This week on the Retirement Quick Tips Podcast, the theme is: your 2021 Year-End Tax Planning Checklist

Today, I’m talking about roth conversions. One thing that has been a consideration for change by lawmakers is banning certain types of Roth conversions, especially backdoor Roth conversions. As of this recording, it’s unclear what will become law and when, but if you have a higher income and big balances in your IRA accounts, you could be locked out of roth conversions in future years. 

Right now, the laws allow Roth conversions no matter what your income. You may make too much money to contribute to a Roth IRA, but you could make $1 million dollars a year right now, and still convert a $1 million IRA to a Roth. 

This is a very powerful way to move some of your investment accounts into a Roth, that won’t be subject to future taxes or future mandatory withdrawals. 

Traditional IRA and 401k accounts recently became the worst account type to inherit after the SECURE act was passed in 2019. Non-spouse beneficiaries now have just 10 years to withdraw all the funds from the IRAs they inherit and pay all the taxes. So from an estate planning perspective - especially if you want to limit future taxation at potentially higher rates to your heirs - now is the time to consider a Roth conversion. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance