The Tax Cuts and Jobs Act made big changes to the way that everyone in the country will pay taxes but it also has implications for your IRA. There are several different things you need to keep in mind as you schedule a consultation with your estate planning attorney and consider what will happen to your IRA. Here’s what you need to keep in mind:
- Â Â Â Â Â Your traditional IRA should be used to pay investment advisory fees. You may still be eligible to get the tax advantage for the advisory fees if you instruct the person responsible to pay these fees directly out of the IRA.
- Â Â Â Â Â Reconsider whether Roth recharacterizations are best for you after talking with a lawyer.
- Â Â Â Â Â The New Jobs Act doubles the lifetime exemption for the estate tax to $11.2 million for an individual or $22.4 million for a married couple. Parents and grandparents will now have a much better capability to pass things onto future generations.
- Â Â Â Â Â Be aware of taxes for children. In the past, if a child classified as a dependent received unearned income in access of $2100, the additional income was taxed to the parent’s highest rate. However, the same tax bracket as trust will now be used to calculate children’s taxes.
- Â Â Â Â Â Don’t forget charities. Many of the itemized deductions were eliminated with the most recent tax law, although the standard deduction was doubled. Many people will lose tax benefit from making charitable contributions. Set aside time to talk to a knowledgeable estate planning lawyer about how you can still accomplish your charitable goals.
