Take-Away: A recent article noted the dramatic change in the longevity of individuals with reference to their income levels. The import of that study is that current life expectancy tables understate the actual life expectancy of wealthy individuals, which disparity should lead them to plan more aggressively for their longer life expectancies, and before the […]

Take-Away: Some qualified plans permit plan participants to take loans from their retirement account. If the participant fails to repay an installment in a timely manner, the loan will be treated as a taxable distribution of the loan balance and possibly trigger the 10% penalty for an early distribution. Background: Amounts distributed to a plan […]

Take-Away: The Uniform Law Commission approved a year ago the Uniform Fiduciary Income and Principal Act. This Act, if adopted by Michigan, makes some important changes to the 1994 and 1997 versions Uniform Principal and Income Act (UPIA). The earlier UPIA Acts tended to create some dilemmas for a trustee that is charged with prudent […]

Take-Away: A Bill currently before the Michigan Legislature would permit married Michigan residents to declare that assets held by them in a community property trust would be classified as community property for all purposes, and in particular for an income tax basis adjustment on the death of one spouse. If the trust’s assets were classified […]

The House of Representatives passed the SECURE ACT in late May, which would eliminate what is called the stretch IRA. A stretch IRA is a popular planning technique because it allows the beneficiary to take distributions from an inherited IRA or qualified plan account over the beneficiary’s life expectancy. Consequently, the recognition of the taxable […]

Take-Away: For individuals who want to fund a Roth IRA, but whose modified adjusted gross income (MAGI) is too high to permit funding a Roth IRA, the backdoor Roth IRA strategy can be used with an after-tax traditional IRA contribution. Backdoor Roth IRAs were of questionable legality until the 2017 Tax Act, which appears to […]

If a client plans to leave Michigan, in order to disconnect any lingering tax exposure to the Michigan Department of Treasury, the following steps should be taken: Overcome any presumptions of continued Michigan residency: Cancel any Michigan Homestead Personal Residence Exemption (PRE) Maintain a log or spreadsheet identify location out of the state, i.e. to […]

Take-Away: If an individual is a resident of one of the 43 states that imposes a state income tax, like Michigan, the state income tax may be imposed on all of the individual’s income, even income that is earned outside his/her state of residence. Nonresidents of these 43 states may only be taxed on income […]

Take-Away: As a wild generalization,  from a recent IRS Notice it appears that the owners of commercial real estate are given favorable treatment in their ability to claim an IRC 199A qualified business income tax deduction. As is often the case, however, the ‘devil is in the details.’ Caveat: I am the first to confess […]

Take-Away: Recent litigation with regard to the Fidelity Donor Advised Fund should prompt donors to any donor advised fund (DAF) to add conditions to the fund. Background: Thirteen years ago, with the Pension Protection Act, Congress required Treasury to examine concerns about possible abuses with regard to the operation of a donor advised fund (DAF.) […]