned income — best for working teens. Best long-term tax treatment.
Annual limit$7,000 or earned income (lesser)
Tax on growthTax-free forever
Withdrawals — contributionsAnytime, tax and penalty-free
Withdrawals — earnings59½ or qualified exception
FAFSA rate0% — retirement accts excluded
RMDsNone
Investment optionsUnlimited
Earned income required?Yes — limits contributions
Kiddie tax — how it works
Tier 1 — Tax-free
$0 – $1,350
Unearned income exempt (dependent standard deduction, 2026)
Tier 2 — Child's rate
$1,350 – $2,700
Next $1,350 taxed at child's own rate (often 10–12%)
Tier 3 — Parent's rate
Above $2,700
Excess taxed at parents' marginal rate (up to 37%). Applies to UTMA income — not 529, Roth, or Trump Account growth.
CGT Advisor Verdict — account selection overview
For UHNW families the answer is almost always a combination. Lead with 529 for known education expenses — FAFSA treatment and tax-free growth are unmatched. Layer in UTMA for flexibility beyond age 18 when education is uncertain. For children born 2025–2028, the Trump Account $1,000 seed is free money worth capturing regardless of strategy. Custodial Roth IRA is the most powerful long-term vehicle but requires earned income — be creative with legitimate compensation (child modeling, family business roles). The worst outcome is analysis paralysis: open the 529 and UTMA, claim the Trump Account seed, then optimize annually.
Custodial Roth IRA
0%
Retirement accounts excluded from FAFSA student assets
Best for aid
529 Plan
5.64%
Parent-owned; assessed at low parent asset rate
Low impact
Trump Account
~20%
Student-owned IRA at 18. Official DoE guidance still pending.
Watch — guidance pending
UGMA / UTMA
20%
Student-owned asset; assessed at highest FAFSA rate
Worst for aid
Trump Account FAFSA guidance is still pending as of July 2026. The account converts to a student-owned IRA at 18, which would typically be assessed at ~20%. The Department of Education could issue guidance for more favorable treatment — monitor IRS Notice 2025-68 updates. Weight 529 more heavily if college need-based aid is a real possibility.
Dollar impact — $50,000 balance at college age
Custodial Roth IRA
529 Plan
Trump Account
UGMA / UTMA
Based on $50,000 balance; FAFSA Formula A for dependent student. CSS Profile schools may assess higher. Illustration only.
Full comparison matrix
| Feature | UGMA / UTMA | 529 | Trump Account | Custodial Roth IRA |
|---|---|---|---|---|
| Annual limit | Unlimited (gift tax) | $19,000 / $95K front-load | $5,000 combined | $7,000 / earned income cap |
| Earned income required | No | No | No | Yes |
| Tax on growth | Kiddie tax (Tier 3 at parent rate) | Tax-free (qualified) | Tax-deferred (trad IRA) | Tax-free (Roth) |
| Withdrawal flexibility | Anytime, any purpose | Education only (+ K-12) | Locked until age 18 | Contributions anytime; earnings at 59½ |
| FAFSA assessment rate | ~20% (student asset) | ~5.64% (parent asset) | ~20% (student IRA at 18) | 0% (retirement account) |
| Parental control | Ends at 18–21 | Owner retains control always | Ends at 18 | Ends at majority |
| Investment options | Unlimited | Plan menu (varies by state) | Index funds / ETFs only (0.10% cap) | Unlimited |
| Government seed | None | None | $1,000 (born 2025–2028) | None |
| Contribution reversible | No — irrevocable gift | Yes — owner retains | No | No (IRA rules) |
| RMDs at retirement | N/A | N/A | Yes (traditional IRA rules at 18) | None |
CGT Advisor Verdict — FAFSA
For clients where need-based aid is a real possibility — typically families with income below $200K — FAFSA treatment should drive account selection. 529 is dominant: parent-controlled, ~5.64% max assessment, tax-free growth. UTMA and Trump Accounts are both assessed at ~20% as student assets once the child reaches 18. The reframe for UHNW clients: at $10M+ net worth, financial aid is largely off the table. For them the FAFSA conversation is moot — optimize for tax-efficiency and control instead, which typically favors UTMA for flexibility and Trump Account for the tax-deferred compounding start.
Trump Accounts launched July 4–5, 2026. To enroll, file IRS Form 4547 with your 2025 tax return or register at trumpaccounts.gov. Official app available (Apple/Google Play, administered by BNY Mellon and Robinhood for Treasury). Children born 2014–2024 may be eligible for a $250 contribution — confirm with IRS guidance.
