Consider these issues before providing (or reimbursing) mobile phones
January 7, 2026
For many employees, mobile phones are no longer a perk — they’re an essential business tool. However, issuing company phones or reimbursing employees for use of their personal devices can create hidden security risks, unexpected tax consequences and productivity concerns for business owners. Here are some key issues to consider before rolling out or revising your company’s mobile phone policy.
Security risks
In general, the biggest security risk associated with mobile phones is that they may lack robust protections against phishing, malware and other cyberthreats. Hackers could use an employee’s phone to access your business’s IT network, leading to theft of customer payment details, payroll data, intellectual property and other sensitive information. An illicit entry could even result in a ransomware incident.
If you allow employees to use phones to access company data, use a mobile device management system that enforces strong security protocols. And instruct phone users to avoid using public Wi-Fi networks (such as those in airports) that could expose them to data interception and malware.
Tax rules for work-issued phones
Another consideration is taxes. Business use of an employer-provided phone typically is treated as a nontaxable working condition fringe benefit if it’s provided “primarily for noncompensatory business purposes.” For example, you may need to reach employees at any time for work-related emergencies.
If the noncompensatory business purposes test is met, the value of any personal use of an employer-provided smartphone will generally be treated as a nontaxable “de minimis” fringe benefit. However, these phones will trigger taxable income if they’re provided to replace compensation, attract new hires or boost staff morale.
Guidelines for employee-owned devices
The IRS has indicated that it analyzes expense reimbursement for employees’ personal phones similarly to how it treats employer-provided phones. So reimbursements generally won’t be considered additional income or wages if:
- You have substantial business reasons for requiring employees to use their personal phones and reimbursing them for doing so,
- Reimbursements are reasonably related to the needs of your operations and calculated not to exceed the expenses that employees typically incur in maintaining their phones, and
- Reimbursements aren’t made as a substitute for a portion of employees’ regular wages.
Employer reimbursements for employees’ actual expenses must usually be made under a so-called accountable plan (contact us for more information). Alternatively, you could provide employees with flat monthly stipends. But stipends that exceed reasonable amounts may be treated as taxable wages.
Formal usage policies
To protect productivity, it’s critical to create written phone-usage policies. Discourage employees from using company-owned phones or their personal devices to make long personal calls, access their social media accounts or stream non-work-related videos during work hours.
If you allow employees to use their own phones at work, be sure to establish a bring-your-own-device (BYOD) policy. In addition to proper usage, it should address such issues as security, data ownership, privacy (for example, your ability to view employee phone data) and proper use. Your BYOD policy might also detail procedures for wiping personal devices when employees leave your employment.
Pros and cons
Many positions call for the frequent use of mobile phones — your executives, salespeople and other “road warriors” are only a few who probably need them. Depending on the nature of your business, it may make sense to issue or reimburse the use of personal phones as a fringe benefit to other employees. We can help you review the pros and cons related to equipment costs, security, taxes and productivity.
