For those unfamiliar with the term, a Roth conversion involves moving money from a tax-deferred traditional IRA (IRA) to a tax-free Roth IRA (Roth). You’ll pay taxes on the amount transferred but from that point on the amount will grow tax-free for the rest of your life (and even for ten years of a subsequent…
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At the tail end of December President Biden signed into law the Secure Act 2.0 as part of the $1.7 trillion Consolidated Appropriations Act of 2023. Its name represents an extension of the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act that was the Federal government’s first major retirement-focused legislation since 2006. Secure…
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Often politicians pass laws that have unintended consequences, making tax planning difficult. This year the uncertainty revolves around two methods to build up your tax-free savings that may go away if the Biden administration’s Build Back Better legislation passes. I’ll describe the situation and the three possible outcomes. As background, some workers have the ability…
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It’s always nice to get a tax break. Starting in 2022 required minimum distributions (RMDs) by seniors from qualified retirement plans such as IRAs and 401(k)s will be reduced, courtesy of a change to life expectancies instituted by the IRS. Here’s an example to illustrate the change. Suppose Mary Taxpayer, born on March 1, 1950,…
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