CHS employees, especially those nearing retirement, should consider utilizing tax-efficient methods such as gifts, loans, or co-signing arrangements to support their children's home purchases in California’s competitive real estate market, while also staying mindful of changing IRS guidelines that could affect long-term financial goals. – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.
CHS employees should evaluate the long-term financial impact of helping their children buy property, considering the tax implications of gifts, loans, and co-signing, while also ensuring these strategies align with their retirement plans and estate goals. – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement Group.
In this article, we will discuss:
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The impact of California’s real estate market on financial planning – How market trends, tax laws, and family financial strategies influence home ownership.
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Strategies for assisting children in purchasing a home – Exploring various financial methods, such as gifting, co-signing, and investment properties.
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Tax implications and legal considerations – Understanding IRS guidelines, gift tax exclusions, and estate planning factors when supporting home purchases.
The real estate market in California is complicated but reflects broad trends that affect many, including CHS employees considering long-term financial planning and intergenerational wealth transfer. Understand tax law, real estate laws and family finance strategies. This guide examines how families negotiate home purchases - from financial, tax and legal points of view.
A hot market with high property costs, the Bay Area often sees first-time buyers Tommy Ufland and Tori Olsen pass on all-cash offers despite being prepared. So eventually Ufland and Olsen purchased a condo from Olsen's relatives at market price.
In California, relatives typically help first-time buyers - about 27% of purchasers in 2024 received such aid - down from 34% in 2023.
Real estate professionals estimate this could rise to 50% in highly competitive markets like the Bay Area.
Family members often give gifts to help with property purchases, even if the gifts are tax-impacted. According to 2025 Internal Revenue Service guidelines, for example, someone could gift USD 19,000 per person annually without paying gift taxes.
Therefore, a couple may jointly give USD 38,000 to their child and spouse with no immediate tax consequences, but this reduces their lifetime gift and estate tax exemption and may require a gift tax return for amounts above this amount.
There are various strategies that parents can use to help their children buy real estate - each with benefits and drawbacks:
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Down Payment Direct Gift: This is a simple one - parents gift the down payment so the money can be used as intended and no more financial problems arise.
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Down Payment via Parental Loan: This involves lending the down payment to the child in a formal agreement with interest at or above the federal rate, not a gift.
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Co-signing a Mortgage: This may help children get better loan terms but puts the parents in a position to be financially liable if the child defaults.
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Purchasing Outright for Cash: Some affluent parents buy a home outright and let their children refinance into a conventional mortgage later on, giving them ownership back.
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Investment/Rental Properties: This option allows parents flexibility in financial arrangement and tax considerations as parents buy a property as an investment and rent it to their child under standard tenant agreements or as a second home.
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Joint Ownership: Parents and children can buy property together in legally defined ownership shares and responsibilities, controlling and financing input but with specific legal structuring.
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Selling a Family Home: Parents may sell their home to their child below market value to save on transaction fees and get the child familiar with the property, but this may increase property and gift taxes.
Every method involves particular taxes, legal rights and financial responsibilities that should be considered and discussed with legal and financial professionals. Picking one depends on the family's financial picture, the real estate market and long-term financial goals of parents and children.
And they reflect broader economic and fiscal conditions that may affect investment strategies and purchasing power, such as changes in IRS rules or market movements that may affect the outcomes of each approach.
Understanding such methods as well as their consequences allows sound decisions in the context of short- and long-term financial realities and health. Professional guidance can explain these options and assist in achieving financial goals and ensuring regulatory compliance.
The SECURE Act 2.0 passed in December 2022 is big news for CHS employees approaching retirement. It affects retirement and tax planning by raising the age of required minimum distributions and allowing penalty-free withdrawals for first-homebuyer down payments - and will affect financial planning for children's real estate goals.
Help your grown children buy a home in California while handling tax considerations. This article details strategies to limit gift tax consequences and maximize financial results, including co-signing mortgages, parental loans and direct gifts. Understanding relevant federal rates and IRS rules helps CHS employees structure transactions to help family members in California's competitive real estate market.
Helping your adult child buy a home in California tax-efficiently involves understanding tax regulations, mortgage details and financial strategies. Everything from using IRS gift exclusions to choosing the right loan or co-signing arrangement must be in line with financial and legal objectives.
Five different sources are listed below with a 100-word explanation of how the source benefits retirees, supports the arguments made, the author name, publication date and references to pages cited.
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- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
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.Sources:
1. Internal Revenue Service. Estate and Gift Tax FAQs. IRS, Sept. 2024.
2. Zillow. California Housing Market: 2025 Home Prices & Trends. Mar. 2025.
3. NerdWallet Staff. Gift Tax: 2024 and 2025 Annual and Lifetime Limits. NerdWallet, Feb. 2025.
4. Redfin. California Housing Market: House Prices & Trends. Feb. 2025.
5. Internal Revenue Service. Frequently Asked Questions on Gift Taxes. IRS, 28 Oct. 2024.
What are the specific criteria that determine eligibility for the various contributions within the CHS 401(k) plan, and how do these contributions affect an employee’s retirement savings over time at CHS? Understanding these criteria can help employees maximize their contributions to ensure they are making the most of the benefits offered by CHS.