© 2026
A Crummey trust provides a key tax benefit of an outright gift without some of the downsides. Although the mechanics can seem technical, the concept is straightforward. And the benefits can be significant for families looking to reduce estate taxes and provide long-term financial security. How does a Crummey trust work? A Crummey trust (named after the 1968 court case that first authorized its use) is a special type of trust that allows gifts to it to qualify for the gift tax annual exclusion. Yet unlike with an outright gift, you still determine, through the trust terms, how the assets will be managed and when they’ll ultimately be distributed to beneficiaries. Generally, assets placed in a trust are treated as future interests and, therefore, don’t qualify for the annual exclusion ($19,000 per beneficiary in 2026). So you normally would have to use some of your lifetime gift and estate tax exemption ($15 million for 2026) to make tax-free gifts to a trust. However, a Crummey trust overcomes this limitation by granting beneficiaries a temporary right to withdraw contributions made to it. Here’s how it works: Each time you contribute assets to the trust, the trustee must send a Crummey notice to the trust’s beneficiaries. This notice informs them that they have a limited window — typically 30 to 60 days — to withdraw their shares of the contribution. Because the beneficiaries technically have immediate access to the funds, the IRS treats the gift as a present interest, allowing it to qualify for the annual exclusion. After the withdrawal period expires, the funds remain in the trust (assuming the beneficiaries didn’t exercise their withdrawal rights) and are managed and eventually distributed according to the trust terms, such as when beneficiaries reach specific ages or to fund certain types of expenses. A Crummey trust is an irrevocable trust, meaning once assets are transferred into it, you, the grantor, generally can’t reclaim them. You determine the trust terms when you set up the trust. But, with limited exceptions, you can’t change them after the trust is initially funded. Because the trust is irrevocable, the trust assets won’t be included in your taxable estate, provided all applicable rules are met. This also effectively removes future appreciation on those assets from your taxable estate. When can they be particularly beneficial? Crummey trusts are often used in conjunction with irrevocable life insurance trusts (ILITs). An ILIT owns one or more policies on your life, and it manages and distributes policy proceeds according to your wishes. An ILIT keeps insurance proceeds, which could otherwise be subject to estate tax, out of your estate (and possibly your spouse’s). You aren’t allowed to retain any powers over the policy, such as the right to change the beneficiaries. But the trust can be structured to make a loan to your estate for liquidity needs, such as paying estate tax. Structuring ILITs as Crummey trusts allows annual exclusion gifts to fund the ILIT’s payment of insurance premiums. There’s an incentive for beneficiaries not to exercise their withdrawal rights so that the premiums can be paid to maintain the policy. The trust can potentially provide beneficiaries with a much larger payout later from the life insurance death benefit. Any tax traps? Before using a Crummey trust, it’s important to consider potential tax traps. One involves inadvertent taxable gifts from one beneficiary to another. Suppose, for example, that you set up a trust that provides income for your spouse for life, with any remaining assets passing to your daughter. To take advantage of the annual exclusion, you provide your spouse with Crummey withdrawal rights. Each time your spouse allows these rights to lapse without exercising them, he or she in effect has made a gift to your daughter by increasing the value of her future interest in the trust. There are a couple of ways to avoid this result. One is to rely on the IRS’s “5&5” rule, which doesn’t count lapsing rights as a taxable gift as long as the withdrawal right doesn’t exceed the greater of $5,000 or 5% of the trust’s principal. So long as the trust principal is at least $380,000, you’ll be able to make $19,000 annual gifts without violating the 5&5 rule. Another option is to make the holder of Crummey withdrawal rights the sole beneficiary of the trust, which eliminates the gift tax concern. Need help? While a Crummey trust can be a powerful estate planning tool, it must be properly drafted and administered, including timely notices of withdrawal and careful recordkeeping. If you’re considering a Crummey trust, contact us. We can help ensure this trust type aligns with your broader financial and estate goals. © 2026
