It is easy to forget our current tax rates and the current tax “break” most of us are experiencing right now is only temporary. Most of the provisions will either phase-out, go away, or revert back to prior legislation in the near future. In fact, some already have and there are several expiring this year. So, what does this mean for you?
It is simple. Plan now or pay later.
There are two additional motivators you might want to ingrain in your thinking. First, no matter which side of the aisle you sit on when it comes to politics, there is something in which we can all agree. The pendulum in Washington continues to swing back and forth. Senator Bernie Sanders has already proposed Senate legislation to lower the exemption amount in which an estate is not taxed below the levels during President Obama’s tenure. Any estate valued at more than 3.5 million dollars would be taxed on a progressive schedule starting at 45 percent and maxing out at 77 percent. This second motivator is the fact that we have a lot of national debt. Additionally, we have a lot of baby boomers whom are retiring. This means our debt is most likely going to grow. Therefore, it is highly unlikely tax rates will remain at one of the lowest points in American history.
What will happen when the pendulum swings in Washington? Will Tax Reform end early? Will you be able to say you made lemonade out of the lemons you were given in these years? Or…will you regret not keeping what you could have kept of your hard-earned money?
So, what should you be thinking about? Here are some of things to consider…
- IRA to Roth IRA conversions
- Creating tax diversification within your investments
- Lowering or eliminating your taxes for retirement years
- Maximizing the new Section 199A deduction (A MONSTROUS 20 Percent Deduction if done right!)
- Conquering worries of mortality and morbidity
- Planning to not outlive your money
- Exit planning for your business
- Estate planning, estate planning, estate planning
Montanan Democratic Senator, Max Baucus, stated, “Tax Reform is a once-in-a-generation opportunity.” This is your generation. This is your opportunity. Own it. Start planning right now before it’s too late.