June’s Newsletter Discusses the 2024 Revenue Proposals
The Biden administration has released a proposed budget for fiscal year 2024, calling for an increase in federal spending and a series of counterbalancing revenue raisers. “General Explanations of the Administration’s FY2024 Revenue Proposals,” also called the “Greenbook,” outlined the budget.
The Greenbook is a comprehensive document prepared by the US Department of the Treasury. Its primary purpose is to explain the revenue proposals in the President’s budget. Additionally, the Greenbook is a reference for Congress when considering tax legislation. It provides an overview of existing tax laws, proposed amendments to those laws, the underlying policy rationale behind the proposed changes, and the US Department of the Treasury’s revenue projections based on the proposed modifications.
Proposed Changes to How Your Retirement Plan is Managed
One proposal that the Greenbook outlines that could directly impact your future financial security is to prevent excessive wealth accumulation by high-income taxpayers using tax-favored retirement accounts. To avoid such “excessive accumulations”, the Greenbook contains proposals that would modify rules related to retirement accounts. One such proposal would impose special distribution rules on high-income taxpayers with large account balances. Another Greenbook proposal that could impact your financial plan is the proposed limit on rollovers and conversions to designated Roth retirement accounts.
Improvements the Administration Wants to Make Regarding Trusts & Estates
Several proposals in the Greenbook help alleviate some of the complications that have arisen in estate and trust tax matters. For example, one proposal requires reporting the estimated total value of a trust’s assets to the Internal Revenue Service (IRS) annually. Another proposal to simplify estate and trust matters is to eliminate the requirement that gifts must be of a present interest to qualify for the gift tax annual exclusion.
Ways the Administration Wants to Modify the Tax Rules for Certain Trusts
Taxes impact trusts as well. The Greenbook proposes modifying the tax rules for grantor retained annuity trusts and charitable lead annuity trusts. Furthermore, a proposal would treat loans made by a trust to a trust beneficiary as a distribution for income tax purposes, carrying out each loan’s appropriate portion of distributable net income to the borrowing beneficiary.