Planning implications of Obama's budget in one simple chart

Michael Kitces explains how the president's fiscal 2017 budget affects retirement, estate and other tax law

Feb 12, 2016 @ 1:04 pm

By Ellie Zhu

In the fiscal 2017 budget proposal President Obama sent to lawmakers Tuesday, he revived some ideas that appeared in previous budgets, such as limiting the amount of money that can build up in tax-favored retirement accounts.

Michael Kitces rounds up key changes to retirement, estate and other tax laws the president seeks with his budget request.

(More on Obama's proposal to curb retirement-savings tax incentives)

President Obama's budget crackdowns
RETIREMENT PLANNING Prevent Roth conversions of after-tax dollars (eliminate backdoor Roth contributions) Add required minimum distributions at age 701/2 for Roth accounts Require 5-year rule for non-spouse IRA beneficiaries (eliminate stretch IRA) Prevent new retirement contributions for those with >$3.4M in account balances Repeal net unrealized appreciations rules for employer stock in an employer retirement plan
ESTATE PLANNING Establish 10-year minimum term for grantor retained annuity trusts Require property sold to an intentionally defective grantor trust to be included in the estate Create 90-year maximum term to prevent dynasty trusts Limit total present interest gifting through Crummey powers Eliminate step-up in basis, replaced with deemed-sale-at-death rules
OTHER INCOME TAX "LOOPHOLE CLOSERS" Limit 1031 like-kind exchanges of real estate to maximum $1M gains deferral Require average cost for all stock sales (no more specific lot identification or FIFO/LIFO choices) Apply 3.8% Medicare surtax on investment income to passive S corp dividends Limit transfer-for-value rules for buyers of life settlements
Source: Michael Kitces. View his full story here.


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