SECURE Act Roth conversions from TIRAs still best?

Submitted by Robert Banta on Sun, 2019-12-22 01:43

In the light of the SECURE Act passage by both houses of Congress, and likely approval by President Trump, would there be any “additional downsides” to continuing to heavily convert from TIRAs to Roth? , as I have done in the past?



Submitted by Alan - IRA critic on Sun, 2019-12-22 02:01

  • The Secure Act provisions were added to the budget bill and were signed into law by the President yesterday. The Senate did not make any changes to reflect their RESA bill, so the Secure Act provisions are intact.
  • While the non spouse beneficiary stretch restrictions apply to both inherited TIRAs and inherited Roth IRAs (as well as inherited employer plans), beneficiaries will be taxed on their reduced distribution periods for TIRAs, but inherited Roth distributions will be tax free, and in addition the inherited Roth can be held longer and distributed in year 10 because the year 10 taxable income will not be increased when distributed. And because there are no TIRA RMDs until 72, the TIRA balance will grow longer and the RMDs will be more concentrated since a little more will be distributed over fewer years. Therefore, the Secure Act probably increases the benefits of conversions somewhat vrs not converting. However, care should still be taken not to overdue the conversions.

 

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