Key mechanics
Structure
Traditional IRA (530A) — owned by child, custodied by parent until 18
One account per child; parent/guardian sole custodian until 18
Funded by individuals, employers, government, and charities
$5,000/yr combined limit; employer portion not taxable income
Investments limited to low-cost broad U.S. index funds/ETFs — 0.10% cap, no leverage
No withdrawals before 18 — no exceptions whatsoever
Tax mechanics
Contributions are after-tax (no deduction, unlike adult traditional IRA)
Growth is tax-deferred — no annual tax drag during accumulation
Withdrawals after 18 taxed as ordinary income (traditional IRA rules)
Before 59½: 10% early withdrawal penalty unless qualified exception
No step-up in basis — heirs inherit full tax liability
Roth conversion at 18–22 in low bracket is the recommended optimization
The Roth conversion play
A Trump Account used as-is is simply a tax-deferred account that will eventually be taxed as ordinary income in retirement. The strategic move: convert to a Roth IRA during the low-bracket years after age 18, before the child has significant earned income. A child at 18 with little other income pays just 10–12% on conversions — versus a parent likely in the 32–37% bracket today. Parents pay the conversion tax as a separate gift to avoid the 10% penalty of pulling from the account.
$1,000 seed · 5%/yr · 18 yrs
~$2,406
Value at age 18 without additional contributions
$5,000/yr max · 7%/yr · 18 yrs
~$168K
Approximate account value at age 18
Conversion rate window (age 18–22)
10–12%
Federal rate if child has little/no other income vs. parent's 32–37%
Trump account works well for
Children born 2025–2028 — $1,000 free seed
Families who can commit $5,000/yr for 18 years
Parents in high brackets — tax deferral is meaningful
Child expected to have low income at 18–22 (Roth window)
Business-owner clients — employer match opportunity
Trump account less ideal for
Families expecting need-based financial aid (~20% FAFSA rate)
Clients who need access to funds before age 18 for any reason
Investment-savvy families wanting concentrated positions or alts
Child doesn't convert to Roth at 18 — traditional IRA tax drag erases benefit vs. UTMA
CGT Advisor Verdict — Trump accounts
Claim the $1,000 seed for every eligible child — it's free money with no downside. Whether to contribute beyond that depends on the conversion plan. A Trump Account that converts to Roth at 18 in the 10–12% bracket can outperform virtually every other vehicle over a 50-year horizon. A Trump Account that doesn't convert is just a tax-deferred account with restricted investment options — arguably worse than a UTMA with deliberate tax-gain harvesting. For UHNW clients: if your client has a newborn or a child under 4, this is a top-priority planning item as of this week. File Form 4547 immediately.
UHNW family — $10M+, no aid concern
1Lead with UTMA — maximum flexibility, no contribution cap, full investment universe
2529 front-load $95K from grandparents in Year 1 — estate removal, tax-free education growth
3Claim Trump Account seed for children born 2025–2028 — free $1,000, then evaluate annual contributions
4Custodial Roth IRA at first earned income — child modeling, family business, summer W-2
5At 18, execute Trump Account Roth conversion in 10–12% bracket — parents cover the tax as a gift
HNW family — $1–5M, aid possible
1Lead with 529 — best FAFSA treatment at 5.64%; parent retains control
2Claim Trump Account seed, defer additional contributions pending FAFSA guidance
3Limit UTMA contributions to amounts that won't materially affect aid package
4Custodial Roth for working teens — excluded from FAFSA, builds lifetime Roth base
5Review annually in November — rebalance contribution split based on aid eligibility
Grandparent gifting strategy
1529 front-load: $95K per grandchild ($190K per couple) — removes from estate immediately
2Grandparent-owned 529s are now FAFSA-neutral under 2024+ rules — the calculus has changed
3UTMA gifts use annual exclusion ($19K/grandchild/year, $38K with gift-splitting)
4Contribute to Trump Account if grandparent is authorized — up to the $5K combined limit
5Charitable families: CRT seeded with appreciated stock, grandchild as remainder beneficiary
Business-owner family
1Trump Account employer match: $2,500/yr per child — not taxable income, doesn't count toward individual $5K limit
2Custodial Roth: pay child for legitimate work (modeling, social media, clerical) — deductible to business
3Under 18 in sole proprietorship / partnership (parent-owned): wages = no FICA taxes
4S-corp: child must be on payroll and paid reasonable comp; FICA still applies
The Kitces debate — Trump account vs. UTMA tax harvesting
Kitces camp — UTMA wins
First $2,700/yr of child's unearned income faces minimal tax. Parents can harvest gains annually in the UTMA at near-0% effective rates, building cost basis. On sale, the child holds fully stepped-up basis vs. the Trump Account's future ordinary income tax. If the child doesn't convert to Roth at 18, the after-tax math often favors the UTMA with disciplined harvesting.
Counter — Trump account wins (with conversion)
Kitces analysis assumes parents harvest gains annually with discipline. In practice, most don't. Trump Account delivers forced tax-deferral and index discipline. If parents pay the Roth conversion tax at 18 as a separate gift — not from the account, avoiding the 10% penalty — the Trump Account becomes a fully tax-free Roth IRA and beats a UTMA in almost every long-horizon scenario.
CGT view: for UHNW clients with a high-income parent willing to pay the conversion tax as an additional gift, the Trump Account + Roth conversion strategy is superior. For mass-affluent clients or those with financial aid exposure, 529 first and UTMA second remains the practical answer.
