I recently read a great article at Money.UsNews by Roger Wohlner | Please see below.
It’s 2013. The world did not end in December and our “leaders” in Washington seem to have averted the fiscal cliff, at least for now. Against this backdrop there are a number of financial planning opportunities for this new year.
Some opportunities born out of the bill passed by the House and the Senate:
- There will be increased opportunities for investors to do Roth conversions. This may or may not be a good idea for you and should be looked at carefully before going this route.
- The estate tax rate increases to 40 percent and the estate tax exemption remains at $5 million. This now allows for some certainty in estate planning which was lacking with the pending expiration of the old rates.
- The income tax rates on the highest earners will rise to 39.6 percent from 35 percent and the tax rates on dividends rise to 20 percent from 15 percent. Together these increases might influence your investing activities in terms of the types of investments held in taxable vs. tax deferred accounts and in the types of investment vehicles in your portfolio.
- Congress has also made permanent a fix to the Alternative Minimum Tax for the next ten years. Again this might make certain investments more desirable and others less so in your taxable portfolio.
There are other opportunities that are timeless and the New Year is always a good time to address these:
- If you aren’t contributing the maximum to your 401(k) or similar company retirement account, increase your contribution to the extent that you can. The maximum deferral rates for 2013 are $17,500 and $23,000 for those who will be 50 at any point in 2013. At the very least try to contribute enough to receive the maximum match offered by your plan.
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To read more, please visit the Money.UsNews article link.
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