Individual Retirement Arrangement (IRA) Planning Strategies for 2018

There have been several tax law changes during 2018 that are affecting Individual Retirement Arrangement (IRA) planning strategies for 2018. This column reviews five of these strategies.

 By Edward A. Zurndorfer, Certified Financial Planner

There have been several tax law changes during 2018 that are affecting Individual Retirement Arrangement (IRA) planning strategies for 2018. This column reviews five of these strategies.

1. Roth IRA conversion
The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the ability to reverse or to “recharacterize” Roth conversions performed after Dec. 31, 2017. Before TCJA, if a Roth IRA conversion resulted in an unexpectedly high income tax bill, or if the IRA owner simply changed his or her mind about converting his or her traditional IRA to a Roth IRA, , then the conversion could be reversed by recharacterizing the Roth IRA funds back to a traditional IRA. This is not the case for Roth IRA conversions performed after Dec. 31, 2017, as these conversions must remain intact and cannot be reversed.

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