Learning the Ropes of a New Tax Act...Again

Opiela, Nancy
December 2003
Journal of Financial Planning;Dec2003, Vol. 16 Issue 12, p34
Academic Journal
The article discusses how financial planners and their clients reacted to the Jobs and Growth Tax Relief Reconciliation Act of 2003, a tax relief package signed into law by U.S. President George W. Bush on May 28, 2003. The change in the tax act is that almost everyone will see a decrease in his or her federal income tax bill in 2003. The tax law also reduces the maximum tax rate on qualified dividends to 15 percent. The tax rates on dividends have prompted many planners to discuss with clients whether dividend-paying stocks belong in taxable or tax-deferred accounts. If current tax law remains in effect, dividends paid on stocks owned in an employer-sponsored retirement plan or a traditional individual retirement account will be taxed as ordinary income when they are withdrawn come retirement. To help clients realize the advantage of holding dividend-paying stocks in a taxable account, Wade Financial Group launched a tax-managed dividend portfolio designed to achieve maximized risk-adjusted returns.


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