The recent passing of the Tax Cuts and Jobs Act (TCJA) affects several areas of the financial investments industry. This article will focus on the changes implemented to ROTH IRA conversions and how this new law both positively and negatively affects your investment opportunities.
What is a ROTH IRA?
As defined by RothIRA.com, a ROTH IRA is, “a special retirement account that you fund with post-tax income (you can’t deduct your contributions on your income taxes). Once you have done this, all future withdrawals that follow Roth IRA regulations are tax free.”
This incredible tax savings makes this type of financial investment very attractive to investors, especially those looking to plan for their retirement. With 80% of Americans currently doubting their financial security in retirement, it is no wonder why these individuals are in search of robust investment options like a ROTH IRA.
Converting to a ROTH IRA
The simplest way to immediately begin making tax free withdrawals from a ROTH IRA account is to convert the account from a traditional IRA. Many of the intricacies of this process can be fully explained by reading through our recent article, “What You Need to Know About IRA Conversions”.
Market Watch contributor, Bill Bischoff clarifies how the Tax Cuts and Jobs Act affects this conversion by saying, “If you convert in 2018, you’ll pay today’s low tax rates on the extra income triggered by the conversion and completely avoid the potential for higher future rates on all the post-conversion income that will be earned in your Roth account. That’s because Roth withdrawals taken after age 59½ are totally federal-income-tax-free, as long as you’ve had at least one Roth account open for over five years.”
Biscoff also states that those in the best position to gain from such a situation are people who believe that they will experience equal or higher tax rates during retirement (which is incredibly likely since these rates rarely drop). Think this may be the right decision for your retirement? Let the retirement income planning experts at CKS Summit Group help!
Speak With a Professional About Converting to a ROTH IRA Today!
The experienced staff at CKS Summit Group has everything you need to take advantage of the recent Tax Cuts and Jobs Act. Our financial advisors firmly believe in a multifaceted approach that balances safety and security with optimal profitability.
To schedule your personal strategy session with a CKS financial advisor, please give us a call anytime at 586-286-5820. You can also request a complimentary session online by clicking here. Thank you, and we look forward to making the most of your ROTH IRA conversions soon!
