Home
Our Services
Meet Our Team
Client Events
Special Events
Cambridge Investment Research

NelsonCorp In the Headlines
Team Recognition
Account Lookup
Newsletters
Stock Quotes
Financial Briefs
Financial Headlines
Articles Of Interest
Financial Calculators
Market Data Bank
Web Resources
Contact Us
Disclosure
Importance of
a CFP

Financial Briefs


More Articles  Printer Friendly Version

 

The New Tax Law Gives Roth Converters A Little Less Wiggle Room

Retirement savers, give thanks! The recently passed tax plan doesn't harm you - much. Congress, for instance, did not lower maximum contributions for tax-deferred plans, like traditional 401(k)s and individual retirement accounts. Nor did Congress tinker with moving your money from a traditional plan into a Roth, where you pay the taxes up front and appreciation grows tax-free and your withdrawals won't ever be taxed.

With one small exception. Until Congress changed the law right before the holidays, some people who did a Roth conversion could decide they wanted to un-do it, which the tax experts call a recharacterization. Not anymore.

Backing out of a Roth conversion was a convenient deal. Maybe at year's end, you discovered that other unanticipated deductions, income or market conditions made the conversion look like a boneheaded idea. Maybe it turned out you lacked the money you thought you'd have to pay the Roth tax. Maybe the stock mutual fund you converted had slid since you moved the fund into a Roth IRA. Why pay taxes on higher-cost stock when you can make the conversion disappear - and maybe later convert at the lower level?

Under the new law, for tax year 2018, you can't have that flexibility anymore. Once you make the switch, you are stuck with your choice. The good news: if you want to recharacterize a 2017 Roth conversion, you have until Oct. 15, 2018 to do it.


Email this article to a friend


Index
The Big New Tax Break For Pre-Retired Professionals
The Truth About U.S. GDP Growth
Sidestepping New Limits On Charitable Donations
Another Member Of Music Royalty Dies With No Will
Paying Off A Mortgage And The New Tax Code
Key Facts On Deducting Medical Expenses
Reduce Your Widow's Tax Bill Materially Annually
Ten Things About 10-Year U.S. Stock Market Performance
Your Alma Mater Or Your Family?
Qualifying For The New Business Owner Tax Break
This Is Not Your Parents' Interest Rate Cycle
Life Is Fragile, So, Please, Value Each Day As Priceless
If Family Is Wealth, Then Planning Is Immortality
Everything You've Learned About Interest Rates May Be Wrong
This First Year Under The New Law Requires Planning
Commodities Stink But Serve A Purpose

This article was written by a professional financial journalist for NelsonCorp Wealth Management and is not intended as legal or investment advice.

©2018 Advisor Products Inc. All Rights Reserved.
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC to residents of AK, AL, AR, AZ, CA, CO, FL, GA, HI, IA, IL, IN, KS, KY, LA, MA, MD, MI, MN, MO, MS, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, WA, WI.
Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.
Cambridge and NelsonCorp Wealth Management are not affiliated.