Financial Expert: Here’s the Smartest Way Boomers Can Give Kids Tax-Free Money

Core Insights - The article discusses strategies for transferring wealth to children without incurring significant tax liabilities, focusing on a specific annual gift limit of $19,000 per person [1][2]. Group 1: Gift Tax Exclusion - In 2025 and 2026, individuals can gift up to $19,000 per person per year without triggering gift tax reporting requirements, allowing married couples to effectively gift $38,000 to the same recipient [2]. - The annual gift tax exclusion is advantageous as it resets every calendar year, enabling substantial tax-free gifting to multiple family members [3][4]. Group 2: Tax Implications of Source of Funds - While the $19,000 gift is tax-free for the recipient, funds withdrawn from an IRA will still incur taxes, as the IRS takes a portion of that money [3][5]. - Many families have retirement savings in 401(k) plans or IRAs, complicating wealth transfer due to potential tax implications upon withdrawal and at the time of death [6].