Every year, severe storms, flooding, wildfires and other disasters affect millions of taxpayers. Many experience casualty losses from damage to their homes or personal property. The One Big Beautiful Bill Act (OBBBA), signed into law last year, generally made permanent the Tax Cuts and Jobs Act (TCJA) limitation on the personal casualty loss tax deduction. But it also expanded the deduction in one way. What’s deductible For losses incurred from 2018 through 2025, the TCJA generally restricted deductions for personal casualty losses to those due to federally declared disasters. This is the rule that applies to your 2025 income tax return due April 15, 2026. (Before the TCJA, personal casualty losses were also potentially deductible if due to various other types of incidents, such as theft, vandalism and accidents as well as to fires, floods, etc., not attributable to a federally declared disaster.) The OBBBA generally has made the disaster requirement permanent. But, effective January 1, 2026, it expands eligible disasters to include certain state-declared disasters. This applies to the tax return you’ll file next year for 2026. There’s an exception to the general rule, however: If you have personal casualty gains because your insurance proceeds exceed the tax basis of the damaged or destroyed property, you can deduct personal casualty losses that aren’t due to a declared disaster up to the amount of your personal casualty gains. Additional limits Even when the cause of a personal casualty loss qualifies you for the deduction, additional limits apply. First, your deduction for the loss from the declared disaster is reduced by any insurance proceeds received. If insurance covered your entire loss, you can’t claim a casualty loss deduction for that loss. If insurance didn’t cover your entire loss, then $100 (per casualty event) must be subtracted from the uncovered amount. Finally, a 10% of adjusted gross income (AGI) floor applies. So you can deduct only the uncovered loss (reduced by $100 per casualty event) that exceeds 10% of your AGI for the year you claim the loss deduction. If, say, your 2025 AGI is $100,000 and your casualty loss (after subtracting insurance proceeds and $100 per event) is $11,000, you can deduct only $1,000 on your 2025 return. Also keep in mind that you must itemize deductions to claim the casualty loss deduction. Since 2018, fewer people have itemized because the TCJA significantly increased the standard deduction amounts — and the OBBBA has increased them further. For 2025, they’re $15,750 for single filers, $23,625 for heads of households, and $31,500 for married couples filing jointly. For 2026, they’re $16,100, $24,150 and $32,200, respectively. So even if you qualify for a casualty deduction under the rules and limits, you might not get any tax benefit because you don’t have enough total itemized deductions to exceed your standard deduction. Have questions? The rules for the personal casualty loss deduction are complex, so contact us for more information. We can help you determine whether you qualify for — and will benefit from — this deduction on your 2025 income tax return. © 2026
With 2025 in the rear view mirror and the tax filing deadline on the road ahead, it’s a good time for businesses to start gathering information about their deductible expenses for 2025. But what’s deductible (and what’s not) might not be as clear-cut as you think. Most business deductions aren’t specifically listed in the Internal Revenue Code (IRC). The general rule is what’s stated in the first sentence of IRC Section 162, that you can write off “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” In addition, you must be able to substantiate the expenses. Ordinary and necessary In general, an expense is ordinary if it’s considered common or customary in the particular trade or business. For example, a landscaping company’s costs for fuel and routine maintenance on its lawn equipment would typically qualify as ordinary expenses because such costs are customary for that type of business. A necessary expense is defined as one that’s helpful or appropriate. For instance, a retail store that invests in security cameras may be able to operate without them, but the expense is helpful for reducing theft and protecting employees and customers. To be deductible, an expense must be both ordinary and necessary. An ordinary expense may be unnecessary because the amount isn’t reasonable in relation to the business purpose. For example, let’s say a construction business upgrades to premium, top-of-the-line tools when standard professional-grade tools already meet job requirements. Tool purchases are ordinary, but excessive upgrades may be unreasonable and, thus, unnecessary. Cases in point The IRS and courts don’t always agree with taxpayers about what qualifies as a deductible business expense. Often substantiation is the primary issue. Sometimes the question hinges not on the expense itself, but on whether the taxpayer was actually operating a trade or business. For example, the U.S. Tax Court denied deductions claimed by an engineering firm owner for the value of his own time spent developing a program. Self-performed labor isn’t “paid or incurred,” the court noted. Therefore, it’s not deductible. The court disallowed other deductions due to insufficient records and lack of a clear business purpose. In another case, a taxpayer engaged in real estate activities. His business expense deductions were denied by the Tax Court. The court ruled that the activities didn’t constitute an active trade or business. Instead, the real estate was held for investment purposes. In addition, the deductions weren’t substantiated because adequate records weren’t kept. The taxpayer appealed. The U.S. Court of Appeals for the Ninth Circuit agreed with the Tax Court. The court ruled the taxpayer “failed to provide sufficient evidence of his claimed deductions.” What can you deduct for 2025? Determining the deductibility of business expenses can be complicated, and proper substantiation is critical. We can help you determine what you can deduct on your 2025 tax return. © 2026