CGT Advisor Verdict — master strategy
The optimal stack for a UHNW family with a newborn in 2026: (1) file IRS Form 4547 immediately and claim the $1,000 Trump Account seed — unconditional; (2) 529 front-load $95K from grandparents in Year 1; (3) start annual UTMA contributions funded by annual gift exclusion for non-education flexibility; (4) at first earned income, open custodial Roth and fund to the lesser of $7,000 or earnings; (5) at 18, convert Trump Account to Roth while child is in 10–12% bracket — parents cover the tax as a gift rather than pulling from the account. This sequence captures every available advantage: free government money, tax-free education growth, flexible non-education savings, and a lifetime Roth IRA foundation — without the FAFSA penalty that would come from an asset-heavy UTMA going into college applications.
Trust Reference
Comprehensive trust law reference for trust officers and advisors. Updated to reflect 2026 law including OBBBA permanent exemption extension and SECURE 2.0 RMD changes.
What is a trust
A trust is a device by which legal title to property is held by one person — the trustee — for the benefit of another — the beneficiary. The trustee holds property in the name of the trust, manages it subject to the trust provisions, and pays income and principal to the beneficiary according to the trust terms. Trusts created during the grantor's lifetime are inter vivos trusts; trusts created by will at death are testamentary trusts.
Why create a trust
Professional management of assets; provide for those unable to manage property (minors, incapacitated); multi-generational planning; tax efficiency; privacy; avoid probate
Six elements of a valid trust
1. Intent to create; 2. Definite subject matter; 3. Ascertainable beneficiaries; 4. A trustee; 5. Specified purpose and performance; 6. Delivery of trust property to trustee
Implied trusts
Resulting: arises when express trust fails or incomplete disposition — property reverts to settlor. Constructive: court-imposed remedy when property obtained wrongfully.
Inter vivos vs. testamentary
Inter Vivos Trust (Living Trust)
When created: During settlor's lifetime
Revocability: Fully revocable and amendable until incapacity
Probate: Avoids probate if fully funded — assets transfer immediately at death
Privacy: Not a matter of public record (unlike probated will)
Trustee: Settlor typically acts as initial trustee; successor provisions required
Incapacity: Successor trustee steps in immediately — no court intervention
FL execution: Two witnesses + notarization recommended (§736.0403)
Testamentary Trust
When created: Created by will at death; active only after probate
Revocability: Amendable until death; irrevocable thereafter
Probate: Requires probate — becomes public record
Privacy: Will and trust terms become public through probate
Pour-over will: Probate assets "poured" into existing living trust after death
Best use: Simple estates; where probate is not a concern; blended families
FL execution: Same formalities as a will — two witnesses required
CGT Advisor Note — inter vivos vs. testamentary
For virtually all UHNW clients, the revocable living trust is the foundational document — not the will. The will becomes secondary, functioning primarily as a "pour-over" to catch any assets not titled in trust at death. The trustee can act immediately at incapacity and death without court intervention. The privacy benefit is significant for families who do not want asset inventories filed as public records in the county court.
Florida Trust Code highlights
| Provision | Florida statute | Key rule | Practice note |
|---|---|---|---|
| Rule Against Perpetuities | §689.225 | 1,000 years for trusts created after July 1, 2022 | Effectively a dynasty trust jurisdiction — plan multigenerational GST trusts accordingly |
| Trust execution formalities | §736.0403(2) | Two witnesses; notarization not required for validity but essential if real property involved | Execute with same formalities as a will to avoid trust being challenged as testamentary instrument |
| Will execution formalities | §732.502 | Two witnesses who sign in presence of testator; notarization optional (self-proved will) | Pour-over will must meet these requirements; execute contemporaneously with trust if possible |
| Elective share / elective estate | §732.2035 | Surviving spouse entitled to 30% of "elective estate" including certain trust assets | Revocable living trusts are included in elective estate — inter vivos trusts do not fully shelter assets from spousal rights in FL |
| Spendthrift exceptions | §736.0503 | Unenforceable against: (1) child/spouse/former spouse with judgment for support; (2) creditor for beneficiary protection services; (3) state/federal claim | Spendthrift clause does not protect against child support or alimony obligations |
| Trustee loan powers | §736.0816(6) | Trustee may borrow money and mortgage/pledge trust property for any duration | Confirm power exists in trust instrument before pledging trust assets as collateral |
| Loans to beneficiary | §736.0816(19) | Trustee has lien on future distributions for repayment of loans to beneficiary | Document all loans with promissory note; monitor payment; enforce if delinquent |
| Incapacity standard | Trust instrument | Typically: certification by physician that settlor cannot handle financial affairs — lower standard than testamentary capacity | Drafting issue: specify independent physician certification to prevent family disputes over incapacity trigger |
Domestic Asset Protection Trust (DAPT) jurisdiction comparison
Florida does not have a DAPT statute. FL clients seeking domestic asset protection trusts must use an out-of-state jurisdiction. The trust must be properly structured and administered in that jurisdiction to achieve protection.
