Contributing Articles

Proposed new regulations from the Internal Revenue Service for inherited retirement accounts would require many heirs to make minimum annual withdrawals from the accounts—leaving less room for the savings to grow tax-deferred over the years.

The new rules would provide guidance to the Secure Act of 2019, which made several changes to laws governing retirement accounts.

Ed likes to say that taxes don’t stop in retirement – they’re really just getting started. I’d say he’s right about that insofar as higher income retirees go – you’ll be paying taxes on part of your Social Security, and probably surcharges on Medicare premiums. Those aren’t technically taxes, but they sure feel like it when you’re paying them. Drawdowns from tax-deferred IRAs and 401ks are taxed as ordinary income…and possibly at high rates.

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IRA legislation will not happen in 2021, and the IRA parts of the Build Back Better Act (BBB) may not happen in 2022 if the legislation remains stalled in Congress.But other retirement-related bills may have a better chance of becoming law.

So advisors should still share retirement tax planning strategies with clients in 2022, based on the current tax structure and what might be in the works.

As the end of the year approaches, here's a round-up of the best retirement tax planning ideas for 2021.

With the end of the year just around the corner, now is the time to consider year-end strategies for tax planning. Ed Slott, CPA, suggests that low tax rates offer opportunities for some taxpayers to make some smart retirement moves.

The clock may be ticking on backdoor Roths. The latest proposal (under a House of Representatives bill submitted on November 19, 2021) would eliminate both the regular backdoor Roth and the mega-backdoor Roth next year for everyone, regardless of income.

As we’ve seen from recent tax proposals, Congress has retirement accounts in its sights for future tax increases, especially the larger IRAs. We know what the tax rules and tax rates are for 2021, but advisers can also help clients make some defensive moves now, just in case any of these IRA tax proposals resurface in future years.

Congress has set its sights on mega-IRA balances, in large part due to the recent reports about Peter Thiel’s $5 billion Roth IRA. But some of these proposals will impact many other clients with smaller individual retirement accounts and Roth IRAs.

Imagine spending a lifetime building a retirement account only to have your beneficiaries lose it in one fell swoop: They mishandle the account, triggering tax on the entire inherited individual retirement account.