When creating or updating your estate plan, it’s important to address your elderly parents with both clarity and sensitivity. If you provide financial support, share housing or anticipate future caregiving responsibilities, your plan should reflect these realities. Clearly documenting any ongoing assistance, loans or shared assets can help prevent misunderstandings among heirs later. In addition, if your parents have designated you to act on their behalf through powers of attorney or health care directives, your estate plan should align with those roles so there are no conflicting instructions or expectations. 5 steps To incorporate your parents’ needs into your own estate plan, you first must understand their financial situation and any arrangements they’ve already made. Some may require tweaking. Here are five action steps: 1. List and value their assets. If you’re going to manage the financial affairs of your parents, having knowledge of their assets is vital. Compile and maintain a list of all their assets. These may include not only physical assets like their home and other real estate, vehicles, and any collectibles or artwork, but also investment holdings, retirement accounts and life insurance policies. You’ll need to know account numbers and current balances. Be sure to add in projections for Social Security benefits. When all is said and done, don’t be surprised if their net worth is higher or lower than what you (or they) initially thought. You can use this information to determine the appropriate planning techniques. 2. Identify key contacts. Compile the names and addresses of professionals important to your parents’ finances and medical conditions. This may include stockbrokers, financial advisors, attorneys, tax professionals, insurance agents and physicians. 3. Open the lines of communication. Before going any further, have a discussion with your parents, as well as other family members who may be involved, such as your siblings. Make sure you understand your parents’ wishes and explain the objectives you hope to accomplish. 4. Execute documents. Assuming you can agree on next steps, develop a plan that incorporates several legal documents. If your parents have already created one or more of these documents, they may need to be revised or coordinated with new ones. Some documents commonly included in an estate plan include: Wills. Your parents’ wills control the disposition of their assets and tie up other loose ends. (Of course, jointly owned property with rights of survivorship automatically passes to the survivor.) Notably, a will also appoints an executor for your parents’ estates. If you’re the one lending financial assistance, you’re probably the optimal choice. Living trusts. A living trust can supplement a will by providing for the disposition of selected assets. Unlike a will, a living trust doesn’t have to go through probate, which can save time and money while avoiding public disclosure. Beneficiary designations. Your parents probably have filled out beneficiary designations for retirement accounts and life insurance policies. These designations supersede references in a will, so it’s important to keep them up to date. Powers of attorney. A power of attorney authorizes someone to legally act on behalf of another person, such as to handle financial matters or make health care decisions. With a durable power of attorney, the most common version, the authorization continues should the person become unable to make decisions for him- or herself. This enables you to better handle your parents’ affairs. Living wills or advance medical directives. These documents provide guidance for end-of-life decisions. Make sure your parents’ physicians have copies. 5. Make gifts. If you decide the best approach for helping your parents is to give them monetary gifts, it’s relatively easy to avoid gift tax liability. Under the gift tax annual exclusion, you can give each recipient up to $19,000 for 2026 without incurring gift tax, doubled to $38,000 per recipient if your spouse joins in the gift. If you give more, the excess may be transferred tax-free under your available lifetime gift and estate tax exemption ($15 million for 2026, less any exemption you’ve already used during your life). Be wary, however, of giving gifts that may affect eligibility for certain government benefits. The availability of these benefits varies by state. Plan for contingencies Your estate plan should specify how you want to assist aging parents should they outlive you. For example, consider setting aside funds for their care or naming a trusted individual to manage those resources. Thoughtful provisions can reduce stress for your family and ensure your parents are treated with dignity and respect. These situations often involve emotional and financial complexity. Contact us to help develop a comprehensive plan that addresses your family’s needs. © 2026
