Key Changes to Watch in 2025

Episode Transcript

Speaker 1 (00:00):
At our phone lines. They are open to you right
now at six oh eight three two one thirteen ten.
That's six oh eight three two one thirteen ten. Love
do to have you join us this morning. Of course
we've got our retirement planning professionals from Coss Financial along
this morning. We got CJ. Closs and Eric Schwartz. Got
our telephone number six oh eight three two one thirteen ten.
That's three two one thirteen ten. The website for class

(00:21):
Financial coss Financial dot com. That's k l aas Financial
dot com. And of course their telephone number at the
office six oh eight four four two five six three seven.
Don't forget no charge for that initial gets to know
you appointment at Coss Financial. It will be complimentary to
you again. They're number six oh eight four four two
five six three seven.

Speaker 2 (00:39):
C J.

Speaker 1 (00:40):
How you doing this morning?

Speaker 3 (00:41):
I'm doing great, Sean, how are you?

Speaker 1 (00:43):
I'm doing really well. We were talking about Rockford earlier
this morning as a matter of fact, and.

Speaker 3 (00:47):
Oh interesting, Yeah, you've got good things. I suppose.

Speaker 2 (00:49):
Yeah.

Speaker 1 (00:49):
I think Rockford's a great, great little town right on
the river. I use it when I want to avoid
paying tolls, you know, right.

Speaker 3 (00:56):
I forgot you all the time down the side roads.
I forgot about it.

Speaker 1 (01:02):
Yes, and it is Cyril. They sent you through ways.
My mapping tool sends me down some strange but I
always love driving by the office down there, and typically
it's still very early in the morning, not open yet.
But if you don't know this, folks, Class Financial of
course two locations, the location right here in Madison as
well as a location in Rockford as well. Speaking of two,
the number two are good buddy. Eric Schwartz joins us

(01:23):
as well from Class Financial. Eric, how you doing this week?

Speaker 2 (01:26):
I am doing great, Sean. I'm a little worried about
you giving away your secrets to avoid told that quiet.

Speaker 1 (01:32):
Yes I am. I although they're better now, it used
to be back in the day when you'd have to
go through and throw money in the buckets. Oh, it's
just such a so anyway, I digress. Well, we've got
important stuff speaking of money, taxes. We're going to talk
this week about tax shifts and things folks need to
be aware of when it comes to planning and looking

(01:53):
forward to or I guess we're in twenty twenty five,
so we're really looking forward to the next The next
time we have to do access but getting ready to
uh to do that and deal with that. So we'll
talk with CJ and Eric about just that this morning.
Mention the website class financial dot com. That's class k
l aas Financial dot com telph number six So eight
four four two five six three seven. I want to

(02:14):
hold on to that telphonover a little later on the program.
You have a chance to win with our class Quiz
Question the week the folks from Class Financial that provided
a fantastic prize for you a twenty five dollars gift
card two Sephora. Little tip. Listen closely to the program
because oftentimes both the question and answer to the Class
Quiz Question Week comes up during the program. And speaking
of the Class Quiz Question Week, before we get rolling
on this week's conversation, let's actually take a look back

(02:36):
at last week's show and get the question and answer
there as well.

Speaker 3 (02:41):
Yeah, So, first off, thanks everyone for listening to our show,
and we hope you have a little bit of fun
with our with our closs Quiz question of the Week
that comes at the end of every show. The last week,
we were talking about social security and we actually got
into some details on social security that we normally don't
and so it's kind of a fun show. If you
missed it, go back and listen to the podcast. It's
on our website. But our COLSS Quiz question of the

(03:04):
Week last week was a true or false question, and
the question was true or for false. Your full retirement
age also known as FRA, is the age at which
you become eligible to receive your full unreduced Social Security
retirement benefit. And our winner from last week was Maria
from Stoughton, who entered that question as true. So Sean said,

(03:29):
listen closely to the question at the end of our
show today and you could be the winner.

Speaker 1 (03:33):
It's going to be an exciting program, definitely worth paying
attention to. Don't forget those sometimes we know in the
morning you step out, maybe you're grabbing some coffee, picking up,
dropping off the grand kiddos or kiddos. Of course with
school and other things, you might miss part of the show.
Don't fore, you can always listen back to the podcast
subscribe as well at Clossfinancial dot com. That's COLSS k
l a a S Financial dot com. So today the

(03:55):
topic it's quite timely and we're gonna do some updates
on some tex shifts that folks should be aware of
us we begin twenty twenty five and consider when it
comes to planning, Is that correct, Eric.

