Vision Capital Management Financial Advisor Portland Oregon

Vision Capital Management has been providing clients financial planning and investment management services since 1999. Visit our site to find out more.

Maria Malloy, CFP®, Contributes Article to Elder Law Section Newsletter of Oregon State Bar

Maria Malloy Customer Service Representative Client Relationship Associate Maria Malloy, CFP®, contributed the article “The SECURE 2.0 Act and You: How New Legislation Is Enhancing Retirement Planning,” to the October edition of the Elder Law Newsletter for the Oregon State Bar. In it, she details how temporary or expiring policies were made permanent, including provisions related to retirement planning, employer-sponsored retirement plans, catch-up contributions to retirement accounts, Roth IRA funding, and charitable contributions, among others. To read the newsletter, click the image below.

Year-End Financial Planning Checklist

As the year draws to a close, we would like to highlight two key activities we’re undertaking on behalf of our clients and provide reminders on other best practices for year-end.

  1. Tax-Loss Harvesting

    Our investment team actively monitors portfolios for tax-loss harvesting opportunities. This involves selling securities at a loss to offset capital gains, while simultaneously reinvesting in a way that remains aligned with your long-term goals and risk tolerance. We also manage cost basis considerations to support overall tax efficiency.

  2. Required Minimum Distributions (RMDs)

    Clients age 73 or older are legally required to take annual Required Minimum Distributions (RMDs) from tax-deferred retirement accounts, such as traditional IRAs and 401(k)s. Vision Capital will assist in coordinating these distributions through your Fidelity or Schwab account as needed.  If you have an inherited IRA, Required Minimum Distributions (RMDs) may still be required, regardless of your age, depending on the terms of the inheritance and current IRS regulations.  If you hold an inherited IRA or have any questions regarding your RMD obligations, please contact your client relationship manager for guidance.

Additionally, the following items can help clients get organized and ready to welcome in the new year.

  • Maximize Retirement Contributions

    Even if you can’t contribute the full annual limit, increasing contributions before year-end can significantly enhance long-term retirement savings. If eligible, consider making “catch-up contributions,” which vary in amount depending on the type of retirement account.

  • Optimize Charitable Giving

    To receive a 2025 tax deduction, charitable donations must be completed by December 31. We recommend acting early, as nonprofits can be overwhelmed during the final weeks of the year. Additional strategies to consider include bunching donations into a single year for greater impact, donating highly appreciated long-term assets, or making qualified charitable distributions (QCDs) directly from an IRA.

  • Evaluate Income Tax Withholding

    Now is a good time to reassess your withholding elections to make sure they still match up with your current income level and tax situation heading into the new year.

  • Assess Medicare Coverage

    We recommend reading the Annual Notice of Change (ANOC) document, which details changes to costs and coverage. If you have experienced significant changes with your health, are seeing new providers, or have new prescriptions, it may be worthwhile to move to a new plan during open enrollment, which takes place from October 15 to December 7.

  • Contribute to Your Health Savings Account

    Health Savings Accounts (HSAs) carry the unspent funds over to the next year. If you are able, it is advantageous to maximize your contribution to your HSA for a triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical costs.

  • Use Flexible Spending Accounts (FSAs)

    Flexible spending funds are generally subject to a “use it or lose it” rule. Depending on your plan, unused balances may expire at year-end. Eligible purchases include new contacts or glasses, prescriptions, appointment copays, and over-the-counter items such as first aid supplies, sunscreen, and cold and flu remedies.

  • Review Estate Planning Documents

    Outdated beneficiary designations are unfortunately common and can lead to unintended consequences. Take the time to review and update your beneficiary forms to ensure they accurately reflect your current wishes and circumstances.

If you have any questions about the topics outlined above, please don’t hesitate to reach out. We are here to support your financial goals with thoughtful, proactive guidance.

15 Things to Know about College Savings Plans (with Special Oregon 529 Plan Tips)

The 529 Plan is the most popular college savings plan available. We have identified 15 things you should know in order to get the most out of a 529 Plan, with a focus on Oregon 529 Plans.

1. What Is a 529 Plan?

A 529 plan is state-sponsored investment program to help families save for college tax-free.

There are two types of 529 plans:

529 Education Savings Plans

These plans work like a 401(k) in that your savings can be invested in stock or bond mutual funds and any earnings grow tax-free. Educational expenses such as tuition, room and board, supplies, and even computers can be paid using these funds. 529 College Savings Plans are the most common type of plan, and the money can be used for schools in any state. Thinking about college overseas? 529 College Savings Plan can be used with some international schools as well.