Debt is inevitable for most small and midsize businesses. Loans are commonly used to help fund a company’s launch, expansion, equipment purchases and cash flow. When problems arise, it’s generally not because debt exists; it’s because the terms of that debt no longer match the operational realities of the business. In such instances, debt restructuring is worth considering. Making debt more manageable At its core, debt restructuring is the process of revisiting existing loan arrangements to make them more manageable for the company. It focuses on adjusting current obligations so they better align with the business’s projected cash flow and operating needs. This can be a more sustainable approach than, say, taking on new debt or ignoring the growing pressure. For small and midsize businesses, debt restructuring is generally handled through direct negotiations with lenders. Options may include: Extending repayment periods, Modifying payment schedules in other ways, Adjusting interest rates, and Consolidating multiple loans. The goal is to allow the business to continue operating normally while meeting its obligations. Warning signs If debt begins to consistently dictate operational decisions, step back and evaluate whether the structure of those obligations is a problem. Warning signs usually surface gradually. Monthly payments may start to limit the company’s ability to maintain adequate cash reserves, invest in growth or handle unexpected expenses. If you find yourself increasingly relying on short-term borrowing to cover routine costs or juggling payment due dates to stay current, it might be time to explore restructuring. That said, many healthy businesses explore debt restructuring as a way to strengthen their overall financial positions. Changes in customer demand, economic conditions, interest rates and operating costs can all be valid reasons to consider it. Timing and perspective Among the most important aspects of debt restructuring are timing and perspective. From a timing standpoint, options are generally broader and more flexible when you address concerns early. Waiting until payments are missed or covenants are violated reduces your leverage with lenders. Perspective matters just as much. Ideally, you should approach restructuring as a proactive strategic adjustment to financial obligations rather than a desperate last resort. Doing so will help you focus conversations with lenders on long-term sustainability rather than a short-term bailout. However, be realistic. Although debt restructuring can ease cash flow pressure and create breathing room to reset strategic objectives, it can’t fix deeper operational or profitability issues. If your business model is no longer viable, restructuring may provide temporary relief but not a permanent solution. It tends to work best when paired with a clear understanding of a company’s financial position and future outlook. Guidance is essential If your business is facing increasing debt pressure, restructuring may be the right solution. But that doesn’t mean you should immediately pick up the phone and call your lender. Professional guidance is essential. We can help assess the implications of restructuring and whether better alternatives are available. © 2025
Many tax figures are annually adjusted for inflation and typically increase each year (or at least every few years). For 2026, some additional changes are going into effect under the One Big Beautiful Bill Act, signed into law July 4, 2025. Here’s an overview of some important limits and other tax figures for 2026. Keep in mind that exceptions or additional rules or limits may apply. Standard deduction Single and married filing separately: $16,100 Head of household: $24,150 Married couples filing jointly: $32,200 Additional standard deduction for those age 65 or older and/or blind: $2,050 ($1,650 per spouse if married). For taxpayers both 65 or older and blind, the additional deduction is doubled. Itemized deduction limits Casualty loss deduction: only for eligible losses from federally or (new for 2026) state-declared disasters Charitable deduction floor (new for 2026): 0.5% of adjusted gross income (AGI) Mortgage interest deduction: interest on qualified debt up to $750,000 Medical expense deduction floor: 7.5% of AGI State and local tax deduction: $40,400 Overall limit for higher-income taxpayers (new for 2026): Generally, the tax benefit from itemized deductions for taxpayers in the 37% bracket will be as if they were in the 35% bracket Retirement plan limits Traditional and Roth IRA contributions: $7,500 Traditional and Roth IRA catch-up contributions for those age 50 or older: $1,100 401(k), 403(b) and 457 plan deferrals: $24,500 401(k), 403(b) and 457 plan catch-up contributions for those age 50 or older: $8,000 401(k), 403(b) and 457 plan additional catch-up contributions for those age 60, 61, 62 or 63: $3,250 SIMPLE deferrals: $17,000 SIMPLE catch-up contributions for those age 50 or older: $4,000 SIMPLE additional catch-up contributions for those age 60, 61, 62 or 63: $1,250 Contributions to defined contribution plans: $72,000 Annual benefit limit for defined benefit plans: $290,000 Other tax-advantaged savings limits Health Savings Account (HSA) contributions: $4,400 for individuals, $8,750 for family coverage Health Flexible Spending Account (FSA) contributions: $3,400 Child and dependent care FSA contributions: $7,500 Trump account contributions: $5,000 Estate planning Gift and estate tax exemption: $15 million Generation-skipping transfer tax exemption: $15 million Annual gift tax exclusion: $19,000 (unchanged from 2025) 2026 tax planning These are only some of the figures and limits that could affect your 2026 taxes. To learn more and begin planning for the new year, contact us. © 2025