Eligibility for 401(k) Contributions: CHS employees can contribute up to 75% of their eligible compensation to their 401(k), with an IRS limit of $18,000 (in 2017) plus an additional $6,000 for those aged 50 and older. CHS also provides a basic contribution of 2% and a performance-based contribution, which increases based on years of service(CHS_12_31_2017_Retireme…). Understanding these contributions can help maximize retirement savings.
How does the CHS Pension Plan work, particularly regarding the differences between the traditional account and the cash balance account? Employees might want to delve into how their choices and years of service will impact their retirement payout from either account.
CHS Pension Plan Structure: CHS offers a pension plan with both traditional and cash balance accounts. The traditional account is based on average pay and years of service, while the cash balance account accrues pay credits based on service. After December 31, 2017, pay credits ceased, but interest credits continue(CHS_12_31_2017_Retireme…). Employees should understand how these accounts affect their retirement benefits.
In what ways does the vesting schedule of CHS employer contributions influence an employee's retirement strategy? Employees at CHS need to understand how vesting affects their overall benefits and what steps they must take to ensure they are fully vested in time for retirement.
Vesting Schedule Impact: CHS has a three-year vesting schedule for its basic 401(k) contributions, while match and performance-based contributions are immediately vested(CHS_12_31_2017_Retireme…). Knowing the vesting rules is crucial for employees planning their retirement strategy, ensuring full benefits are realized.
Can you explain what "frozen" benefits mean for employees nearing retirement at CHS, and how this affects the calculations of future pension benefits? It's critical for employees to grasp the implications of a frozen pension account on their retirement plans.
Frozen Benefits: CHS employees with frozen benefits in the pension plan will not receive further pay credits after December 31, 2017, but interest credits will continue(CHS_12_31_2017_Retireme…). Understanding this freeze is essential for planning retirement payouts.
How can employees at CHS plan for their retirement withdrawals post-employment, particularly focusing on the pension distribution options that are available to them? Employees may find it beneficial to understand the long-term effects of these options on their financial health during retirement.
Retirement Withdrawals: CHS employees have the option to withdraw retirement savings via lump-sum payments or monthly annuities(CHS_12_31_2017_Retireme…). Choosing the right distribution option can significantly impact long-term financial health in retirement.
What actions should employees take if they want to change their contribution elections or investment strategies within CHS retirement plans? Knowledge of the processes for making changes can empower employees to take proactive steps in managing their retirement savings.
Changing Contribution Elections: Employees can change their contribution and investment elections online via the Empower Retirement portal or by calling Empower Retirement(CHS_12_31_2017_Retireme…). This flexibility allows for proactive management of retirement savings.
How does the ability to access and review pension benefits online through the Empower Retirement website enhance the retirement planning process for employees at CHS? This question can lead to discussions about the importance of staying informed about one's financial future.
Access to Pension Benefits Online: Employees can access their pension benefits through Empower Retirement’s website(CHS_12_31_2017_Retireme…). Regularly reviewing these accounts is crucial for staying informed about retirement planning.
What are the implications for CHS employees who are not 100% vested in the Pension Plan before the freeze date, and what alternative options do they have for their retirement savings? Understanding this will help employees make informed choices regarding their benefits.
Not Fully Vested Before Freeze: If employees were not fully vested in the pension plan before the freeze date, they are still eligible to receive vested benefits(CHS_12_31_2017_Retireme…). Exploring alternative retirement savings options is important for those affected.
How do fluctuations in national interest rates impact the retirement plans of employees at CHS, particularly in the context of cash balance accounts? Employees should consider how external economic factors can affect their financial future.
Interest Rate Impact: The interest rate used to calculate cash balance account credits is the 10-year Treasury constant maturity rate plus 2%. These rates fluctuate annually(CHS_12_31_2017_Retireme…). Employees should be aware of how changes in interest rates affect their pension growth.
How should employees contact CHS for more information regarding their retirement benefits, and what resources are particularly useful for navigating the complexities of the pension and 401(k) plans? Contacting the right departments or utilizing specific resources can be crucial for maximizing retirement benefits at CHS. These questions are designed to provide depth and complexity, enabling employees to better understand their retirement benefits and the policies at CHS.
Contacting CHS for Retirement Information: Employees can contact Empower Retirement for pension and 401(k) inquiries via the Empower Retirement website or by phone(CHS_12_31_2017_Retireme…). Utilizing these resources can help navigate complex retirement options.
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