Upper-income bracket to see Medicare tax hike by Rob Kieckhefer, first vice president, RBC Wealth Management, Milwaukee
Because of several provisions within the recently approved federal health care reform package, employers may want to review their executive compensation program.
The new law contains a provision that introduces a 3.8-percent Medicare tax on the lesser of net investment income or the excess of modified adjusted gross income over a threshold amount. For taxpayers with high earned income and substantial investment income, this provision could increase Medicare tax payments.
One strategy to reduce this liability is to defer current earned income into future years. Employers may want to consider a nonqualified deferred compensation (NQDC) plan for this purpose.
Read more in the latest issue of BizTimes Milwaukee.