The American Taxpayer Relief Act of 2012 (ATRA) is introducing new top income and capital gains tax rates that will change the way people plan for retirement. The new law will also phase out itemized deductions and personal exemptions for high income earners. With new higher tax rates being implemented, wealthy couples and individuals are going to have to come up with new investment strategies. This column examines the different ways people are going to have to adapt to the tax policy changes being made by ATRA. For example, higher income tax payers will have to be careful that the distributions from a retirement account do not place them into a higher tax bracket. Investors might also consider using the IRS section 1031 “like-kind” exchange provisions to offset the new top capital gains tax rate of 20%. Estate planners will also need to advise clients to plan ahead for the personal exemption phase-out and itemized deduction limitations that the ATRA imposes.
See Robert Powell, Higher tax rates force retirement redo, Market Watch, March 5, 2013.
Special thanks to Jim Hillhouse for bringing this article to my attention.
