"It ain’t over till it’s over" is the famous quote ascribed to baseball Hall of Famer, Yogi Berra.
In today’s political climate, we can stretch Berra’s quote to encompass "the Fiscal Cliff Deal". The formal name of which is the American Taxpayer Relief Act of 2012 passed by Congress on January 2, 2013.
What the Act covers has been all over the media in bits and pieces. But if you want the "Executive Summary", here’s it is, The Fiscal Cliff Legislation: An Executive Summary of What You Need to Know, an article in the National Law Review by attorneys Michael L. Pate and Elizabeth L. McGinley, Partners in the Bracewell & Giuliani LLP law firm.
In our corner of the world, there were two specific retirement plan provisions in the Act.
- In-Plan Roth Conversions Expanded. Under prior rules, a 401(k), 403(b) or 457(b) account balance could only be converted to Roth if the amount is otherwise distributable. Effective January 1, 2013, a 401(k), 403(b) or 457(b) plan which permits Roth elective contributions can allow any amount in a non-Roth account to be converted to a Roth account.
- IRA Charitable Rollovers Extended. The $100,000 IRA charitable rollover provision has been extended through 2013 with two special rules: 1) A rollover during January of 2013 can be treated as a 2012 rollover; and 2) individuals who took a distribution in December of 2012 will be able to contribute that amount to a charity and count it as an eligible charitable rollover.
But despite the passage of the Act, it isn’t over yet. There are still unresolved, contentious political issues over federal spending and debt. Time is running short. This country officially hit our debt limit on January 1, 2013, and Treasury has been undertaking “extraordinary measures” to put off default. If Congress does not raise the ceiling by late February or early March, this country will not be able to pay all of its bills.
While tax incentives for qualified retirement plan contributions were not reduced in the Act, many of us in the retirement plan industry are concerned that retirement plan tax preferences will be a target as part of the upcoming and continuing "fiscal cliff".
That term again. If you’re one of those people that consider use of the term "fiscal cliff" overused or not even appropriate, you’re not alone. It tops the 2013 edition of the 38rh annual list of Lake Superior State University’s List of Banished Words. Since the University is not the Word Police, the "banned" words seem to stick around. Words like "viral," "epic" and "refudiate" on last year’s list aren’t going away anytime soon.
Journalist Adam Davidson speaking on TED, put the term in this light:
“The ‘fiscal cliff’ — I was told that that’s too partisan a thing to say … so I just call it the ‘self-imposed, self-destructive, arbitrary deadline about resolving an inevitable problem.’”
As for me, I see it in the political arena of demographics and entitlements. In pop culture terms, it goes to the question made famous by the title track in the 1975 album, Why Can’t We Be Friends? written and recorded by the funk band, War. Interesting juxtaposition, eh?
Baseball Note: Sorry to bring back bad memories if you’re a Cubs fan. Yogi’s quote was in July, 1973 when his Mets trailed the Chicago Cubs by 9½ games in the National League East/ The Mets rallied to win the division title on the final day of the season. But if you’re a baseball memorabilia collector, the autographed baseball pictured above is available at the Yogi Store, on the official Yogi Berra website.