Family Planning
If you plan to transfer wealth to the next generation, gifts of up to $18,000 will be tax free in 2024, up from $17,000 in 2023, and the lifetime estate tax exemption will be $13.6 million, up from the $12.9 million.
Wealthy taxpayers should take advantage of these higher limits, advisers say, as the Trump-era tax cut that doubled the federal estate tax exemption will sunset in 2025; meaning the exemptions will effectively be cut in half.
Annual contribution limits for 529 savings accounts, meant for a child’s education, will also increase by $1,000 to $18,000 in 2024. 529 contributions are considered gifts for federal tax purposes, but they don't count against the lifetime gift tax exemption.
Additionally, starting in 2024, 529 account holders will be able to transfer up to a lifetime limit of $35,000 to a Roth IRA for a beneficiary. So if the next generation changes their higher education plans, the money you saved for college can be used for their retirement instead, said McKeown.
“Grandparents can save away and rest assured that their money won’t go to waste,” he said.
This article was provided by Bloomberg News.