Is Biden’s new proposal about to kill Roth Conversions? Check out my video and I’ll explain.
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President Joe Biden’s new proposal to implement a tax increase on high-income earners is causing concern among those who have been considering converting their traditional retirement accounts to Roth accounts. The proposed tax increase, which is part of the President’s Build Back Better agenda, could potentially make Roth conversions much less attractive and potentially eliminate a key tax planning strategy for many individuals.

Roth conversions have long been used as a way to minimize taxes in retirement by allowing individuals to pay taxes on their retirement savings upfront, in exchange for tax-free withdrawals in retirement. However, under the new proposal, individuals making over $400,000 per year would see an increase in their tax rate, effectively making Roth conversions much less beneficial.

The proposed tax increase would not only affect high-income earners looking to convert their retirement accounts but could also have a ripple effect on those planning to pass down their Roth accounts to heirs. Currently, heirs who inherit Roth accounts are able to withdraw the funds tax-free over their lifetime. However, the proposed tax increase could potentially change this benefit, making it less advantageous for individuals to pass down their Roth accounts to their heirs.

While the full details of Biden’s tax proposal have yet to be finalized, many financial experts are advising individuals to carefully consider their options before moving forward with a Roth conversion. It is important for individuals to assess their overall financial situation and consult with a financial advisor to determine whether a Roth conversion is still a beneficial strategy under the proposed tax changes.

If the President’s tax proposal is approved, it could have far-reaching implications for individuals looking to maximize their retirement savings and minimize their tax burden in retirement. While the future of Roth conversions remains uncertain, it is clear that individuals will need to carefully evaluate their options and potentially adjust their retirement planning strategies in response to the proposed tax changes.