A new year brings many new tax-related figures for businesses. Here’s an overview of key figures for 2026. Be aware that exceptions or additional rules or limits may apply. Depreciation-related tax breaks Bonus depreciation: 100% Section 179 expensing limit: $2.56 million Section 179 phaseout threshold: $4.09 million Qualified retirement plan limits 401(k), 403(b) and 457 plan deferrals: $24,500 401(k), 403(b) and 457 plan catch-up contributions for those age 50 or older: $8,000 401(k), 403(b) and 457 plan additional catch-up contributions for those age 60, 61, 62 or 63: $3,250 SIMPLE deferrals: $17,000 SIMPLE catch-up contributions for those age 50 or older: $4,000 SIMPLE additional catch-up contributions for those age 60, 61, 62 or 63: $1,250 Contributions to defined contribution plans: $72,000 Annual benefit limit for defined benefit plans: $290,000 Compensation defining highly compensated employee: $160,000 Compensation defining key employee (officer) in a top-heavy plan: $235,000 Compensation triggering Simplified Employee Pension contribution requirement: $800 Other benefits limits Health Savings Account (HSA) contributions: $4,400 for individuals, $8,750 for family coverage Health Flexible Spending Account (FSA) contributions: $3,400 Health FSA rollover: $680 Child and dependent care FSA contributions: $7,500 Employer contributions to Trump account: $2,500 Monthly commuter highway vehicle and transit pass: $340 Monthly qualified parking: $340 Miscellaneous business-related limits Income range over which the Section 199A qualified business income deduction limitations phase in: $201,750 – $276,750 (double those amounts for married couples filing jointly) Threshold for the excess business loss limitation: $256,000 (double that amount for joint filers) — note that this is a reduction from 2025 Limitation on the use of the cash method of accounting: $32 million (also affects other tax items, such as the exemption from the 30% interest expense deduction limit) Planning for 2026 We can help you factor these changes and others into your 2026 tax planning. Contact us to get started. © 2025
Integrating health care decisions into your estate plan is important because it ensures they are thoughtful, informed and reflective of your values. When you make decisions in advance, you can clearly outline preferences for medical treatment, end-of-life care and quality-of-life considerations without the pressures of an illness or crisis. As with other aspects of your estate plan, the time to act is now, while you’re healthy. The benefits Making key health-care-related decisions now can prevent confusion, delays and disagreements among family members and medical providers at moments when emotions are already high. Advance planning also allows you to name someone to make health decisions on your behalf. You can choose someone who you know understands your wishes and can confidently advocate for you if you become unable to speak for yourself. Equally important, making these decisions while healthy can protect both you and your family from unnecessary stress and financial risk. Without documented health care directives, your family may be forced to seek court intervention or make rushed decisions with limited information, possibly leading to outcomes you wouldn’t have wanted. 2 documents do the heavy lifting To ensure that your health care wishes are carried out and that your family is spared the burden of guessing — or arguing over — what you would decide, put those wishes in writing. Generally, that means executing two documents: a living will and a health care power of attorney (HCPA). Unfortunately, these documents are known by many different names, which can lead to confusion. Living wills are sometimes called “advance directives,” “health care directives” or “directives to physicians.” And HCPAs may also be known as “durable medical powers of attorney,” “durable powers of attorney for health care” or “health care proxies.” In some states, “advance directive” refers to a single document that contains both a living will and an HCPA. For the sake of convenience, we’ll use the terms “living will” and “HCPA.” It’s a good idea to have both a living will and an HCPA or, if allowed by state law, a single document that combines the two. Let’s take a closer look at each document: Living will. This document expresses your preferences for the use of life-sustaining medical procedures, such as artificial feeding and breathing, surgery, or invasive diagnostic tests. It also specifies the situations in which these procedures should be used or withheld. Living wills often contain a do not resuscitate order, which instructs medical personnel to not perform CPR in the event of cardiac arrest. While a living will details procedures you want and don’t want under specified circumstances, no matter how carefully you plan, a document you prepare now can’t account for every possible contingency down the road. HCPA. This authorizes a surrogate — your spouse, child or another trusted representative — to make medical decisions or consent to medical treatment on your behalf when you’re unable to do so. It’s broader than a living will, which generally