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Effects of the New Tax Law on Retirement Planning

With the passage of the Tax Cuts and Jobs Act (TCJA) that became effective on January 1, 2018, there are several changes to the federal tax law that could impact your retirement planning. Some of these changes for the 2018 tax year include:

  • Standard deduction increases to $12,000 for singles and $24,000 for married couples filing joint returns. Those over 65 can add either $1,600 (single) or $1,300 (married); if both spouses are over 65, the standard deduction will be $26,500 in 2018.
  • A $10,000 limit on deductions for state and local income, sales and/or property taxes per year.
  • Deduction for investment management fees is eliminated.
  • Beginning in 2018, IRA conversions from a traditional IRA to a Roth IRA are irreversible, and cannot be “undone” as has been allowed in the past.
  • Deduction for home equity loan interest is eliminated.
  • 529 plans are now available to cover the costs of a private or religious school for grades K-12. Contributions are capped at $10,000 annually per student.
  • The threshold for deductible unreimbursed medical expenses has been lowered to 7.5% of adjusted gross income for 2017 and 2018. It goes back up to its previous threshold of 10% of AGI in 2019.
  • Estate tax exemption doubles in 2018 to approximately $11 million per taxpayer ($22 million for married couples).

If you already have a retirement plan, you should review it with a Florida retirement planning attorney to determine how the 2018 tax law changes could affect your plan.

Contact our Fort Myers estate planning law firm for a complimentary consultation on strategies to help protect and preserve your assets.

Categories: Retirement Planning, Tax Planning
dorcey law firm
The Dorcey Law Firm, PLC - Fort Myers Attorney
Located at 10181 Six Mile Cypress Pkwy, Suite C, Fort Myers, FL 33966
Phone: (239) 330-6674
Local Phone: (239) 418-0169