| Jurisdiction | Creditor limitation period | Exception creditors | State income tax | Directed trust statute | CGT assessment |
|---|---|---|---|---|---|
| South Dakota | 2 years (shortest) | Child support; alimony; fraudulent transfer | None | Yes — strong bifurcation | Top tier — preferred for most UHNW clients |
| Nevada | 2 years | Child support; existing tort claims; fraudulent transfer | None | Yes | Top tier — competitive with SD |
| Delaware | 4 years | Child support; alimony; fraudulent transfer | None (for non-residents) | Yes | Strong — longer seasoning period than SD/NV |
| Wyoming | 4 years | Child support; fraudulent transfer | None | Yes | Competitive but less established case law |
CGT Advisor Note — Florida clients and DAPTs
Florida courts have not definitively ruled on whether they will respect DAPT protections established in sister states. Full faith and credit concerns exist. For maximum protection, the trust must have a genuine nexus to the chosen jurisdiction: a corporate trustee with a physical presence there, administration actually occurring there, and trust assets (or a portion) held there. South Dakota and Nevada are the preferred jurisdictions for CGT clients based on the combination of zero state income tax, the shortest creditor limitation periods (2 years), and the strongest spendthrift statutes.
Spendthrift clauses — practical guidance
A spendthrift clause restricts the voluntary or involuntary transfer of trust income or principal to the beneficiary or to third parties (creditors, former spouses). Standard language: "The interests of beneficiaries in principal or income shall not be subject to the claims of any creditor, any spouse for alimony or support, or others, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered." (Northern Trust Formbook, p. 201-15)
What spendthrift protects against
Voluntary assignment by beneficiary to creditors
Involuntary attachment by creditors
Third-party demands on trustee to exercise discretion
Claims of a former spouse (except child/spousal support)
FL §736.0503 — exceptions (spendthrift does NOT protect against)
Child, spouse, or former spouse with court order for support
Creditor who provided services to protect beneficiary's trust interest
State or federal claims where law so provides
Distributable amounts withheld beyond reasonable time — becomes attachable
Critical trustee duty: You cannot intentionally withhold a distribution due to a beneficiary who has creditor issues, even if the beneficiary asks you to do so. Property that has become distributable but is retained beyond a reasonable time is subject to attachment. Restatement (Third) §58, comment d(2).
Loans to beneficiaries — trustee checklist
Before making a loan (FL §736.0816(19))
Examine creditworthiness of beneficiary
Confirm trust instrument authorizes loans to beneficiaries
Document with a promissory note and reflect on trust asset statement
Provide commercially reasonable terms (rate, collateral) unless trust permits otherwise
Trustee has lien on future distributions for repayment — enforce if delinquent
Bank lending to trust — confirm before pledging (FL §736.0816(6))
Confirm existence of trust and that it is valid
Confirm capacity of trustee(s): properly appointed and accepted
Confirm trust assets may be used as collateral
Confirm trustee power to borrow and pledge — check powers clause
Confirm trust duration and what happens if trust terminates before loan matures
Crummey notice requirements
Crummey powers (Crummey v. Commissioner, 9th Cir.) allow gifts to trusts to qualify for the annual gift tax exclusion by giving beneficiaries a temporary right to withdraw. Five requirements for an effective Crummey provision:
1.Written notice to beneficiary of the right of withdrawal
2.Reasonable period to exercise (minimum 30 days; within the same calendar year as the gift)
3.Require beneficiary to acknowledge receipt of the power in writing
4.Authorize guardian to sign on behalf of a minor beneficiary
5.Power amount should not exceed greater of $5,000 or 5% of trust FMV per beneficiary — lapse beyond "5 or 5" may be treated as taxable gift by beneficiary (lapse of general power of appointment)
ILIT trustee liabilities — corporate fiduciary considerations
Many corporate fiduciaries decline ILIT trusteeship during the settlor's lifetime — no marketable assets to manage, and liability exposure is disproportionate to fee income. Key liability triggers:
Failure to pay insurance premiums — policy lapse eliminates the entire estate planning benefit
Crummey notices not issued or tracked on a timely basis
Failure to periodically review policy provisions, options, and insurance company financial health
Insurance company financial difficulties — trustee has ongoing duty to monitor carrier solvency
Year-end action items
Year-End Tax Checklist
Income, gift, and estate tax actions to complete before December 31.
