The Cliff Averted: What the Fiscal Deal Means for You

The past week’s fiscal cliff deadline has been averted, at least for now. The last-minute compromise — the American Taxpayer Relief Act (ATRA) — extends the majority of tax cuts scheduled to expire at the end of 2012, in addition to retroactively reinstating some rules that had expired in 2011. However, the legislation also introduces a number of changes as well — including a new top tax bracket and an increase in the top long-term capital gains and qualified dividend rates. Some old rules that had lapsed have returned, such as the phaseout of itemized deductions and personal exemptions, and a new rule will allow 401(k) participants to complete intra-plan Roth conversions.