is limited to end-of-life situations, although there may be some overlap. An HCPA might authorize your surrogate to make medical decisions that don’t conflict with your living will, including consenting to medical treatment, placing you in a nursing home or other facility, or even implementing or discontinuing life-prolonging measures. Although an HCPA can include specific instructions, it can also be used to provide general guidelines or principles and give your representative the discretion to deal with complex medical decisions and unanticipated circumstances (such as new treatment options). This approach offers greater flexibility, but it also makes it critically important to appoint the right representative. Choose someone who you trust unconditionally, who’s in good health, and who’s both willing and able to make decisions about your health care. And be sure to name at least one backup in the event your first choice is unavailable. Be proactive Proactive planning can support better coordination with overall estate and financial strategies, helping you manage potential medical costs and preserve assets. By addressing health care decisions early, you can take control of your future, reduce the burden on loved ones and create peace of mind knowing your wishes will be respected no matter what lies ahead. Contact us with questions regarding a living will or an HCPA. © 2025
Did you know there’s a tax-advantaged way to save for the expenses of a person with a disability that’s similar to saving for college expenses with a Section 529 plan? Achieving a Better Life Experience (ABLE) accounts can help fund qualified disability expenses for an eligible beneficiary. The SECURE 2.0 Act, signed into law in 2022, made changes that will allow more people to be eligible for ABLE accounts beginning in 2026. The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, has made certain enhancements to them permanent. The benefits ABLE accounts can be created by eligible individuals to support themselves, by family members to support their dependents, or by guardians for the benefit of the individuals for whom they’re responsible. Anyone can contribute to an ABLE account. The OBBBA made permanent the ability of the designated beneficiary to claim the saver’s credit for contributions he or she makes to his or her ABLE account. The maximum saver’s credit for an individual for 2025 and 2026 is $1,000. While contributions aren’t tax-deductible, the funds in the account are invested and grow tax-deferred. Distributions used to pay eligible expenses are tax-free. (If distributions are used for nonqualified expenses, the portion of the distribution that represents earnings on the account is subject to income tax — plus a 10% penalty.) Having an ABLE account generally won’t affect the beneficiary’s eligibility for the government benefits to which he or she is entitled. ABLE accounts have no impact on Social Security Disability Insurance (SSDI) payments or Medicaid eligibility. However, ABLE account balances in excess of $100,000 are counted toward the Supplemental Security Income (SSI) program’s $2,000 individual resource limit. Therefore, an individual’s SSI benefits are suspended, but not terminated, when his or her ABLE account balance exceeds $102,000 (assuming the individual has no other assets). In addition, distributions from an ABLE account to pay housing expenses count toward the SSI income limit. Expanded eligibility Eligible individuals must be blind or disabled. For 2025 and prior years, the individual must have become so before turning age 26. But under SECURE 2.0, this age increases to 46 beginning on January 1, 2026. To be eligible, individuals generally must be entitled to benefits under the SSI or SSDI programs. Alternatively, individuals can become eligible if a disability certificate is filed with the IRS. Qualified expenses Distributions from an ABLE account are tax-free if used to pay for expenses that maintain or improve the beneficiary’s health, independence or quality of life. These expenses include: Education, Housing, Transportation, Health and wellness, Assistive technology, and Personal support services. Employment support expenses also qualify. Setting up an account Like 529 plans, ABLE accounts are established under state programs, and there are many choices. An account may be opened under the program of a state other than the one where the individual resides (as long as the state allows out-of-state participants). The funds in an account can be invested in a variety of options, and the account’s investment directions can be changed up to twice a year. Be aware that an eligible individual can have only one ABLE account. Also, there’s an annual contribution limit of $19,000 for 2025 and $20,000 for 2026. The OBBBA made permanent the ability to roll over 529 plan funds to an ABLE account without penalty, as long as the ABLE account is owned by the beneficiary of the 529 plan or a member of the beneficiary’s family. Such rolled-over amounts count toward the annual contribution limit. However, if the beneficiary works, he or she can also contribute part, or all, of his or her income to the account. (This additional contribution is limited to the poverty-line amount for a one-person household.) A new opportunity If you or someone in your family became disabled or blind after turning 26 but before age 46, the expansion of ABLE account eligibility in 2026 provides a new opportunity for tax-advantaged savings. To learn more about the tax benefits and other financial considerations, contact us. © 2025