Capital gains & losses
1Harvest capital losses to offset realized gains — deadline Dec 31
2Net losses offset gains; up to $3,000 of net loss deductible against ordinary income; excess carries forward
3Wash sale rule: no repurchase of substantially identical security within 30 days before or after sale — swap S&P 500 ETFs from different providers to maintain exposure
42026 LTCG 0% bracket: single up to $49,450 / MFJ up to $98,900 — harvest gains if client is below these thresholds
5Review all taxable accounts holistically — coordinate TLH across all accounts, not just one
Maximize deductions
Bunch charitable contributions: combine multiple years into one to exceed standard deduction ($32,200 MFJ in 2026)
Bundle medical expenses if close to 7.5% AGI floor — schedule elective procedures before Dec 31
SALT strategy: prepay Q4 state income taxes by Dec 31 (federal Q4 deadline is Jan 15 but state payment counts as SALT if paid in calendar year)
SALT strategy: consider double-paying property taxes in one year to reach $40,000 combined SALT cap
Non-itemizers: claim new OBBBA $1,000 ($2,000 MFJ) charitable deduction without itemizing — does not apply to DAF or private foundation contributions
37% bracket filers: itemized deductions now benefit-capped at 35% under OBBBA — model carefully before large deduction decisions
Estimated taxes & withholding
Q4 2026 estimated payment due Jan 15, 2027 — but state Q4 payment due Dec 31 for SALT deductibility
Safe harbor: pay 90% of current year tax OR 100% of prior year tax (110% if prior year AGI >$150,000) — avoids underpayment penalty
Review for large capital events (stock sales, business income, Roth conversions) — recalculate and pay shortfall before Dec 31 to avoid penalty
Employees: adjust W-4 withholding — IRS treats withheld taxes as paid evenly throughout year, which can cover shortfalls from earlier quarters
Business & QBI
QBI deduction (§199A): 20% of qualified business income — now permanent under OBBBA. Review entity structure and income timing to maximize
OBBBA adds $400 minimum QBI deduction (requires $1,000+ of QBI) — confirm eligibility for smaller business clients
Section 179 expensing: purchase and place in service qualifying equipment before Dec 31 for immediate full deduction
Income deferral: delay invoicing for work completed late in year until January — constructive receipt rules apply (can't defer a check already in hand)
Installment sales: consider structuring large asset sales (real estate, business) as installment sales to spread gain over multiple years
Key 2026 income tax numbers
| Item | Single | MFJ | Note |
|---|---|---|---|
| Standard deduction | $16,100 | $32,200 | OBBBA increased (up $350/$700 from 2025) |
| Senior add'l deduction (65+) | $6,000 | $12,000 | Phases out: $75K–$175K single / $150K–$250K MFJ |
| SALT cap | $40,000 | $40,000 | SALT torpedo: phases out $500K–$600K MAGI → $10,000 |
| Non-itemizer charitable | $1,000 | $2,000 | New OBBBA — not for DAF or private foundations |
| 37% bracket starts | >$640,600 | >$768,700 | 37% bracket benefit from itemized deductions capped at 35% |
| LTCG 0% threshold | Up to $49,450 | Up to $98,900 | Harvest gains below these levels |
| NIIT threshold | >$200,000 | >$250,000 | 3.8% on lesser of NII or MAGI excess |
| Trust 37% bracket | $16,001+ | Trusts hit top rate at very low income | |
CGT Advisor Verdict — income tax year-end
The most impactful year-end income tax move for UHNW clients is the Roth conversion sizing decision — get the projection done in November, not December. TLH and SALT prepayment are mechanical and should be on every December client communication. The new OBBBA deductions (tips, overtime, senior add-on, car interest) are generally not relevant for UHNW clients but worth knowing when speaking to younger or middle-income family members. The SALT torpedo at $500K–$600K MAGI is a genuine planning trap — model carefully for clients in that income range before year-end.
Annual exclusion gifts — Dec 31 deadline
1Annual exclusion: $19,000 per donee, unlimited number of donees
2Gift-splitting with spouse: $38,000 per donee — requires timely Form 709 filing
3Complete gifts by Dec 31 — check clearing by year-end required for paper checks
4529 front-load: $95,000/donor ($190,000 couple) per beneficiary — elect 5-year averaging on Form 709
5Direct payments: tuition and medical — pay directly to institution/provider, unlimited, not counted against annual exclusion
Lifetime exemption — $15,000,000 per person in 2026
OBBBA permanently increased exemption to $15,000,000 per person ($30,000,000 couple) — indexed for inflation
Review estate documents: ensure wills, trusts, and beneficiary designations reflect updated $15M threshold
Consider gifts of discounted interests in FLPs, FLLCs, or other entities where valuation discounts amplify the transfer
Intra-family loans: utilize current low AFR rates before potential rate changes — document carefully with promissory note
Portability (DSUE): surviving spouse of 2026 decedent can elect unused exemption — file estate tax return timely or use Rev. Proc. 2022-32 (5-year late election)
Charitable strategies — Dec 31 deadline
Donate appreciated securities (held >1 year): deduct FMV, avoid LTCG — most tax-efficient charitable vehicle
Fund DAF: make large deductible contribution in high-income year, grant to charities over multiple years
QCD: execute BEFORE taking RMD from same IRA — first dollars out of IRA count as RMD; QCD after RMD does not satisfy requirement
QCD limit: $111,000 per taxpayer in 2026. Transfer must clear by Dec 31 — allow 2–3 weeks for processing
QCD + OBBBA interaction: QCDs reduce MAGI, which can unlock new OBBBA deductions (SALT, senior add-on, tips) that are MAGI-limited
Estate tax planning structures
SLATs and IDGTs: irrevocable trusts that allow tax-efficient wealth transfer while retaining indirect access — fund before year-end if client is motivated
Rolling GRAT: initiate new short-term (2-year) zeroed-out GRAT with highly-appreciating assets before year-end — each GRAT is a separate transfer
CRTs: fund before entering binding sale contract for appreciated asset — must be funded first to avoid capital gain
ILIT Crummey notices: issue before year-end if trust funded — 30-day window must fall within same calendar year as gift
CGT Advisor Verdict — gift & estate year-end
With the exemption now permanently at $15,000,000 (indexed), the panic-driven "use it now before sunset" urgency is gone. Year-end gifting should be driven by the client's actual wealth transfer goals, not legislative fear. That said, annual exclusion gifting is unconditionally efficient — $19,000/donee removes assets from the estate at zero transfer tax cost forever. For clients with charitable intent, the QCD timing rule is the most commonly missed detail: the QCD must go out before the RMD is taken from the same account, or it loses its RMD-satisfying benefit. Set custodian reminders for November.
