Fidelity’s “Crisis Averted” article describes the key provisions of the bill. As I’ve already blogged, one of the positive impacts is that it makes permanent tax cuts and estate planning changes that, up until now, have been the grist for annual political muckraking, leaving accountants and investors uncertain about how to plan for the future. By making permanent these tax laws, investors finally have a reasonable basis for tax and estate planning. Perhaps the legislation will help everyone start moving forward, after years of being in limbo.
At least two types of readers will find the extension of the IRA charitable rollover of particular interest. First, development staff in the non-profit world ought to be aware of the preferential treatment that January contributions will have over the exact same charitable gift, made sometime after January 31, 2013.
Second, retirees who have been forced to take required minimum distributions from their IRAs, and who make substantial charitable gifts over the course of the year, might want to front load their giving in 2012. While people still have the opportunity to offset 2013 RMDs with direct charitable rollover gifts, for those folks with significant charitable giving plans – enough to offset two years worth of RMD payouts – the clock is ticking. It probably makes sense to make some of those gifts in January, so they can be applied to help reduce your 2012 Adjusted Gross Income (AGI) calculations. Since I'm not an accountant, you probably want to run the idea past your CPA first, but it seems to me that there might be a strategy to reduce taxes for some people and the opportunity to take advantage of this ends in less than 27 days.
Douglas B. May, CFA, is President of May-Investments, LLC and author of Investment Heresies .
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