Each February the president puts together a formal budget request for the federal government. The members of Congress then consider this budget request when putting together their own budget resolution. Although the majority of provisions in the President’s budget refer to a specific recommendations for appropriating various government agencies, the proposals will frequently also include tax law changes that are suggested.
Since this is an election year and drawing to a close of President Obama’s term, there is very little chance that substantive tax changes will actually come to pass through Congress such as the increase in the maximum capital gains rate, a fair share tax for a minimum 30% tax on individuals with very high levels of income, and a rewind of the estate tax exemption back to the $3.5 million threshold of 2009. However, the proposals from President Obama do show issues that are on the radar screen for the federal government at this time, such as a variety of crackdowns and attempts to close various loopholes.
There are a wide range of possible crackdowns on individuals such as a new cap on maximum gain deferral for 1031 exchanges, the elimination of stretch IRAs and step up in basis at death, the closure of the backdoor Roth contribution strategy and lifetime required minimum distributions for Roth IRAs after an individual turns age 70 and a half. In order to stay on top of any potential changes that will come to pass this year or could be included in future years, it is a good idea to consult with a knowledgeable estate planning attorney in New Jersey as soon as possible. Do not hesitate to get advice.