These are new deductions and provisions effective 2025–2026 under OBBBA. Most are targeted at specific income ranges and occupations — review applicability for each client. Sources: Kress memo (Nov 2025), IRS Rev. Proc. 2025-32, Forbes (Oct 2025).
New Schedule 1-A deductions (2025–2028)
| Deduction | Limit | Phaseout | Notes |
|---|---|---|---|
| Tips (No Tax on Tips) | Up to $25,000/yr | MAGI phaseout applies | Voluntary cash/charged tips in customarily tipped occupations only. Not applicable to UHNW clients directly but relevant for household employees. |
| Overtime pay (No Tax on OT) | $12,500 single / $25,000 MFJ | MAGI phaseout applies | For employees receiving qualified overtime under FLSA. Not applicable to salary/bonus income. |
| Car loan interest | Up to $10,000/yr | MAGI phaseout | First-lien personal vehicles purchased/financed in USA. Includes refinances. 2025–2028 only. |
| Senior deduction (65+) | $6,000 single / $12,000 MFJ | $75K–$175K single / $150K–$250K MFJ | In ADDITION to standard deduction and existing elderly add-on. Phases out sharply — most UHNW clients above threshold. |
| Non-itemizer charitable | $1,000 single / $2,000 MFJ | None stated | New permanent deduction for those who take standard deduction. Does NOT apply to DAF or private foundation contributions. |
Other OBBBA changes affecting 2026 planning
Tax changes affecting high earners
Itemized deduction cap (37% bracket): For taxpayers in the 37% bracket, the tax benefit from itemized deductions is capped at 35%. Effectively a 2% haircut on deductions for top earners. Model in eMoney before large deduction planning.
SALT torpedo: $40,000 SALT cap phases out from $500,000 to $600,000 MAGI — creating an effective marginal rate of ~45.5% in that range. Clients earning $500K–$600K need specific MAGI modeling before year-end income decisions.
Gambling losses: Limited to 90% of gambling winnings (previously 100%). Minor for most UHNW clients but relevant for casino-active clients or those with gaming income.
Charitable deduction 0.5% AGI floor (2026+): A new 0.5% AGI floor applies to itemized charitable deductions beginning 2026 — very small impact for most clients but technically reduces deductible amount slightly.
Retroactive to 2025
SALT $40,000 retroactive to 2025: Applies to 2025 tax year as well — advise clients to review 2025 state/local tax payments and consider prepaying December 2025 installments
Child Tax Credit: Increased to $2,200 per qualifying child under 17 in 2026; $1,700 refundable portion; phaseout begins $200K single / $400K MFJ
QBI 20% permanent: §199A QBI deduction made permanent — no longer set to expire. New minimum $400 deduction for qualifying business income of $1,000+
Standard deduction increased: OBBBA increased over and above inflation — MFJ $32,200 in 2026 (vs. pre-OBBBA projection of ~$31,700)
Employer childcare credit: Increased to $500,000 maximum ($600,000 for eligible small businesses) — relevant for business-owner clients who provide childcare benefits
CGT Advisor Verdict — OBBBA new items
Most OBBBA Schedule 1-A deductions (tips, overtime, car interest) are designed for working- and middle-class taxpayers and are phased out well below UHNW income levels. The advisor conversations worth having: (1) the SALT torpedo — clients earning $500K–$600K need their MAGI modeled carefully to see if the phaseout creates effective rates above 40%; (2) the 37% bracket itemized deduction benefit cap — budget that large deductions will save 35 cents rather than 37 cents per dollar for top-bracket clients; (3) the non-itemizer charitable deduction — relevant for family members or employees of clients who take the standard deduction and make charitable gifts.
RMDs — deadline December 31
RMD must be distributed by December 31 — no extension. Multiple IRAs: can aggregate RMDs and take from one account. 403(b): must take from each 403(b) separately.