Speaker 2 (04:06):
Yeah, that's that's correc Sean. You know. The IRS is
they are always coming forward with updates every year. Sometimes
it's you know, just inflationary adjustments. Sometimes we're talking about
changes in the tax code. But we're going to talk
today about planning for our taxes for twenty twenty five.
We're going to look at some changes for twenty twenty

(04:27):
five and some of them that have been put in
place here in the last couple of years because they're
they're pretty important. But as an aside, we're really excited
to announce that just this year, we have brought tax
services in house at COSS Financial. So for our clients,
this is a nice little add on service that we
can we can offer and kind of bring their whole

(04:47):
financial situation together under under one roof. So we're pretty
excited about that. But you know, getting kind of getting
back here to our topic today, we know that a
lot of people are still thinking about their tax situation
for twenty twenty four. You know, we haven't been able
to file those yet. The IRS is going to be
accepting twenty twenty four tax returns starting January twenty seventh

(05:11):
for our early birds, with the tax deadline of April fifteenth,
and then the extension for filers who elect that that's
going to be October fifteenth, twenty twenty five. But you know,
we're planners here, so we want to get ahead and
talk about tax planning for twenty twenty five. Often, you know,
people will go see their tax professional at tax time,

(05:34):
and unfortunately, at that point it's often really too late
to take advantage of some of the strategies you might
use to reduce your tax burdens. So we want to
get ahead of that and start talking about twenty twenty
five right now. So the first change that I wanted
to address here is the standard deduction change in twenty
twenty five. So, because the standard deduction was increased with

(05:59):
the tax cuts in Jobs Act, it's become much more
common for folks to use the standard deduction rather than
to itemize their deductions. And the standard deduction, which this is,
you know, the specific dollar amount that the IRS provides
each year that reduces the amount of income without having
to come up with a whole bunch of other itemized deductions.

(06:20):
For married couples who are filing jointly for twenty twenty five,
it is rising up to thirty thousand dollars, so that's
about an eight hundred dollars increase from last year. And
for single taxpayers and married individuals who file separately, the
standard deduction is rising to fifteen thousand dollars for twenty
twenty five, so that's an increase of about four hundred
dollars over last year. And then for folks who are

(06:44):
filing head of household, standard deduction will be twenty two thousand,
five hundred for twenty twenty five, and that's about a
six hundred dollars increase from last year.

Speaker 1 (06:52):
Talk of this morning with Eric Schwartz and CJ. Closs.
They are are retirement planning professionals from Coss Financial. You
can learn more online about them class financial dot com,
fantastic website, telph number six so eight four four to
two five six three seven. So, Eric, what about tax rates?
What are we seeing as far as the bracket's there?

Speaker 2 (07:09):
Yeah, the marginal tax rates for twenty twenty five, we're
not seeing any major changes there. The top rate remains
thirty seven percent for individual single tax payers whose income
is greater than six hundred and twenty six thousand, three
hundred and fifty dollars, so you got to make quite
a bit of money to hit that top bracket. And
for for married couples filing jointly, it's you know, about

(07:31):
seven hundred and fifty one thousand, six hundred dollars that
your income has to exceed before you see that thirty
seven percent rate. From there though, no major changes to
the marginal tax rates. You know, we have the thirty five,
thirty two, twenty four, twenty two, twelve and ten percent
income tax brackets. And just a reminder for folks, just

(07:53):
because you are in let's say the twenty two percent
income marginal income tax bracket, that doesn't mean that every
dollar you earn is going to be taxed at twenty
two percent. This is a really common misconception we see
with clients. It is just the amount over and above
where that limit begins. So, for example, let's say the

(08:13):
twenty two percent tax bracket for married couples filing jointly,
that starts at ninety six, nine and fifty dollars, But
that does not mean that every every dollar is taxed
at twenty two percent. Only the dollars that exceed that
that ninety six, nine hundred and fifty dollars threshold. And
know this is kind of really getting into the weeds,

(08:35):
but we often hear from people that are really concerned.
Oh no, I went into the twenty two percent bracket.
Now I'm going to have to pay way more in tax.
Keep in mind, it's not the end.

