Your Retirement Savings: Obama Won. Now What?
“Whatever ultimately emerges from the fiscal-cliff negotiations, the country will survive. But the damage can’t be undone. Taxes are going up for all working American. And so is the size of government….During the fiscal-cliff negotiations, however, the president made clear that his goal isn’t to get business going again but instead to expand government and redistribute income. It offered no real spending cuts and instead used the year-end deadline to divide America into classes…his policies penalize profit and investment” says David Malpass of the Wall Street Journal, January 2.
How much will your taxes jump?
“In essence, the new law “replaces uncertainty with confusion” say David Lifson, an accountant in New York. Only tax wizards can understand the entirety, especially for people earning between $200,000 to $400,000.”
This is a year to use a good CPA!
1-First of all, we will all pay 2% more in the employee portion of the Social Security tax.
Dividends are now in the same category as capital gains on investments held longer than a year.
2-If you are in the 39.6% tax bracket, you will pay 20% on their net long term gains.
3-The alternative minimum tax has changed-no explanation.
4-The estate and gift tax remain at $5M per person but the tax rate above the exemption will rise to 40%. This is a permanent change.
5-The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts, the IRS noted. It takes effect on Jan. 1, 2013.
6-Workers of any age or employment status can move pretax savings to a Roth account within their employers plan. Roth 401k require distribution at age 70.5. Retirees could roll the assets into Roth IRAs to avoid distribution. (We do this!)
Call or email to protect your retirement saving!