Examine the details before converting a Roth IRA

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Estate planning, unlike a certain rotisserie oven, is not a matter one should simply “set and forget.” In fact, leaving an estate plan unchanged or reviewed for too long may virtually guarantee conflicts when it comes time to disperse assets to your beneficiaries. The laws that govern estate planning change regularly, so it is important to review your estate plan to take advantage of these changes regularly, or at least every three to four years.

The recent tax laws passed by Congress have some implications for Roth IRAs, which are staples of the estate planning community. Depending on the nature of your investments and your preferences regarding taxation, you may need to reconsider how and when you classify your Roth IRA in coming years.

Before the new tax bill took effect, it was possible to convert a Roth IRA to a traditional IRA while still retaining the right to revoke the change until Oct. 15 of the following year. This offered excellent flexibility to many savers who saw their investments plummet due to a market dive. Under previous tax law guidelines, if the market took a downswing, those who converted Roth IRAs to traditional could undo the conversion to avoid paying taxes on funds that lost value. Under the new laws, this reconversion is not allowed, potentially affecting savers’ tax bills.

If you have questions or concerns about your estate plan and its use of the new tax law provisions, you can speak with an experienced attorney. With professional counsel, you can examine your estate plan to make sure you understand how the new law affects it, and make any adjustments necessary to keep you resources and your rights protected.

Source: Time, “Make This One Change to Your Retirement Account Now, Tax Experts Say,” Elizabeth O’Brien, accessed Feb. 23, 2018

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