Uncertainty is the enemy to peace of mind. And there are little other times more uncertain than the change of the guard and the transition of power that comes with the inauguration of a new president. This uncertainty is compounded by the contemporaneous change in the power structure of Congress. There’s nothing like a swing of the pendulum of power to upset the clarity of the status quo. As a result, the question in everyone’s mind is: what’s going to happen in the next 100 days?
The first 100 days of a president’s time in office is their chance to implement sweeping changes, to upset the apple cart, to show that they are effective, and to uphold their campaign promises. Washington, as a rule, tends to move at a glacial pace. However, it’s pretty much widely accepted that there is an exception for the president’s first 100 days. Washington, especially when in the grip of one political party, is a well-oiled machine for those three months. As a result, a lot can happen in a president’s first 100 days.
So, what can we expect to happen going forward? The next three months will usher in changes. But, more importantly, it will be the laboratory, the microcosm for the changes to come in the next four years. The next 100 days will demonstrate the effectiveness of the new president and the willingness (or lack thereof) of Congress to work with him. If the next 100 days goes well for the president, then the country could see significant changes that affect our day to day life. These are changes that we should prepare for.
Here are some of the anticipated changes that you should begin preparing for immediately:
1. Change in Taxation in Retirement Account Contributions. Currently, contributions to most retirement accounts e.g., 401k and IRA, are tax deferred. If you contribute, you get to lower your income by the contribution the account. Thus, you defer the taxation of the money in the account until it is pulled out in the future. The main benefits of this approach are (a) allowing the retirement account to grow quicker with compound interest and (b) to defer taxation until your income tax rate is lower (because you’re withdrawing it in retirement, where you’re not earning wages). Biden’s plan would change this structure. Contributions would not lower a person’s income. The only tax incentive would be a tax credit for contribution capped out at 26%. This would result in a double taxation of retirement accounts.
2. Increase in business tax rates. Business tax rates could increase a significant amount. This is not only important for business owners (especially those who depend upon their business for retirement) but also each and every consumer. Corporate tax rates can adversely affect a company’s bottom line and this cost can be passed along to the consumer.
3. Estate and Gift Tax. No one really knows what the estate and gift tax will look like in the coming years. However, the discussions around the subject seem to indicate that more people will be subject to the estate tax in the coming years. Currently, only those who are incredibly wealthy pay any federal estate tax, that burden will likely be shared by the upper middle and middle class in the immediate future.
The best way to combat uncertainty is to prepare. To be ready for anything. That’s estate planning and that’s what we do at McIntyre Elder Law. If you want to combat the uncertainty and anxiety of the days to come, if you want peace of mind, give McIntyre Elder Law a call today at (704) 259-7040.
If you or your loved one has questions we would be glad to extend a FREE CONSULT to answer those estate planning and elder law questions and get your affairs in order. Let the experienced attorneys at McIntyre Elder Law help. Call (704) 259-7040.
Brenton S. Begley
Elder Law Attorney
McIntyre Elder Law
“We help seniors maintain their lifestyle and preserve their legacies.”