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Navigating Home Buying Support for Your Children: A USG Corporation Employee's Guide to Avoiding Tax Pitfalls in California

USG Corporation 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.

USG Corporation 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:

The impact of California’s real estate market on financial planning – How market trends, tax laws, and family financial strategies influence home ownership.
Strategies for assisting children in purchasing a home – Exploring various financial methods, such as gifting, co-signing, and investment properties.
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 USG Corporation 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:

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.
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.
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.
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.
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.
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.
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 USG Corporation 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 USG Corporation 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.

Articles you may find interesting:

.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.

How does the retirement plan structure at USG Corporation impact both final average earnings participants and cash balance participants, especially regarding their eligibility and benefits accrued over time? In what ways does the differentiation between these two categories influence the retirement outcomes for employees of USG Corporation?

Retirement Plan Structure: USG Corporation's retirement plan differentiates between Final Average Earnings Participants and Cash Balance Participants. Final Average Earnings participants, who joined before January 1, 2011, accrue benefits based on their final average earnings and years of service, which can result in higher benefits for longer-serving employees. Cash Balance participants, who joined after January 1, 2011, have their benefits calculated based on a cash balance account, which grows with contributions and interest credits. These differences affect retirement outcomes, as Final Average Earnings participants may see higher pension payments if they have longer service or higher wages, while Cash Balance participants have more predictable but potentially lower benefits based on their account balance(USG Corporation_Retirem…).

USG Corporation's Retirement Plan allows for different age-specific rules regarding early retirement. How do the "Rule of 90" and "Rule of 82" affect the financial planning of employees considering an early retirement option, and what should they consider regarding their long-term financial security?

Rule of 90 and Rule of 82: The "Rule of 90" allows employees to retire early without a reduction in benefits if their age plus years of service total 90, provided they retire at or after age 62. The "Rule of 82" permits early retirement with reduced benefits for those whose age and years of service total 82. Employees planning early retirement must consider these rules as they directly affect the amount of benefits they receive, making it important to assess how long-term financial security will be impacted, especially if they retire before age 62(USG Corporation_Retirem…).

Could you elaborate on the process through which employees at USG Corporation can change their beneficiaries within the retirement plan? What steps need to be taken, and what are the implications of these changes on the benefits received upon the participant's death?

Changing Beneficiaries: To change beneficiaries, USG Corporation employees must contact Your Benefits Resources™, where they can designate a primary and contingent beneficiary. If married, the spouse must provide notarized consent to name a different primary beneficiary. The process involves completing a form, and any changes affect who receives benefits upon the participant's death. Failing to update the beneficiary could result in benefits being paid to unintended individuals(USG Corporation_Retirem…).

As part of the retirement process at USG Corporation, how are pensionable earnings calculated? What factors are included in this determination, and how might they vary among different employees based on their roles within the organization?

Pensionable Earnings Calculation: Pensionable earnings at USG Corporation include regular pay, shift differentials, and bonuses but exclude items like nonqualified deferred compensation, severance, and stock awards. These earnings are used to calculate benefits based on formulas that take into account an employee’s service years and earnings over the 36 highest consecutive months of the last 15 years of participation(USG Corporation_Retirem…).

How does the automatic enrollment in the USG Corporation Retirement Plan work, and what options do employees have if they initially chose not to participate? What implications might this have for their retirement savings strategy?

Automatic Enrollment and Opting In: Employees at USG Corporation are automatically enrolled in the retirement plan unless they choose to opt out. If employees decide not to participate initially, they can enroll later by contacting Your Benefits Resources™. Failure to participate from the start could result in lower retirement savings due to fewer years of contributions(USG Corporation_Retirem…).

In the context of USG Corporation, what are the potential tax consequences for employees withdrawing their retirement benefits, especially regarding the mandatory withholdings? How might employees effectively manage these tax liabilities when planning for retirement?

Tax Consequences of Withdrawals: Employees withdrawing their retirement benefits from USG Corporation will face mandatory federal income tax withholdings, typically 20% for lump sum distributions, unless the distribution is rolled over into an IRA. Employees must plan for these taxes when withdrawing to avoid unexpected liabilities and ensure they maximize their after-tax retirement income(USG Corporation_Retirem…).

How do employees at USG Corporation access the necessary documents related to their retirement benefits, and what is the process for obtaining copies of these documents if needed? What are the responsibilities of the Plan Administrator in this process?

Accessing Retirement Documents: Employees can access documents related to their retirement benefits through Your Benefits Resources™ online or via phone. If additional copies are needed, employees can request them from the Plan Administrator for a small fee. The Plan Administrator oversees ensuring these documents are provided to participants as required by ERISA(USG Corporation_Retirem…).

What unique provisions exist for USG Corporation employees who experience a break in service? How do these provisions impact their accumulated benefit service and overall benefits upon reemployment?

Break in Service Provisions: USG Corporation allows employees who experience a break in service to retain their accumulated benefits if they are reemployed within one year. If reemployed after one year, their previous service may not count toward future benefits unless they were vested prior to termination. This can affect the total benefits an employee accrues if they leave and later return(USG Corporation_Retirem…).

What options do employees of USG Corporation have for managing their benefits if they return to work after retirement? How does this affect their pension benefits and the overall strategy for maximizing retirement income?

Returning to Work After Retirement: Employees returning to work after retirement at USG Corporation will have their pension payments suspended and recalculated based on additional years of service. This recalculation takes into account prior payments, meaning employees should consider the impact of returning to work on their long-term pension strategy(USG Corporation_Retirem…)(USG Corporation_Retirem…).

How can employees of USG Corporation contact their Benefits Resourcesâ„¢ for more information on their retirement plan options? Are there specific channels preferred for different types of inquiries, and what resources are available to assist them?

Contacting Benefits Resources™: Employees can contact Your Benefits Resources™ via the web or a toll-free number to inquire about retirement plan options. Different inquiries, such as changes to beneficiaries or requesting benefit estimates, can be handled through these channels. Resources such as detailed benefit estimates are available to help employees plan for retirement(USG Corporation_Retirem…).