OSHA

Article Dean Dorton

There are many ways to save for a child’s or grandchild’s education. But one has annual contribution limits, and if you don’t make a 2016 contribution by December 31, the opportunity will be lost forever. We’re talking about Coverdell Education Savings Accounts (ESAs).

How ESAs work

With an ESA, you contribute money now that the beneficiary can use later to pay qualified education expenses:

  • Although contributions aren’t deductible, plan assets can grow tax-deferred, and distributions used for qualified education expenses are tax-free.
  • You can contribute until the child reaches age 18 (except beneficiaries with special needs).
  • You remain in control of the account — even after the child is of legal age.
  • You can make rollovers to another qualifying family member.

Not just for college

One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren’t limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such qualified expenses as tutoring and private school tuition.

Another advantage is that you have more investment options. So ESAs are beneficial if you’d like to have direct control over how and where your contributions are invested.

Annual contribution limits

The annual contribution limit is $2,000 per beneficiary. However, the ability to contribute is phased out based on income.

The limit begins to phase out at a modified adjusted gross income (MAGI) of $190,000 for married filing jointly and $95,000 for other filers. No contribution can be made when MAGI hits $220,000 and $110,000, respectively.

Maximizing ESA savings

Because the annual contribution limit is low, if you want to maximize your ESA savings, it’s important to contribute every year in which you’re eligible. The contribution limit doesn’t carry over from year to year. In other words, if you don’t make a $2,000 contribution in 2016, you can’t add that $2,000 to the 2017 limit and make a $4,000 contribution next year.

However, because the contribution limit applies on a per beneficiary basis, before contributing make sure no one else has contributed to an ESA on behalf of the same beneficiary. If someone else has, you’ll need to reduce your contribution accordingly.

Would you like more information about ESAs or other tax-advantaged ways to fund your child’s — or grandchild’s — education expenses? Contact us!

Article Dean Dorton

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits:

  • Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred.
  • Some states offer tax incentives for contributing in the form of deductions or credits
  • The plans usually offer high contribution limits, and there are no income limits for contributing.

Prepaid tuition plans

With this type of 529 plan, if your contract is for four years of tuition, tuition is guaranteed regardless of its cost at the time the beneficiary actually attends the school. This can provide substantial savings if you invest when the child is still very young.

One downside is that there’s uncertainty in how benefits will be applied if the beneficiary attends a different school. Another is that the plan doesn’t cover costs other than tuition, such as room and board.

Savings plan

This type of 529 plan can be used to pay a student’s expenses at most postsecondary educational institutions. Distributions used to pay qualified expenses (such as tuition, mandatory fees, books, supplies, computer equipment, software, Internet service and, generally, room and board) are income-tax-free for federal purposes and typically for state purposes as well, thus making the tax deferral a permanent savings.

The biggest downside may be that you don’t have direct control over investment decisions; you’re limited to the options the plan offers. Additionally, for funds already in the plan, you can make changes to your investment options only twice during the year or when you change beneficiaries.

But each time you make a new contribution to a 529 savings plan, you can select a different option for that contribution, regardless of how many times you contribute throughout the year. And every 12 months you can make a tax-free rollover to a different 529 plan for the same child.

As you can see, each 529 plan type has its pluses and minuses. Whether a prepaid tuition plan or a savings plan is better depends on your situation and goals. If you’d like help choosing, please contact us.

Article Dean Dorton

In today’s regulatory environment, companies must be proactive in addressing environmental and safety concerns. A third-party hotline encourages disclosure of critical issues and protects both the company and its employees.

Voluntary Protection Program Act

OSHAOSHA’s Voluntary Protection Program Act is garnering support from both political parties. Introduced on April 28, the proposed legislation would signify a long-term commitment to OSHA’s program recognizing exceptional worksite in terms of safety and health performance. Worksites that successfully participate in VPP are exempt from certain OSHA inspections.

Sens. Michael Bennett (D-CO) Mike Enzi (R-WY) are partnering in introducing the legislation. Enzi said in a press release: “It is important that Congress cement this successful program to help ensure that it persists, as well as to ensure that it can grow to include more of America’s small businesses.” Bennett said “Our bill ensures that OSHA can continue to use this successful and cost-effective program to ensure the health and safety of Colorado workers.”

Since its 1982 inception, over 2,200 worksites have participated in VPP; the VPP Act would codify the program and secure funding against Congress. At this writing the bill is still before the Senate’s Health, Education, Labor and Pensions Committee.

EPA Initiatives

EPAFor the first time since 2011, the United States Environmental Protection Agency will update its initiatives starting in October. The newly selected national enforcement initiatives will guide inspection and enforcement resources for the next three years.

The EPA will also increase focus on metals manufacturing, mining, chemical manufacturing, and food processing industries. Increased inspections for facilities under the Clean Air Act are planned, especially where there is a risk of catastrophic releases. Industrial facilities with substantial air emissions and large agricultural facilities are also in line for an expanded EPA focus.

The EPA’s limited enforcement budget makes this announcement noteworthy. Between FY2010 and FY2015 there was a 20% budget decrease. With that tight budget, the EPA’s top priority will switch to larger, complex cases. While this strategy entails fewer cases for the EPA to pursue, the conclusion is it will provide greater environmental and health gains.

Within this structure, the EPA’s attention will continue in focused priorities at facilities: expand targeting toxic air pollution emissions for storage of hazardous waste; ensure large industrial facilities comply with the Clean Air Act; examine energy extraction activities; pursue unpermitted raw sewage discharges; target concentrated animal feeding operations that hinder natural resources.

To compensate for reduced physical inspections and limited enforcement resources, the EPA plans to better engage technologies to gather information about compliance at facilities.

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For more information about Red Flag Reporting, the third-party hotline offered by Dean Dorton, please contact Nick Lynch at nlynch@deandorton.com or 859.425.7635.