This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
All eyes are on the Build Better Act as it works its way through Congress. While nothing has been set in stone yet, it’s important to consider how the tax implications of this bill might affect your retirement plan in the event they make it through the legislative process.READ THE ARTICLE
Here are a selected few of the 14 changes you should know:
📌An imposed surtax on wealthy Americans: Included is a five percent increase of modified adjusted gross income (MAGI) from $10 million to $25 million – Or, an eight percent increase for MAGI above $25 million
📌Increased surtax on net investment income for wealthy Americans: This includes an expanded surtax that covers net investment income derived in the ordinary course of a trade or business for single filers with a MAGI of over $400,000 – Or, joint filers with a MAGI of over $500,000
📌Curbing Mega-IRAs, Backdoor Roths and other retirement savings for the wealthy: Includes a limit on IRA contributions if a combined $10 million in plan savings is reached, as well as certain MAGI thresholds, a new Required Minimum Distribution (RMD) rule for mega-IRAs and 401(k) plans and an end to backdoor Roth IRA conversions
📌Extending premium tax credit enhancements: Originally, the American Rescue Plan implemented temporary tax credit to assist people in paying premiums for health insurance purchased through Obamacare; Now, the Build Back Better Plan aims to extend that credit from one to four years
Keep ears and eyes open: Your taxes may see little-to-no impact in 2022, but this is exactly how tax changes occur. The highest income earners act as a bellwether, followed by a trickle-down effect over time.