Speaker 3 (08:45):
Of the world.

Speaker 2 (08:45):
It is just those dollars over and above the threshold.

Speaker 1 (08:48):
What about earn income tax credits?

Speaker 2 (08:50):
Eric, Yeah, so so that amount is going to be
eight thousand, forty six dollars really specific number there for
qualifying taxpayers who have three or more qualifying children. That's
a small increase of about two hundred and sixteen dollars
from twenty twenty four. Moving on to R and D adjustments,
This one is really really near and dear to us

(09:12):
here at class because we talked about rm ds in
our day to day and on the show a lot
as well, so required minimum distributions from your retirement accounts.
One change that took effect it's now been two years,
was the increase of the RMD age to seventy three.
So remember it was originally seventy and a half, then

(09:32):
it went to seventy two, then it was pushed back
to seventy three, but for people who were born in
nineteen sixty or later, that age is actually up to
seventy five now. So keep in mind you can distribute
funds from your retirement accounts anytime after age fifty nine
and a half without penalty. And in many cases, these

(09:53):
funds were invested pre tax so they were they reduced
your taxable income when you put them into the account,
which means that you will have to pay taxes once
the funds are distributed, either as regular income or in
the case of an rm D. So in the case
of an r and D that keep in mind here,
you may already be taking enough to satisfy the r

(10:15):
and D if you're drawing money out as part of
your retirement income. So for some folks, rmds don't actually
impact them directly because they're already satisfying it through normal distributions.
But the penalty for missing rm ds, so this is
something that we've talked about before. If you forget to

(10:36):
take that required minimum amount before well in the year
that you are required to, the rs used to issue
a penalty of fifty percent of the shortfall. Okay, so
that's a huge penalty, fifty percent of the amount that
you did not take out that you were supposed to.
But back in twenty twenty three they drop that down

(10:57):
to twenty five percent of the shortfall. And if you
actually correct that in with they deem a timely manner,
which you know is I suppose up to interpretation. But
if you do that in a timely manner, they're going
to reduce that penalty to ten percent of the shortfall.
Last one here on rm DS that I wanted to
talk about, and this one is is something that we

(11:19):
never really understood why it was the way it was
before to begin with. But that's the elimination of required
minimum distributions for the WROTH portion of your retirement accounts.
So think of your you know, your four oh one
K or your four h three B that you've put
WROTH dollars into. This change actually took effect for twenty
twenty four, but we want to highlight it because it's

(11:39):
a pretty big change, and like I said, it was
something that never really made sense to us because like
a roth IRA that that doesn't have a required minimum distribution,
but a WROTH four oh one K, a WROTH four
old three b ROTH war fifty seven, and you know
the WROTH portion of the thrift savings plan for some
of our federal ployees, those were all subject to required

(12:02):
minimum distributions. The beginning last year, rm ds are no
longer required on any type of WROTH retirement savings account.
So this allows individuals to keep their WROTH accounts really
wherever they want. They're not forced to roll it over
to a ROTH IRA to avoid r and ds. And
not that these r and ds were taxable coming from

(12:23):
from the Roth portion, but if you think about it,
those WROTH dollars are some of your most powerful dollars
and if you if you don't have to take them
out of the ROTH portion and you don't have to
give up that tax free growth, that's definitely going to
be preferable. So this is a good change in our.

Speaker 1 (12:39):
Minds starting to make it makes a little more sense
to Yeah, as we talked this morning with Eric Schwartz
and CJ. Colss, they are our retirement planning professionals from
Costs Financial. You can learn more online. They've got a
great website, Costs Financial Dot com. That's cost k l
a a Sfinancial dot com. If you haven't been there recently,
head on over. You can learn more about the team
at costs Financial. There's separate divisions. Also, you can sign

(13:01):
up for the weekly Market Pulse newsletter. It's a weekly
email that comes in your inbox. It's got a little
snapshot of what's been going on in the markets. Also,
we'll link to the most recent podcast that available at
cossfinancial dot com. There are teleph number six oh eight
four four two five six three seven. No charge for
that initial gets know you appointment at Coss Financial. It
will be complementary to you again their number six o
eight four four two five six three seven. What about

