Please note that Portnoff Financial has joined with Tempus Wealth Planning and some information here may no longer be applicable. Please contact Jeremy Portnoff at 949-226-8342 (CA) or 732-226-3113 (NJ) for additional information.  We apologize for any confusion while we are in transition. 

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UPDATE!! Roth Conversions: No More Do-Overs

One of the many sweeping changes resulting from the new tax law is that you can no longer recharacterize, or undo, a conversion from a traditional IRA to a Roth IRA. Thus, under the new law, Roth conversions are irrevocable.

What does this mean for you?

You may determine a Roth conversion is right for you after working with a qualified financial professional to consider a variety of factors, including when you will need the money and your current tax rate. When you convert, you are liable for income tax on the amount converted.

Until the passing of the new tax law, you had until October 15 of the year following the conversion to change your mind. Reasons for wanting to undo a Roth conversion might include a decline in value of the converted funds or a change in life circumstances that leave you unwilling or unable to pay the tax on the conversion. With the new law, however, the decision is permanent.

The key takeaway is that before you do a Roth conversion, you must be sure that you have the funds to pay the projected tax bill on the conversion.

Given its permanence, the decision to convert your traditional IRA to a Roth IRA will require careful planning. It is more important than ever to be working with an advisor who is well-trained in the intricacies of laws that impact retirement accounts.

Feel free to call our office to schedule a time to discuss your retirement account. Click here to contact the office nearest you.

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