Tax BillDecember 5, 2018 -
Categorized in: Uncategorized
As the year winds down, Congress is faced with the task of deciding whether they wish to extend certain tax provisions that expire every year on December 31.
On November 26, the chairman of the House Ways and Means Committee unveiled his year-end proposal which included some interesting retirement account proposals.
With such little time left in the year the odds of this particular bill becoming law would normally be very low – particularly with control of the House switching parties in the new year.
However, the bill includes special provisions for the victims of California’s wild fires, Hawaii’s volcanic eruption, and Hurricanes Florence and Michael. It also does not include any highly controversial provisions that could impede its progress. Therefore, this bill may have a chance of moving forward.
Please keep in mind that all of the provisions discussed below are simply concepts for debate. Before any of them become law they will have to pass the House Ways and Means Committee, the U.S. House of Representatives, the Senate Finance Committee, the U.S. Senate, and be signed into law by the President.
Here are a few of the potential rule changes being proposed for retirement accounts:
- Repeal the maximum age for traditional IRA contributions. Under current law you may no longer make traditional IRA contributions once you reach age 70.5. This change would permit such contributions as long as you have earned income.
- Exempt taxpayers who have less than $50,000 in their retirement accounts from Required Minimum Distributions.
- Waive the 10% penalty on early IRA distributions for withdrawals (up to $7,500) within one year of the birth or finalized adoption of a child. You would still need to pay income taxes on any withdrawals.
- Stop 401(k) plans from offering loans via credit cards. Yes, some 401(k) providers already permit plan participants to access their 401(k) loan accounts using a credit card.
- Make it easier for 401(k) providers to offer “guaranteed retirement income contracts” in 401(k) plans.
- Provide new tax credits to small businesses to help offset the start up costs for new employee retirement plans.
We will continue to monitor this bill’s progress to see if any of these proposals actually become law and impact your financial plan.
Quote of the week: George H.W. Bush: “The American Dream means giving it your all, trying your hardest, accomplishing something. And then I’d add to that, giving something back. No definition of a successful life can do anything but include serving others.”
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Please consult with your tax professional before making any decisions that could impact your taxable income or tax deductions. Your tax circumstances are unique.
Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.