(13:23):
contribution limits? We'll get the details on that and so
much more as Money in Motion with Coss Financial continues
right here on thirteen ten, Wiva talking with our retirement
planning professional CJ. Coloss and Eric Schwartz. They come to
us from Class financial website Coss Financial dot com. That's
Class k l aa S Financial dot com. The are
telephe number six oh eight four four two five six

(13:44):
three seven. No charge for that initial gets to know
your appointment at Loss Financial. It will be complementary to
you again their number six oh eight four four two five,
six three seven looking through the year twenty twenty five
when it comes to changes to tax law and some
things to keep in mind as we move through the
year this morning, and and CJ bringing you in on
the on the conversation, what about limits when it comes

(14:06):
to contributions in our in our twenty twenty five retirement accounts.

Speaker 3 (14:11):
Yeah, this is really important as you kind of adjust
your expectations for twenty twenty five as it relates to
saving for the future. So, so some additional limits for
you to be aware of as we head into the
twenty twenty five calendar year. Here, So contribution levels to
employer sponsored retirement plans have increased, So here we're talking

(14:32):
about like four to one k's, four h three b's,
forty sevens and federal thrust savings plans. In twenty twenty five,
these maximum elective deferral contributions as we call them, have
increased to twenty three thousand, five hundred dollars if you're
under the age of fifty, with an additional seven five
hundred dollars catchup if you're over the age of fifty.

(14:53):
So twenty three thousand, five hundred for basically everybody, plus
seventy five hundred dollars extra known as catchup contribution if
you're over the age of fifty. So we often will
just talk about these as two big different numbers, like,
if you're under fifty, it's twenty three five. If you're
over fifty, it's thirty one thousand dollars. But interestingly, if
you log in online, they're going to ask you to

(15:15):
make contributions to those two buckets separately, which is kind
of weird. You go, oh, wait, what, I've got a
max out the elective deferral and then I've got also
max out the ketchup contribution. It's just a little bit wonky.
But IRA contribution levels have remained the same from last
year to this year. So if you're under the age

(15:35):
of fifty, the max you can put into an IRA,
assuming you're eligible, is seven thousand, and then if you're
over fifty, there's one thousand dollars catchup for an additional thousand,
totally eight thousand dollars for the year. Now, interestingly enough,
we talked about this actually last week a little bit,
but under a change made in Secure Act two point zero.

(15:55):
There is a higher catchup contribution limit on employer sponsor
retirement plans for individuals who are specifically age sixty, sixty one,
sixty two, and sixty three and who participate in one
of the employers sponsored retirement plans. So again just those
four years, there's actually a higher catchup contribution mount not

(16:16):
the seventy five hundred I was talking about, but actually
it goes up to eleven thousand, two hundred and fifty
dollars in the catchup for a total of thirty four thousand,
seven hundred and fifty dollars. So interestingly enough, Eric and
I and Mark firm view this as a very good thing,
just kind of wonky. Wait a minute, there's a there's

(16:37):
a third level of complexity here now. So now it's
like if you're under fifty, it's twenty three to five,
if you're over fifty, it's seventy five an additional seventy
five hundred, But if you're specifically sixty, sixty one, sixty two,
and sixty three, it's actually eleven two hundred and fifty.
So I hope you're laughing with me. As great as
it is, it just adds another layer of.

Speaker 1 (16:56):
Complex Dougan's warning with CJ Class and Eric Schwartz, our
retirement fighting professionals from Class Financial go over. You can
find them online Class Financial dot com. That's Closs k
l A A S Financial dot Com and CJ. As
we as we work through this stuff, what about qcds,
we haven't touched on those yet.

Speaker 3 (17:14):
Yeah, so before I move on to that, you know,
I'd like to kind of poke at and make fun
of occasionally complexity, but I do want to circle back.
This is a good thing. If you are going to
be sixty sixty one, sixty two, or sixty three this
year and you are still working, eligible to contribute to
an employer sponsored retirement plan, do speak with your employer,
your four one K provider, even your financial advisor to

(17:35):
see if you should be trying to max that out.
But yes, QCD so goodness, you all know our industry
loves our acronyms. So qcds. This state is short for
qualified charitable distributions. We discussed this area quite frequently, and
the two the qcds kind of interact with your rmds.

