Special Report Part 2: What the Biden Tax Plan Means for You

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Say Goodbye to Retirement Account DeductionsWord "TAX" on wooden blocks with businessman in the background

There are potentially sweeping tax law reforms coming.

These adjustments will primarily impact high-income Americans. There is a short window of time where you can prepare for the coming changes. Notably, you can use increased allocations in gold bullion and rare coins to protect and preserve your family’s wealth.

A significant change will be the elimination of the retirement account deduction.

If you currently enjoy deducting up to $26,000 to your 401 (k) if you are 50 or older, say goodbye to that sweet deduction.

Under the proposed Biden tax plan that deduction would disappear – and be replaced with a tax credit.

The Biden plan reduces tax benefits for high-income workers and increases benefits for low and middle income workers.

  Current Law Biden Tax Proposal
401(k) and retirement accounts Contributions are tax-deductible. Growth is tax-deferred

Create a 26% flat tax credit. Let unpaid caregivers make “catch-up” contributions to retirement accounts. Give tax credits to small businesses to offset cost of creating plan.

Give all workers without a pension or 401(k) access to “auto 401(k)”


Corporate Tax Rates Would Climb

  • Under current law, corporations pay a 21% tax rate
  • The Biden tax proposal would increase the corporate tax rate to 28%. (That’s still below the pre-2017 Tax Cut and Jobs Act level of a 35% corporate tax rate.)

Taken together with the changes we discussed in part one – these are significant proposed changes to tax law. Fortunately, there are actions you can take to minimize the impact to your income and wealth.

Gold: An Excellent Vehicle for Private Wealth Preservation

As we’ve discussed, now is the time to take action and re-position some holdings to get in front of these proposed tax changes.

Gold bullion and rare coins have long been touted by trust attorneys as an efficient and discreet method of transferring wealth from one generation to another.

This bears repeating:

With the proposed estate tax level falling from $11.7 million to $3.5 million – that means many more families will be forced to pay the 45% tax rate on a larger amount of your estate. That significantly reduces the wealth you can give to your heirs – as the government will take a much larger portion of your family’s money.

Current Action in the Gold Market

Call it the calm before the storm. After hitting a new all-time record high last year, gold market action turned consolidative recently.

It’s easy to say:  “Buy low, sell high.” Yet so many investors do the exact opposite. Many investors wait to buy until a market is near its all-time highs! That’s buying high, not buying low.

  • Gold still remains in the midst of a long-term, historic uptrend.
  • In fact, the price of gold climbed 53% from January 2019 through January 2021. That’s right. In just two years, gold climbed 53%!

For long-term market up-trends – current activity is normal behavior. Markets go up, they correct and consolidation, then they go up more. 

The secret to long-term investing success? Buy on a pullback in an uptrend.

The recent drifting action in the gold price is just that – it offers long-term precious metals buyers an excellent buying opportunity.

Goldman Sachs, Citigroup, and UBS all forecast additional gains for gold and silver prices in 2021, which creates an ideal buying situation now.

If you are worried about losing money to new taxes – take action now to protect your wealth and income and you’ll also be able to generate new profit from buying gold at a time when the price is low.

If you or your family could be impacted by the proposed shift in these tax laws, don’t wait. Contact a Blanchard portfolio manager for a confidential portfolio review – and to learn strategies to maximize your wealth transfer.

Current action in the gold market offers a perfect long-term buying opportunity before these tax proposals become reality.

You can’t control what tax legislation passes in Congress.

You can control how you prepare and position your financial picture to limit the impact of new taxes. 

We are here to help.

If you missed it, take a look at part one of this series here.

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