ACCOUNTABLE UPDATE
"See Through"
…in this world nothing can be said to be certain, except death and taxes.
— Ben Franklin
The quote above, attributed to Ben Franklin, is a well-known excerpt from a letter to French scientist Jean-Baptiste Leroy in 1789 where he discussed the new Constitution that had recently been adopted in the United States.
President Joe Biden has proposed plans in his first few months in office that may pair those events even more so than Franklin may have imagined.
It seems that all we have been doing for the past few months is talking about taxes. The Tax Reform & Job Act did, in fact, give us much to talk about. At one point, it appeared that the bill was going to do away, or significantly reduce, pre-tax savings opportunities currently available to eligible retirement plan participants.
The talk was that after-tax contributions would largely replace pre-tax contributions in 401(k)s, 403(b)s, and other defined contribution plans. In other words, they would have forced everyone into Roth IRA type of arrangements, where you don’t get the near-term incentive of saving on taxes, but the earnings would be tax-free. Fortunately, taxpayers retained the incentives and flexibility to decide for ourselves between pre-tax accounts that defer income taxes or post-tax alternatives that grow tax-free. With both alternatives still available, a common question remains.
In early November, I highlighted some of the changes that were in the tax reform legislation known as the Tax Cuts and Jobs Act. Over the past several weeks, the deal making process was in high gear as some elements expected to be in the bill stayed, while others were left out of the final version.
Instead of rehashing all of the changes though, I thought it may be worthwhile to point out a few end of year "To Do's" that may be worth considering as a result of the new law.
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