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Why Pensions Are the Hot New Tax Shelters

Why Pensions Are the Hot New Tax Shelters

Why Pensions Are the Hot New Tax SheltersTraditional pension plans are being used by some doctors, lawyers and other wealthy small business owners to shield hundreds of thousands of dollars in income from taxes, Bloomberg’s Ben Steverman reports, and new tax rules related to pass-through businesses are expected to make the plans even more popular. Guidelines released by the Treasury Department last week limit the use of the 20 percent pass-through tax deduction for some high-earning professionals, who will have to keep their incomes under $315,000 per married couple in order to claim the full benefit of the tax break. Defined-benefit pension plans provide a way to reduce income and, in the wake of the new tax rules, are especially attractive to older, high-income service providers who operate their own businesses.

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