Estate Planning and Taxes for 2020

The lifetime estate and gift tax exemption is increased to $11.58 million (from $11.4 million). A couple can jointly exempt $23.16 million from estate and gift taxes. The annual gift tax exclusion remains $15,000 for 2020. The standard deduction for married couples filing jointly is $24,800 (up from $24,400). For single taxpayers, it is $12,400 .

The annual tax-deferred contribution to 401(k) and similar plans is increased to $19,500 from $19,000. The catch-up contribution for those ages 50 and older increases to $6,500 from $6,000.

The IRA contribution limit remains at $6,000. The contribution limit is the same for traditional and Roth IRAs.

IRA owners older than age 70½ must begin taking RMDs no later than April 1 of the year after they turn age 70½. After that first RMD, an RMD must be taken by Dec. 31 each year.

An easy way to reduce RMDs is to distribute your IRA early and pay the income taxes. Invest the after-tax amount in a taxable account, which gives you much more control over when the income and gains are taxed.

Another strategy is to convert all or part of the traditional IRA to a Roth IRA, however taxes will be due at the time of the conversion.

Dan