Monterey, CA Tips On ROTH IRA Conversions

Tax rates are likely to go up under the Biden administration, and one hedge against this is to convert an existing IRA or 401(k) to a Roth IRA.  You will have to pay taxes on the amount converted but then the IRA grows tax free.  Talk to a tax advisor—and make sure you wait closer to year-end before doing it in case tax rates increase this year.  Or let Monterey Bank or one of our other local banks walk you through the rules.  There are few—for instance, there are no Required Minimum Distributions from this type of IRA.

Monterey, CA Avoid Taxes on Required Minimum IRA Distributions By Giving To Non-Profits

Although the IRS requires us to withdraw a certain amount each year from our retirement accounts in order to satisfy the Required Minimum Distribution requirements.  However, if you don’t need the money, you can transfer money directly to a non-profit via a qualified charitable distribution.  This can be done for a total of up to $100K per year and meet the IRS guideline.  You can split your contributions between as many charities as you want under IRS rules, although some banks do place a limit on this.  Talk to your bank and a local accounting firm like Hayashi & Wayland.

New Legislation Could Boost Retirement Savings

A bill from Rep. Richard Neal (D, Mass.) and Rep. Kevin Brady (R. TX) would boost the age for required minimum distributions (RMDs) from IRAs and 401 (k) accounts to 75, from 72.  It applies to those born after June 30, 1949.  It would also waive RMDs entirely who have a cume total of less than $100K.