529 Prepaid Tuition Plans

Fourteen states have 529 Prepaid Tuition Plans (Oregon does not). With a prepaid tuition plan, you can prepay all or part of an in-state public college education. The benefit is that you can lock in tuition at today’s rates, however, you must be sure that your child will be attending a public, in-state university for this to be a good option.

2. Why Use a 529 Plan over Other Plans?

There are three reasons to opt for a 529 plan for education savings:

Tax-free investment growth and withdrawals

There are no federal income tax benefits associated with a 529 plan contribution. However, your investment grows tax-deferred and qualified withdrawals are federally tax-free and state tax exempt as long as they are used for qualified education expenses.

State tax benefits

Thirty-four states offer tax deductions or credits on contributions to 529 plans, including Oregon. Click here to see the tax benefits associated with the Oregon 529 College Savings Plan.

Estate planning

The unique advantage to 529 plans is that the value is transferred out of your estate, yet you retain full control over the account as an owner. This can be an important estate planning tool for grandparents who are looking to reduce their estate taxes at death.

3. When Should I Open a 529 Plan?

We recommend you begin saving as early as possible as tax-free, compounding investment returns are powerful. Investing $100 a month from birth will give your child $43,000 for college, assuming a 7% rate of return. If you were to start saving when your child is 10, that number drops to less than $13,000.

4. What Kind of Investments Are Available?

529 plans are invested in a portfolio of mutual or index funds and they are managed by the state or an outside manager such as Fidelity, TD Ameritrade, Vanguard and many others.

5. Shop Around and Pay Attention to Fees

Depending on the investment manager, fees can vary according to the type of investment funds the manager uses. The fees may include advisor fees, program management fees, maintenance fees, and investment manager expense fees. Some states offer low-cost index funds and other states only offer actively managed mutual funds, so it pays to shop around, especially if your state does not offer a state tax deduction for contributions. State plans can be opened in most other states, and you can roll a 529 plan to a different state once every 12-month period, with some exceptions Additionally, some states and program managers may offer incentives in the form of a fee waiver if you opt to fund your account with direct deposit.

6. Two Primary 529 Investment Strategies

There are two types of 529 plan investment strategies: age-based or static funds.

Age-based, or target date funds

Age-based or target date plans automatically adjust your asset mix toward a more conservative allocation as your student approaches college age. This means that you start with a higher allocation to stocks when your child is younger and, by the time they reach college age, the assets are more heavily invested in cash and bonds. Using this type of automatic adjustment may be right for you if you do not have the time or knowledge to manually adjust the account’s asset mix. It’s important to note that these age-based shifts from aggressive to conservative may not happen fast enough if the market hits a period of volatility.

Static funds

The “static” option means that you hold an investment fund or portfolio of funds that maintain the same allocations over time.

7. Custodial Account

A 529 account is managed by a program manager: either the state or a third-party investment firm. The funds are held in a custodial account, meaning that your money is protected even if the state or third-party has financial issues.

8. The Investment Strategy Is Important

Diversification is an important risk management tool. Most 529 plans offer an investment strategy using U.S. stocks and bonds as well as international investments. Make sure you fully understand the specific investment options and their associated risks.

9. Private School Tuition Now Allowed

There have been several changes to college savings plans in recent years, including tax-free withdrawals for private, public and religious school tuition, up to $10,000 per year (formerly used to be $10,000 total). However, not all states recognize this benefit so some withdrawals could be taxed at the state level.

10. Understand the Basic Rules

  • Both state and federal rules apply to 529 Plans.
  • There can only be one owner and one beneficiary for a 529 account.
  • You can own more than one 529 account.
  • The student can be a beneficiary of more than one 529 account as long as the aggregate contributions don’t surpass the state’s account size limit. This limit varies by state and ranges from $235,000 to $575,000.
  • Anyone can contribute to a 529 Plan account, not just a parent.
  • The account owner may change the beneficiary, and some states permit the account owners to name a contingent beneficiary.
  • Some states allow the account ownership to transfer to the beneficiary in the event the account owner dies.
  • Plan holders may roll over $35,000 per beneficiary to a Roth IRA if the 529 plan is overfunded. Contributions in excess of $19,000 for single filers and $38,000 for couples filing jointly may be subject to gift taxes.
  • Be sure to consult your tax advisor to make sure you have not exceeded the annual gift tax exclusion limits.
  • For non-qualified withdrawals, earnings are subject to federal income tax and a 10% penalty.

