the Boston Globe reports the end of year holds some good news for retirement investors – thanks to new rules put into effect by the small business bill passed last month making Roth IRAs a more attractive option.
The remaining months of 2010 may prove an uneasy time for tax and financial planning – with the status of Bush-era tax cuts and the possible return of the estate tax hanging in the balance while a “lame duck” congress still has the wheel. However, the Boston Globe reports the end of year holds some good news for retirement investors – thanks to new rules put into effect by the small business bill passed last month making Roth IRAs a more attractive option.
While traditional retirement accounts allow you to invest pre-tax dollars, paying the tax on withdrawals during retirement; the opposite is true for Roth accounts. With a Roth account, you will pay the tax upfront, but the funds are freely accessible during retirement. The ability to draw money from both taxable and nontaxable accounts allows a retiree to better control tax liability.
The new small business law includes a provision that allows you to roll over funds from a 401(k) into a Roth account, without incurring the associated penalty (10%) for doing so before age 59.5. The conversion process will still be subject to income tax, but there law also includes a special tax break available if you make the switch this year. To qualify, however, the funds must convert before December 21, so don’t wait until the last minute to make this decision.
To increase your monthly income, please contact us about a FREE HANDBOOK about VA Benefits, written by David Wingate, an accredited VA Attorney, of Senior Life Care Planning, LLC, go to email@example.com or if you require additional information about VA Benefits, visit our Senior LCP's Website.
We also have a Blog on Elder Issues and Veteran's Benefits.
If you are not receiving our Newsletter, go ahead and subscribe to our free NEWSLETTER to stay on top of senior issues.Tags: Financial Planning, retirement accounts, Roth IRA, tax planning