(17:55):
So let me say that differently qualified charitable distributions have
some level of interaction with your required minimum distributions. So
let me explain what I mean here. If you contribute
to a charity under normal circumstances, assuming you're not over
seventy and a half, your only way to benefit by
those contributions to the charity on your taxes would be

(18:18):
for your itemized deductions, which includes charitable and a bunch
of other things. Would be if your itemized deductions to
exceed the standard deduction, which, as Eric just talked about,
is less common given how high the standard deduction is now.
Well one we'll call it. Get out of jail Free
card is the way that qcds interact with rmds. So
when you become required to pull money out of your

(18:41):
pre tax retirement account through this thing called the required
minimum distribution for most Americans, that's now seventy three or
seventy five, when that happens, if you don't need that income,
or furthermore, you don't want it because it's going to
push you up in the higher tax brackets or cause
other tax issues for you, you get out of jail
free card. It is just to take that money and

(19:01):
do what are called qualified charitable distributions. This is not
giving to the charities out of your checking account anymore,
you'd have to work with your advisor to say I
don't want to I don't want to give out of
my checking account. I want to give directly from my
IRA to the charity. And in so doing, two things
are happening. Number One, you're meeting your required minimum distribution

(19:22):
by doing this, so set another way. Those qcds count
towards meeting your minimum. And then secondarily, you're not paying
income taxes on that money. It's counted right, it shows
up as a distribution, but there's just no tax withholding
off of it. So you get the idea. It's like, WHOA.
So what you're saying CD is there's no itemization. I don't. Basically,

(19:45):
set another way, my first dollar that comes out as
a QCD has a tax reductive value to it, whereas
if I get up give out of my checking account,
I might need to do you know, twenty some thousand
dollars worth of gifts before it has any tax benefits.
So where do the wise You don't need to know
all the logistics of this. What you do need to

(20:05):
know is that if you are old enough to have
required minimum distributions, and you are giving to charities of
a substantial amount and you are not doing it out
of your IRA, you're missing out. You should probably go
talk to your accountant or your financial advisor to change
the way in which you are giving to charities. Now,

(20:25):
as it relates to this, there used to be a
maximum annual QCD amount that you could do that was
established like seventeen years ago. But now these maximum kind
of qualified charitable distributions are linked to inflation. So the
max you can do in any calendar or sorry as
of twenty twenty five is one hundred and eight thousand dollars.
That's the max you can do in qcds.

Speaker 1 (20:47):
Talking partner to CJ Class and of course Eric Schwartz
of COSS Financial and this money emotion with Class financial
website colssfinancial dot com. That's Coss Klaas Financial dot com.
CEJ any other notes when it comes to when it
comes to rmds.

Speaker 3 (21:02):
Yeah, so interestingly enough, again, i'd like to poke every
once in a while at things that we think are funny,
although Eric and I would both attest to actually think
secure Act one point zero and two point zero did
a wonderful job of cleaning up a lot of unnecessary complexity.
So truly, I think both Eric and I think a
really good, good piece of legislation overall. Now, one thing

(21:23):
they didn't clean up, which is still a little bit wonky,
is you're actually eligible to do qualified charitable distributions at
seventy and a half, which used to be the age
that your required minimum distributions would begin. It's not anymore
now it's seventy three or seventy five. So you can
actually do qualified charitable distributions as early as age seventy

(21:47):
and a half, but you're just not required to make
minimum distributions until seventy three or seventy five. Which the
reason this is wonky everybody is because the real benefit
here is not claiming the extra income. That's why one
of the biggest benefits, and so for us, having those
two linked by age makes more sense. But listen, it's
not a bad thing. I would just say to you,

(22:08):
you're actually eligible to do qualified charitable distributions before you're
required to perform minimum distributions. So again, if you're over
seventy and a half, you're not doing qualified charitable distributions
and you're giving a lot to charities. Go speak with
your accountant or advisor. Now another thing here, another kind
of change as we head into twenty twenty five is

(22:29):
that additional employer contributions are now eligible for WROTH treatment.
This is interesting. So remember the laws used to be, Hey,
when I contribute to a four ROH one K plan,
they might match my contributions. You've heard us over and
over say to you, don't leave free money on the table.