Strategic planning can feel overwhelming for business owners juggling sales goals, cash flow challenges, staffing needs and day-to-day operational issues. Although you may rely heavily on financial reports to make key decisions, numbers alone don’t always tell the full story. Introduced in the early 1990s, the balanced scorecard approach still offers a practical framework for translating vision into action that’s worth revisiting. 4 critical areas The balanced scorecard approach was unveiled in a 1992 Harvard Business Review article entitled “The Balanced Scorecard — Measures That Drive Performance.” Essentially, it segments strategic planning into four critical areas: 1. Customers. Every business owner understands the importance of customer satisfaction. However, to truly understand and meet their needs, you must identify the right metrics. Just as critical is determining which customer segments your company is best equipped to serve. Under the balanced scorecard approach, you consider how your business can attract, retain and deepen relationships with customers that are most likely to support sustainable profitability. 2. Finance. Many companies rely on financial results as the sole indicator of overall stability and success. However, the results that show up in, say, your financial statements are typically lagging indicators; they reflect past events rather than future performance. To be clear, you should continue generating accurate financial statements. But the balanced scorecard approach encourages businesses to track metrics, such as sales growth and workforce efficiency, that reveal more timely financial outcomes. 3. Processes. To operate more productively and efficiently, business owners and their leadership teams must identify and solve process-related problems. Simply paying closer attention to a shortcoming isn’t enough. For example, measuring productivity won’t automatically increase it. The balanced scorecard approach motivates you to analyze the internal components of your operations — from design and production to delivery, billing and collections — and implement process improvements that support strategic objectives. 4. Learning and professional growth. Continuing education often calls for more time and effort than companies are willing or able to devote. Learning must go beyond training new hires to include, for instance, mentoring and knowledge sharing through performance management programs. For many businesses, success largely depends on the development and preservation of intellectual capital. The balanced scorecard approach focuses strategic planning on better retaining institutional knowledge, encouraging ongoing learning and preparing employees for future roles. Best practices Following the balanced scorecard approach involves clearly defining your strategic objectives in each of the four areas, choosing a few metrics to track and expressing the results on a “scorecard.” Many leadership teams use a simple table or spreadsheet for their scorecards, while others use digital dashboards that update key metrics in real time. Remember, too many measures can dilute focus and obscure what truly drives business performance. The most effective scorecards concentrate on a small set of meaningful indicators aligned directly with the company’s strategic objectives in each area. For instance, suppose a growing manufacturing company wants to improve profitability while maintaining quality and on-time delivery. To support this strategic objective, leadership develops a balanced scorecard to track: On-time delivery and customer complaints (customers), Operating margin and cash flow (finance), Production cycle time and scrap rates (processes), and Safety incidents and workforce training hours (learning and professional growth). Another best practice is to ensure balance among leading and lagging indicators. As mentioned, financial results show what has already happened. In contrast, customer surveys, employee engagement data and operational benchmarks can highlight emerging opportunities or risks before they appear in financial statements. Reviewing these measures together can help you and your leadership team identify connections across the business rather than evaluating each area in isolation. Finally, consistency and accountability are essential. Review your scorecard regularly — quarterly at a minimum — and integrate it into leadership meetings and performance discussions. Assign clear ownership to each metric so responsibilities are clear and progress can be monitored. As your business evolves, revisit your scorecard to ensure it continues to reflect your strategy and priorities. An intriguing concept When exercised diligently and properly, the balanced scorecard approach can become a vibrant business practice that supports better decisions and keeps strategic objectives front and center. But it’s not for every company. If you’re intrigued by the concept, explore it further before committing. And no matter what strategic planning approach you choose, we’re here to help organize your financials and support measured, long-term growth. © 2025