11. Does the 529 Plan Affect My Financial Aid Options?

In general, 529s have a minimal impact on financial aid, but it depends on if the account is owned by the parent, grandparent or student. Broadly speaking, parent-owned 529 Plan accounts are treated favorably by the federal financial aid eligibility formula (maximum 5.64% rate) as well as financial aid income limits. A distribution from a 529 Plan to pay college expenses is not considered a “base-year income” that would reduce next year’s financial aid eligibility. It is important to remember that federal financial aid rules are subject to change, and you should confer with your accountant on the particulars of your situation.

12. Great Option for Grandparents

Grandparents can support a grandchild’s college education while benefiting from specific tax treatment. Any contributions up to $19,000 qualify for annual gift tax exclusion (and up to $95,000 in one year as long as no additional contribution is made over the next five years. The $95,000 maximum can become $190,000 for a married couple filing together, which is referred to as front-loading or superfunding the plan). Any contributions are removed from their estate, thus reducing any potential estate tax liability. Depending on the state, they may also be eligible for state income tax deductions.

In addition, if grandparents are the owners of a 529 account, the funds will not impact financial aid eligibility.

13. Time Limits on Withdrawals

529 Savings Plans do not have specific withdrawal or age requirements. Prepaid Tuition Plans, however, may have time limits for withdrawals.

14. Roll Overs

Every state allows for one rollover to another 529 plan per year without triggering tax penalties. However, you may have to repay state tax deductions or pay a fee if you go from an in-state plan to an out-of- state plan.

15. Prioritize Retirement

It is important that you don’t sacrifice your retirement savings for college savings. There are no scholarships and loans available for retirement and the biggest gift you can give your children is not relying on them for financial support in retirement.

Have questions about college savings plans? Have specific questions about 529 Plans specific to Oregon? Get in touch with us.

Sources: IRS, Kiplinger, Saving for College

Cleaning and Organizing … the Swedish Way

There are many organizational methods for reducing our clutter and making our spaces more efficient, tidy, and serene. There is the “One-Touch Method” which bucks procrastination in favor of putting things away immediately after use, and the “Neat Method” which employs various color-coded containers and labeling for sorting and display. The KonMari method from Japan instructs organizers to ask themselves if their items still spark joy in them, and if not, to release the belongings with gratitude. And, yet another approach has risen in popularity, this time from Sweden, known as “döstädning,” or the translated “death cleaning,” which seeks to reduce clutter and stress from an aging person’s home and life.

While it may sound severe, the idea of döstädning is actually a very thoughtful and respectful exercise for both the individual and their loved ones. Contrary to KonMari, which centers on the individual’s attachment to their possessions, this approach asks how family and survivors will feel about the items left behind after a loved one’s death. Margareta Magnussen, author of “The Gentle Art of Swedish Death Cleaning,” explains how employing döstädning can streamline an individual’s space and create a peaceful environment in which they can focus on what matters to them at that stage of life. The process of sorting and gifting belongings and communicating with family and friends about what they would like to have can often bring loved ones closer together, and may minimize the future burden on family members, allowing them to focus on grieving rather than a large clean-out project.

For those interested in the process of döstädning, professionals recommend the following:

  1. Tell your family about this process you are undertaking, what you hope to get out of the experience and ask them what items they would like to inherit from you.
  2. Start with your clothing and closets, sorting through what does and does not fit and what can be donated to charity.
  3. Declutter furniture, décor, and household items by room and then size, gifting functional pieces to family and friends and donating the rest.
  4. Address digital information and share details for important vendors such as your bank and insurance provider to your next of kin.
  5. Take stock of valuable jewelry and heirlooms and communicate with your insurance provider regarding appropriate coverage. Next, give some thought to who you will leave these items to and make those wishes apparent in your documents.
  6. Gather your paperwork and leave clear instructions regarding your will, advance health directive, power of attorney and any other related documents to your intended survivors.

While it may seem like a big undertaking, döstädning can give practitioners the chance to find memory and meaning in their possessions, as well as a sense of lightness and contentment when they let them go.

To connect with a client relationship manager, email info@vcmi.net.

Certifications and Associations

Certified Women Owned Business
Certified
Private Wealth Advisor
Certified Financial Planner
CFA Institute
Certified Divorce Financial Analyst
Financial Planning Association Member
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