(22:49):
So if they're going to match you fifty cents on
the dollar up to six percent, make sure you're putting
in six to get there to get their three right,
always get the free money. Well, what we also used
to say to you is, regardless of the way that
you save into the plan, whether it was WROTH or
pre tax, all of the employer money so the money

(23:11):
coming from your employer as a match would always be pretax.
Didn't matter if you were contributing WROTH, they were going
to give you pre tax money. Well, amazingly this has
now changed as we head into twenty twenty five. And
this is assuming your plan allows for this, by the way,
so you would need to talk to your employer, but
now you could say, hey, my income is low enough
or I'm young enough that I want to do a
WROTH for oh one K contribution up to say six percent,

(23:34):
and the three percent that they're going to put in
for me, I want them to do that money as
wroth now word other wise, this means that that money
that they're putting into for you has to be taxed.
So actually, as great as that is that they can
put WROTH money in for you, that kind of dilutive
pattern of their money going in as WROTH is just

(23:56):
going to further reduce your net paycheck. Warning, warning, warning.
As much as we love this, I love choice, I
don't think a lot of people are going to pick
up on the consequences of their choice. So make sure
again talk to your advisor, your accountant, even your spouse
to make sure that the take home pay is enough
to kind of meet the bills.

Speaker 1 (24:15):
See J might do that in reverse order.

Speaker 3 (24:16):
I mean a good point, super talk to the spouse
first and then the accountant.

Speaker 1 (24:21):
Advice, anything else as far as as far as iras
and things that we need to know for twenty twenty
five CJ.

Speaker 3 (24:28):
Yeah, so the IRS is also phased out income ranges
for iras, So for single taxpayers covered by a workplace
retirement plan, the phase out range for a traditional IRAY
is between seventy nine and eighty nine thousand in twenty
twenty five. You know, similarly, the income limit for wroth
I rays is also higher in twenty twenty five. So
the maximum you can earn and still contribute to a

(24:49):
wroth IRA is one sixty five if you're a single
tax payer or single single file or head of household,
and that's up from one fifty three last year. And
if you're read filing jointly, this again is for Rotha
Ray contributions, your joint modified adjusted gross income must be
under two hundred and forty thousand. So listen, everybody, I've

(25:10):
been doing this for a long time. I know to
hear this and how to apply this. It actually took me,
and this is being in the industry, It actually took me,
maybe I'm slow, like five to seven years to understand
what the heck this meant. Like I kind of understood
the concept, like, okay, there's some limit. If I earned
too much, then I can't do the thing. But how

(25:33):
it got applied and then it was like I heard
this thing of well, you know, you can always contribute
to an irge as may or may not be deductible,
and I was like, what what, so what is the
what is the phase out for if I can still contribute?
All very confusing to me. What I'd say is, if
you understand this, great it means it means you're smarter
and faster than me. If you don't, you're in good company.

(25:55):
Even people who do this for a living, it takes
some while to warm up to all of it. So
this is why people like us have jobs. Feel free
to call us, talk to your accountant, talk to your advisor,
and make sure that you are avoiding problems. Many times
people just do the same behavior over and over and
over until they suddenly find out they weren't eligible for it,

(26:15):
and then we've got to go back and amend multiple years
of tax returns. So this is This is kind of
my sly way of saying, you may want to have
a financial advisor who at least you meet with occasionally,
just to make sure you're not running a foul of
any of the rooms you mentioned.

Speaker 1 (26:29):
CJ giving you a call, of course, tell number for
COSS Financial six so eight four four two five six
three seven really cool thing. No charge for that initial
get to know your appointment at Coss Financial. It will
be complimentary to you again. They're number six oh eight
four four two five six three seven the website coss
financial dot com. That's coss financial dot Com. Remember watching
weekend programming, they'd always say, but wait, there's more, and

(26:49):
there is more, and we'll talk about that. Next has
Money in Motion with Class Financial continues right here on
thirteen ten. Dou Wuiba talk this morning with Eric Schwartz
and CJ Closs. They are our retirement planning for specials
from Class Financial website class financial dot com delv whatever
six So eight four four two five six three seven
just moments away from the class quiz question the week
will do that just a minute. But first, as mentioned,

(27:10):
there is more that we need to be aware of.
And Eric, what are some of those other changes that
folks need to be queuing in on this time of
year or this year?

