Repeated Tax Reforms Raise The Risk Of Doing Nothing
The U.S. Tax Code has been reformed more and more over the past few decades. From 1940 to 1979, 24 major tax laws were enacted, compared with the 40 years from 1980 to 2019, when 63 major tax revisions were enacted.
The Tax Cuts And Jobs Act was signed into law in December 2017, and now the SECURE Act, which was signed into law in December 2019, has significantly changed 2020 rules affecting IRAs and estate planning. With the $1 trillion current budget deficit and soaring U.S. Treasury long-term debt, another new tax law in 2021 is very possible.
The SECURE Act has made tax planning more important to retirement income decisions, IRA beneficiary choices, lifetime annuity income, lifetime wealth transfers, and estate planning as well as investment opportunities open to affluent and ultra-high net-worth individuals.
Strategic tax planning is boring and detailed, and the vast majority of people are too busy with other priorities, creating inertia that stops most people from learning what to do. Consequently, most people often do nothing.
Despite the effort to simplify tax laws since the 1980s, the repeated revisions have made the tax code more idiosyncratic. Tax planning is much more important in wealth management now and the cost to individuals of doing nothing about tax planning has risen, upping the value of strategic tax advice about retirement income planning from a professional.
This article was written by a veteran financial journalist. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation. Tax laws are subject to change. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. No one can predict the future of the stock market or any investment, and past performance is never a guarantee of your future results.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.