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4 ‘fiscal cliff’ fix goodies

By Jennie L. Phipps · Bankrate.com
Thursday, January 3, 2013
Posted: 5 pm ET

Here are four more retirement planning goodies from the "fiscal cliff" fix swag bag.

The individual retirement account charitable rollover, which expired at the end of 2011, has been extended for 13 months, retroactive to December 2012 through 2013. People 70 1/2 or older who are required to take minimum distributions from their traditional IRAs may give up to $100,000 directly from their IRAs to qualified charities. This will satisfy the required minimum distribution, or RMD, requirements, and no taxes will be due on the amount of the contribution.

If you took your 2012 RMD in December, you can redirect that amount to a charity and avoid the 2012 tax. If you took the distribution in an earlier month, you're out of luck.

Another plus: The amount you pull from your IRA and give to charity won't count as part of your adjusted gross income. So your donation could keep your income down to a level where you won't be affected by the new phaseouts on itemized deductions and personal exemptions for high-income earners. And it might even keep your Medicare tax a little lower because it, too, is linked to your income.

Three other features of the fiscal cliff fix that particularly affect retirement planners are:

  • The tax on long-term capital gains and dividends will remain at 15 percent for individuals whose income is less than $400,000, $450,000 for couples filing jointly. People who make above that will pay 20 percent on capital gains.
  • Physicians who treat Medicare patients are no longer facing reimbursement cuts.
  • The estate tax will go to 40 percent, up from last year's 35 percent for individuals with estates worth more than $5 million -- $10 million for couples. Below that level, estates pass untaxed by Uncle Sam.
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