Kenneth Brackett of Lighthouse Financial states that the House consented to the Fiscal Cliff proposal in the last minute by the Senate. This really is something which needed to take place, or $600 billion of essential tax increases as well as spending cuts would immediately go into effect. Ken Brackett stated, “One of the bright spots in this bill is that now everyone can do Roth conversions regardless of their income. Prior to this, only those who made less than $150k annually could do the conversions.” The brand new possibility to do the Roth conversion pertains to people who have 401ks that happen to be currently still with a job. Just before this, people were unable to convert except when these people retired, changed job opportunities or even reached 59 and one half years old.
Kenneth procedes to express, “This is great news to those of us that are convinced that tax rates will probably be much higher in the future. Men and women can do the conversion at lower tax rates today and acquire our tax on sale”. Keep in mind, the federal government benefits by even more earnings (taxes from your conversion), however, this is short sighted because there will be a huge loss of revenue for these people in the future as none of the Roth withdrawals will be taxable for numerous generations. We are seeing a longer term tax break for the people making not as much as $400k individual and $450k married filing jointly.
This is substantially higher than the $250k that was initially being proposed. This allows individuals to keep their current tax brackets, as well as allows them to benefit from the reduced tax rate for Long Term Capital Gains and Qualified Dividends. These kinds of tax rates both keep at 15%. We are seeing a permanent extension of the AMT Exemption; and the Estate Tax Exemption currently is established at $5 million for each man or woman with the excess being subject to taxes at 40%. The next hurdle which Mr. Brackett foresees is the Debt Ceiling that will have to be lengthened in under 2 months. According to him, “the House will try to enforce spending cuts that should have been sorted out during the Fiscal Cliff negotiations, and the Debt Ceiling will have to be extended continuously in to the foreseeable future. The probability of an additional USA downgrade is very likely.”
About Ken Brackett Ken Brackett, owner and founder of Lighthouse Financial Advisory Group is a Twice Winner of the a Five-Star Wealth Manager Award by both Delaware Today Magazine along with the Philadelphia Magazine. Lighthouse Financial is registered with the state of Delaware, Better Business Bureau, the National Ethics Bureau and the National Association of Securities Dealers. Ken is a well known financial educator within the New Castle County area as well as a Registered Investment Advisor. His retirement classes are again and again oversold and he has been doing planning for the retirees of General Electric, the University of Pennsylvania, Rohm & Haas and DuPont. Having an focus within fiance and accounting, he graduated with a Bachelor’s degree in 1988 and has worked alongside the senior generation ever since 1991.
Source: Ken Brackett