Using a 1031 real estate exchange to avoid the new 3.8% Medicare surtax on investment income could backfire, writes Michael Kitces. Sheltering income through a 1031 exchange could increase exposure to the tax in the future because the income thresholds are not indexed for inflation. In a separate issue, Kitces questions the Center for Retirement Research's study that finds that required minimum distributions are a better method for retirement plan withdrawals than the 4% rule. He argues that the center's analysis of required minimum distributions doesn't take into account the volatility of portfolio returns.
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