A rare break in congressional gridlock produced some actual tax legislation this week, albeit of limited scope. In addition, it appears we may be heading toward an expansion in the use of Roth retirement accounts.
Notice: The new 2010 edition of our book Consider Your Options is now available.
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Two items this week:
- Roth expansion. Action in the Senate (still pending) makes it likely we’ll see some expansion in the availability of Roth accounts (see below).
- Stocks down, spirits up. People have a hard time seeing a decline in stock prices as a good thing, but for most of us it’s an opportunity, not a calamity.
@Congress
Congress passed two tax laws of very limited scope:
- Pension funding. A law mainly designed to prevent an interruption in Medicare services includes a relaxation of pension funding requirements.
- Homebuyer credit. People seeking to claim the homebuyer credit had to enter into a binding contract for the purchase of a home before May 1 and close on their purchase before July 1. Congress has now extended the closing deadline until September 30. (The extension applies only to people who had a binding contract before May 1.)
Roth expansion. In another significant development, the Senate version of the small business tax bill will drop the provision dealing with grantor retained annuity trusts, or GRATs, and instead include provisions expanding availability of Roth accounts. One would allow Roth accounts in governmental 457b plans beginning in 2011, and the other would make it possible for plan participants to convert money from a regular account in an employer plan to a designated Roth account within the same plan. The Senate has not yet approved this law, however, and following Senate action the House and Senate will have to reconcile their differing versions of the legislation.
Social Security cutbacks. Finally, in an interview that attracted attention for other reasons, House Minority Leader John Boehner mentioned various cuts in Social Security benefits that might be used to close the funding gap.
@IRS
The IRS also had a busy week:
- Oil spill losses. The oil spill in the Gulf of Mexico creates a variety of tax issues for individuals and businesses. The IRS has created a web page to answer many of these questions.
- Tanning. With the new excise tax on tanning services taking effect July 1, the IRS circulated a list of tips concerning the new law.
- Disaster relief. The IRS provided disaster relief in announcements we noted here and here.
@Fairmark
This week we bragged about favorable reviews for our primer on investment principles, That Thing Rich People Do. We also noted the passing of noted tax lawyer, professor and author Martin Ginsburg.
As noted above, the new edition of Consider Your Options is now available. We weren’t planning a 2010 edition until we realized that the forthcoming changes in tax rates for 2011 would affect certain strategies for 2010.
Tags: Roth conversion, wrapup
