On April 28, the White House released the “American Families Plan.” While these changes are still speculative, we have the opportunity to plan ahead and better position ourselves for the tax changes that could be coming.
Top Individual Income Tax Rate
If you are in the top marginal tax bracket (not officially known, but perhaps anything above $452,700 for single filers and $509,300 for joint filers), you may consider taking some of the following actions:
- Do a 2021 Roth conversion
- Switch IRA/401(k) Roth contributions to pre-tax
Long-Term Capital Gains
To reduce capital gains taxes, consider:
- Asset location
- Taxable gains budget
Step-Up in Cost Basis at Death
Potential estate tax law changes make it especially important to consider these strategies:
- Take gains before death
- Review charitable giving plan
- Revisit estate plan
At this time, proposed tax-changes are speculative. However, taxpayers who might be impacted by the proposed changes should start coordinating an action plan with their trusted team of advisors (accountant, estate planning attorney, financial advisor) to identify current or possible future planning opportunities.