Legal Blog

Thoughtful Giving Ideas: Using Gifts to Your Children to Encourage 401(k) Retirement Savings

From the Desk of Herb

If you wish to make annual gifts to your children and simultaneously desire encouraging them to save for retirement, consider tying your gifts to your child’s 401(k) contributions or other retirement plan.

For example: you should advise your child to make the maximum allowed contributions to his or her 401(k) of $18,500 in 2018, with the understanding that you will replace that contribution with an $18,500 gift to your child. By making this contribution, your child will achieve three major benefits.

First, your child will reduce his or her income tax obligations. The government is actually subsidizing people who wish to save for retirement. This is the last known tax shelter for the employee.

Second, your child’s employer may make matching 401(k) contributions, providing your child with an increase in his or her compensation.

Third, this plan provides greater cash to your child. Specifically, for each dollar of compensation income your child receives and does not contribute to a retirement account, your child receives, net after-taxes, only around 70 cents (depending on the tax rate); while for each dollar you give to your child, he or she gets the full dollar–income tax free–to spend or save.

Under the $15,000 annual exclusion from gift taxes, each parent can give a child $15,000 in 2018 or $30,000 per couple.


Want to discuss this and other thoughtful gift and estate planning ideas?

Contact Herb Fineburg at


ABOUT HERB FINEBURG | 267.338.1376

Mr. Fineburg is recognized as one of Philadelphia’s most respected business lawyers whose substantial knowledge of tax law provides clients with strategic and cost-saving benefits in connection with commercial transactions, taxation and wills, trusts and estates matters. Known for his ability to resolve complicated matters effectively, Mr. Fineburg has assisted businesses and individuals with the organization of their finances, business and real estate affairs, and the structure of their assets (i.e., in LLCs, partnerships, corporations, trusts or joint ownership). He has substantial expertise in the preparation of buy-sell agreements for co-owners who are family members or unrelated business partners and has handled the resolution of shareholder and partner disputes and buy-outs. In addition, to working on bank financings, business contracts and employment matters for his business clients, Mr. Fineburg also provides advice on business acquisitions and sales. Mr. Fineburg, who began his law career as a commercial litigator and bankruptcy lawyer, frequently provides litigation counsel and assistance to a wide range of firm clients. His articles have appeared in the Pennsylvania CPA Journal, the Journal of S Corporation Taxation and other publications. A graduate of Washington University in St. Louis, Mr. Fineburg received his law degree from the University of Missouri and a Master of Laws in Taxation (LL.M) from the New York University School of Law, Graduate Division. Mr. Fineburg is the Managing Shareholder of the Philadelphia office and is also a member of the Board of Directors at Offit Kurman.



Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 170 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eleven offices serve individual and corporate clients in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

You can connect with Offit Kurman via our Blog, Facebook, Twitter, Google+, YouTube, and LinkedIn pages. You can also sign up to receive Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.