Hi,
I have a Fidelity account where I invest $100 per month per child into SPY, and I also make a significant contribution when they are born to save for their future, such as for their weddings. I would like to know if there are any special accounts or other methods available that could help minimize the tax burden on these investments.
All your advice are highly appreciated
Thank you!
If you give money to charities over the years, use a donor-advised fund (probably using Fidelity's would be simplest) to cycle through your appreciated investments. For example, if you're going to give $5k to charity this year, instead of giving cash or checks, transfer $5k of your most-appreciated SPY into your donor-advised fund, and send the money from there. Then use the money you would have given to buy another $5k of SPY - presto:
1) You gave the money to charity
2) You have the same amount of SPY
3) Your biggest tax liability just got a free step-up in cost basis.
A 529 education account.
You'll have to use it for higher education. That includes any yeshiva, sem, etc in which you can get get gov't assistance such as FAFSA.
This may not work for the whole savings, but up to $5,000 per donor per year NYS tax deductible. IDK NJ.
+1, als note that while I don't know much about 529 plans, different state's plans may have different advantages, including using your own states plans.
And as above, you can invest money in a 529 plan, and then use that money for schooling expenses which would otherwise have come directly from your bank account...and then use the money in your bank account for the non-529-eligible expense.