Missed RMD penalty: 25% excise tax on undistributed amount — reduced to 10% if corrected in a "timely manner" (generally by filing corrected return)
RMD ages: born 1951–1959 = age 73; born 1960+ = age 75 (SECURE 2.0)
QCD must be executed BEFORE the RMD is taken from the same IRA — once the RMD is taken, it cannot be re-contributed or redirected as QCD
Roth conversions: execute before Dec 31 to convert traditional IRA assets at current rates. No RMD for Roth IRAs (though Roth 401(k) also now exempt post-2024)
Trust distributions — 65-day rule & bracket management
65-day rule (§663(b)): trustee may elect to treat distributions made within 65 days after year-end as made during the prior year — useful for bracket management and estimated tax timing
Trust bracket comparison: trust 37% bracket hits at $16,001 in 2026 vs. individual $640,600 (single) — distributing income to beneficiaries in lower brackets saves material tax
Before distributing: compare trust marginal rate vs. beneficiary rate — distributing to a beneficiary in 24% bracket saves 13 cents per dollar vs. trust paying 37%
Distributable net income (DNI) limits deductibility of distributions — confirm DNI calculation before year-end distributions to avoid exceeding deductible amount
Do NOT intentionally withhold distributable amount due a creditor-challenged beneficiary — property distributable but withheld becomes attachable by creditors (Restatement §58)
Retirement account contributions
401(k)/403(b): $23,500 limit — must be contributed by Dec 31 via payroll (no extension)
Catch-up (50+): +$7,500; super catch-up (60–63): +$11,250 — Dec 31 deadline for 401(k)
IRA/Roth IRA: $7,000 ($8,000 if 50+) — deadline is tax filing deadline (April 15, 2027, not Dec 31)
SEP-IRA: funded by tax filing deadline (with extensions) — business owners can fund up to $70,000
Solo 401(k): employee deferrals must be elected by Dec 31; employer profit-sharing contribution by tax filing deadline
HSA: contributions for 2026 tax year due by April 15, 2027 — but invest now to maximize tax-free growth window
Year-end action calendar
October
Begin MAGI projection for year
Identify Roth conversion window
Initiate IRMAA modeling for age-65 clients
Review portfolio for TLH candidates
November
Finalize Roth conversion amount
Review trust distributions vs. beneficiary brackets
Confirm RMD amounts — set QCD reminders
Review estimated tax payments for shortfall
Schedule QCD transfers (allow 2–3 weeks)
December
Execute Roth conversion before Dec 31
Execute TLH — 30-day wash sale clock starts
Confirm RMD distributed (check cleared)
Complete annual exclusion gifts — checks cleared
Prepay Q4 state income taxes for SALT
Issue ILIT Crummey notices if trust funded
DAF funded; QCD transfers confirmed cleared
January (post year-end)
Q4 federal estimated payment due Jan 15
63-day window opens for 65-day rule trust distributions
IRA/Roth contributions (deadline April 15, 2027)
Repurchase securities sold for TLH (if 31 days have passed)
CGT Advisor Verdict — trust & retirement year-end
The trust income distribution decision is the most underutilized year-end lever for trust companies. A trust hitting the 37% bracket at just $16,001 is paying the same rate as an individual earning $640,600. For discretionary trusts with beneficiaries in 22–24% brackets, distributing trust income before year-end is almost always the right call — subject to DNI limits and the trustee's fiduciary review of distribution standards. The 65-day rule provides additional flexibility for trustees who need time to calculate year-end income accurately before making the distribution election.
Roth conversion planning
Bracket Visualizer
Model ordinary income, Roth conversion, and LTCG simultaneously. Type amounts directly or use sliders — gold bars show which bracket your conversion touches.
Federal only · not a tax projection · verify with eMoney or MoneyGuidePro before advising
Tax bracket model — FL has no state income tax
⚠ Exceeds slider range — calculation remains valid
⚠ Exceeds slider range — calculation remains valid
⚠ Exceeds slider range — calculation remains valid
Adjust sliders or type values to see bracket breakdown.
Calculator
Roth Conversion Optimizer
Calculate the optimal annual Roth conversion amount to fill your current tax bracket, project tax-free growth at retirement, and compare long-term outcomes against no conversion. Based on 2026 IRS brackets.
Inputs
Results
Current marginal bracket—
Room remaining in target bracket—
Recommended annual conversion—
Est. federal tax on conversion—
Effective rate on conversion—
⚠ Conversion may push MAGI into a higher IRMAA tier — verify Medicare premium impact before executing.
⚠ Conversion crosses the $200,000 / $250,000 NIIT threshold — 3.8% surtax applies to net investment income above this level.
Projection: Convert vs. Don't Convert
| Year | Convert — Roth value | No convert — IRA value | Roth advantage |
|---|
How to use this calculator
Enter current income before any conversion. The calculator identifies how much room remains in your target bracket and recommends converting exactly that amount. The projection table shows the Roth account value vs. the equivalent pre-tax IRA balance (net of future taxes) over time. The breakeven point is when the Roth line crosses the IRA line — before that point, you've paid more in taxes than you've saved; after it, Roth wins. Key planning insight: conversions made in low-income years (retirement transition, business loss, sabbatical) provide maximum bracket efficiency.
Calculator
Estate Tax Exposure Calculator
Estimate federal estate tax exposure based on current estate value, marital status, prior lifetime gifts, and projected growth. Uses 2026 exemption of $15,000,000 per person under OBBBA.
