As you may be aware, the Bush-era tax cuts of 2001 and 2003 may expire at the end of 2012. Or they may be extended. Or they may be extended, but modified. Or they may expire, and then be extended or modified in 2013. It is all up to Congress.
Despite the uncertainty, there are steps you can take to help reduce taxes—regardless of what Congress ultimately does—plus strategies to consider should there be higher taxes next year or down the road.
We divide those strategies into two buckets: first, things to do assuming tax rates rise on January 1, 2013, and second, things to do no matter what happens with rates.
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The Fidelity® Personalized Portfolios service applies tax-sensitive investment management techniques (including tax-loss harvesting) on a limited basis, at its discretion, primarily with respect to determining when assets in a client’s account should be bought or sold. Because it is a discretionary investment management service, any assets contributed to an investor’s account that Fidelity Personalized Portfolios does not elect to retain may be sold at any time after contribution. An investor may have a gain or loss when assets are sold.
Investing in a variable annuity involves risk of loss - investment returns and contract value are not guaranteed and will fluctuate. Withdrawals of taxable amounts from an annuity are subject to ordinary income tax, and, if taken before age 591/2, may be subject to a 10% IRS penalty.