Speaker 2 (27:18):
Yeah, Sean, I just had two more really really important
topics to discuss here, both having to do with education funding.
And the first one is really exciting at starting this year,
and it's the student loan match benefit. So this is
an opportunity where employers are now able to match employee

(27:39):
student loan payments what with matching payments to their retirement account.
So basically, this gives an employer an opportunity to reward
the repayment of educational loans. So this means if your
employer offers it. Again, like CJ mentioned before, every plan
is different, but if your employer offers to match your
four oh one K contribution, and you could get matched

(28:02):
dollars into your four one K or four O three
B without ever having to deposit your own funds into
your retirement account. So we always say don't leave free
money on the table. Make sure you're getting the employer
match at least in your retirement savings plan. But especially
when people are just starting out, we realize that you know,
you have to make decisions about you know what, what

(28:23):
you can and can't do financially. But this is an
opportunity for people to you know, pay down their educational
debt and get a retirement contribution. So it gives the
opportunity to not have to to choose between paying down
debt and saving for retirement. So check to check with
your employer to see if this is available. If you

(28:44):
are if you are repaying student loans and hopefully can
get you a little bit more and put into your
retirement accounts. And the last, the last thing I want
to talk about here is the something that that took
that came about as a result of Secure Act two
point zero, and it has to do with five twenty
nine college savings plans. So what this provision does is

(29:09):
it allows unused funds from a five to twenty nine
educational savings plan to actually be rolled over to a
Rothie array. So now remember five twenty nine plans. They
are to be used for educational expenses. And if you
don't use them for an educational expense, there can be
some tax and penalty do on the distribution. And we

(29:33):
hear this from people all the time. You know, it's
great that you know, you get the tax free grow.
It's great that I can get a you know, a
state tax deduction. But I don't want to put money
into the five twenty nine because you know, if my
child decides not to go to college, or you know,
their college doesn't isn't like a traditional four year program.
It's shorter and it doesn't cost as much. I just

(29:53):
don't want to have my hands tied. Which makes a
ton of sense. But what we've seen in recent years
is the IRS has really been trying to quell some
of that fear by adding some flexibility to the allowable
distributions from A five to twenty nine. And this is probably,
I think one of the coolest ones. So what it
allows them to do them being the beneficiary, is they

(30:18):
can take up to thirty five thousand dollars okay, of
remaining balance in A five twenty nine. So maybe that's
you know, they didn't spend all the money on school,
Maybe they didn't go to school, and they can use
that thirty five thousand dollars to start saving for retirement, okay,
So they can use that thirty five thousand dollars to
make an annual roth IRA contribution up to the limit

(30:39):
which CJ mentioned this earlier. It's seven thousand dollars for
folks under fifty and eight thousand for people fifty and older,
and they can take you know, let's say they have
thirty five thousand dollars left in a college savings plan.
They can make five years of contributions to their roth
IRA using those five twenty nine dollar dollars without penalty.

(31:02):
And they're actually putting those dollars to good use for
for their future.

Speaker 1 (31:05):
That's a really good tool made even better as we
talked this morning with Eric Schwartz and CJ. Closs. They
are our retirement finding professionals from Class Financial the website
class financial dot com. That's Closs klaas Financial dot com
are telephon number six oh eight four four two five,
six three seven. You want to hold on to that
teleful number because it's time now for the Class Quiz
Question of the week. It works like this. In just

(31:25):
a moment, I'll ask you the class Quiz question leak.
You'll then have thirty minutes from the en Today's program
to call the Class Financial office right here in Madison
at six oh eight four four two five six three seven.
If you are the first collet correct answer, win this
week's prize, which is a twenty five dollars gift card
to Sephora. This week's Closs Quiz question of the week
is this What is the new standard deduction for single
tax payers in twenty twenty five? Is it ten thousand

(31:49):
dollars or fifteen thousand dollars? Telephone number six oh eight
four four two five six three seven. First call with
correct answer when that twenty five dollars, gift cards, Sephora
and again that's Loss Financials Office right here in matt U.
No charge for that initial gets to know the appointment.
It is complimentary to you again their number six O
eight four four two five six three seven CJ.

Speaker 3 (32:07):
Eric.

Speaker 1 (32:08):
It's always fantastic chatting with you guys.

Speaker 2 (32:10):
You have a great day, Thanks Sean, Thanks Sean.

Speaker 1 (32:13):
Doctor Marty Greer comes your way next right here thirteen
ten WIV eight