Inputs
Results — Current year
Gross estate—
Available federal exemption—
Taxable estate—
Estimated federal estate tax—
Effective estate tax rate—
Planning gap (tax minus coverage)—
Growth projection
| Year | Estate value | Taxable estate | Est. tax |
|---|
Planning context
The federal estate tax applies at a flat 40% rate to the taxable estate above the available exemption. With OBBBA permanently setting the exemption at $15,000,000 per person (inflation-indexed), married couples can shelter up to $30,000,000 combined. The planning gap shown is the difference between estimated estate tax owed and assets already positioned outside the estate (irrevocable trusts, ILIT proceeds). Florida imposes no state estate tax — clients relocating from CT, MA, NY, WA, or OR may see significant tax reduction. The growth projection illustrates why early planning matters: a $25M estate growing at 6% becomes a $60M estate in 15 years, with dramatically higher tax exposure.
Calculator
RMD Calculator
Calculate required minimum distributions using IRS Uniform Lifetime Table III (or Joint Life Table II for spouses more than 10 years younger). Reflects SECURE 2.0 RMD ages: 73 for born 1951–1959; 75 for born 1960+.
Inputs
Results
Owner's current age—
RMD start age—
IRS life expectancy factor—
Current year RMD—
RMD as % of balance—
Deadline—
5-year RMD projection
| Age | Year-end balance | IRS factor | RMD |
|---|
Key RMD rules
RMDs must be taken by December 31 each year (April 1 of the following year for your very first RMD — but taking two RMDs in one year accelerates income and may be suboptimal). Missing an RMD triggers a 25% excise tax on the undistributed amount, reduced to 10% if corrected timely. For multiple IRAs, you can aggregate RMDs and take the total from any one account — 401(k)s must be handled separately. The QCD remains the most tax-efficient use of an RMD for charitably-inclined clients: execute the QCD before taking any distribution from that IRA, as the first dollars out count as the RMD.
Calculator
Medicare / IRMAA Projection
IRMAA (Income-Related Monthly Adjustment Amount) applies Medicare premium surcharges based on income from two years prior. Enter 2024 MAGI to project 2026 Part B and Part D surcharges. Plan ahead to avoid crossing tier thresholds.
Inputs
MAGI for IRMAA = AGI + tax-exempt interest + excluded Social Security income. Roth conversions, capital gains, and RMDs all increase MAGI.
2026 Premium Results (based on 2024 MAGI)
IRMAA tier—
Part B monthly premium—
Part D monthly surcharge—
Annual IRMAA cost (both parts)—
MAGI to drop to next lower tier—
3-year IRMAA outlook
| Year | MAGI used | Tier | Monthly Part B | Annual cost |
|---|
Life-change event appeal
If income dropped due to retirement, divorce, death of spouse, loss of income-producing property, or reduction/cessation of pension — file SSA Form SSA-44 to request a reduction based on more recent income.
IRMAA planning strategies
The two-year lookback makes IRMAA planning a forward-looking exercise — income decisions made today affect Medicare costs two years out. The most common trap: a large Roth conversion or business sale in year N unexpectedly triggers IRMAA surcharges in year N+2. QCDs are particularly powerful for IRMAA management because they reduce MAGI without appearing as a deduction — a client who donates $50,000 via QCD instead of writing a check reduces MAGI by $50,000 even if they don't itemize. The tier thresholds are cliff edges, not gradual phaseouts — a single dollar over a threshold triggers the full next-tier surcharge. Worth checking before executing any large income event.
Calculator
Portfolio Longevity — Monte Carlo
How long will an account last given annual withdrawals? Runs 1,000 randomized return sequences to show the probability of depletion by year, plus a deterministic year-by-year worksheet at the average return.
Inputs
Return is nominal — inflation is already embedded in it. Use the indexing option to grow withdrawals with inflation. Volatility guide: conservative 6–8%, balanced 10–12%, growth 14–16%. 1,000 trials per run.
Monte Carlo results — 1,000 trials
Median depletion—
Deterministic depletion (avg return)—
Worst 10% of outcomes deplete by—
Best 10% of outcomes last beyond—
Probability lasting 10 years—
Probability lasting 15 years—
Probability lasting 20 years—
Probability lasting full horizon—
Depletion probability by year
Yr 1Yr 25
Worksheet detail — deterministic at average return
| Age | Year | Beginning value | Additions | Investment earnings | Return | Withdrawal | Ending value |
|---|
How to read this
The worksheet shows the deterministic path — what happens if returns hit the average every single year. Real markets don't do that, which is why the Monte Carlo matters: sequence-of-returns risk means two portfolios with identical average returns can deplete years apart depending on when the bad years land. The "worst 10%" number is the planning-relevant figure for risk-averse clients — if that depletion year falls short of life expectancy, the withdrawal rate needs to come down or the allocation needs to change. As a rule of thumb, a plan is comfortable when the worst-decile depletion year exceeds the client's planning horizon.
Reference
Glossary & Definitions
Plain-English definitions for tax, trust, and investment planning terms. Type to filter.