Tax Reform Act Of 1986
Legislation to eliminate most tax shelters and write-offs in exchange for lower rates for both corporation and individuals. It was intended to be revenue neutral; that is, to bring in the same amount of revenue as the previous law.
- For individuals, it eliminated deductions for most tax shelters such as tax-advantaged limited partnerships; it eliminated special treatment for capital gains by taxing them at the same rate as ordinary income.
- Deductions for an INDIVIDUAL RETIREMENT ACCOUNT (IRA) no longer applied to those with incomes above $35,000 and couples above$50,000 unless they had no company pension plan. Individuals with incomes between $25,000 and $35,000 and couples between$40,000 and $50,000 got a partial deduction.
- For company-sponsored 401 (k) salary reduction plans, the maximum annual limit was reduced from $30,000 to $7000; antidiscrimination rules were tightened; and a 10% penalty was imposed for withdrawals before age 59/2.
- Other administrative changes made it more expensive for companies to start or maintain a company pension plan.
- CASH VALUE LIFE INSURANCE was one of the few retirement vehicles to retain its tax-deferred status.
- Top individual tax rates were reduced from a series of rates going up to 50% to two rates: 15% and 28%, although the top marginalrate was 33%.
- The top corporate rate down from 46% to 34%.
- The investment tax credit was eliminated and depreciation schedules were lengthened.
- Many industries lost special advantages they held under the old code.
- The alternative minimum tax was stiffened for individuals and one was added for corporations.
Popular Insurance Terms
Employer's obligation to fund a pension plan for the time period when employees were qualified to participate but the plan was not yet established. For example, a pension plan is ...
Coverage for the insured in the event that the insured's negligent acts and/or omissions result in losses in connection with the use, ownership, or maintenance of aircraft. Liability ...
Search, attraction, interview, and employment of insurance agents. This is a primary function of the general agent (GA) or agency manager. ...
Type of premium plan under which the employer (if noncontributory plan) or the employer and employee (if contributory plan) make level annual premium payments to fund the future retirement ...
Coverage for an employer in the event of dishonesty of any employee. ...
Call on a prospective insurance buyer without a prior appointment. Many salespeople find this exercise the most threatening in their career development. Some observers attribute the ...
A form of assessment insurance for which a regular premium is charged. In addition to paying the regular stipulated premium, an insured and other members of a mutual assessment company may ...
Plan providing benefits that are adjusted according to variations in a specified index of prices. For example, some pension plans adjust retirement benefits yearly according to the rise in ...
Combination of coverages from property, liability, health, and life insurance into a single insurance policy from one insurance company. ...

Have a question or comment?
We're here to help.