Backdoor Roth IRA Baggage

Feb 16, 2024 | Investment Management, Retirement Planning, Tax Planning Strategies

Cornerstone is pleased to bring you this article by Ed Slott and Company, LLC. As a member of Ed Slott’s Elite IRA Advisor Group™ Gordon keeps Cornerstone professionals on the cutting-edge of retirement, tax law, and IRA distribution planning through continuous training with Ed Slott and his team of IRA Experts.

Membership includes immediate notification of changes to the tax code and updates on retirement planning, and 24/7 access to Ed Slott and Company, LLC to confer with on complex cases. Just one of the tools in the Cornerstone arsenal that helps you avoid unnecessary taxes and fees on your retirement dollars! As always, give us a call if you’d like to discuss!

BACKDOOR ROTH IRA BAGGAGE

A Backdoor Roth IRA strategy is when high-income earners – those over the Roth IRA income threshold ($230,000 – $240,000 for those married filing joint in 2024; $146,000 – $161,000 for single filers) – can make non-deductible contributions to a traditional IRA and then convert the traditional IRA to a Roth, thereby circumventing the income limitations. (We can expel the notion that this is a step transaction or that a Backdoor Roth IRA is on the precipice of illegality. In 2018, a tax law specialist with the IRS Tax-Exempt and Government Entities Division stated that Backdoor Roth IRAs will not be challenged by the IRS.)

You may have heard, “If your income is too high for a direct Roth IRA contribution, just do a Backdoor Roth.”

Easy-peasy, right? Maybe not.

A Backdoor Roth IRA transaction can carry a lot of “Backdoor baggage,” including:

1. The Pro-Rata Rule – No Cherry Picking. The pro-rata rule dictates that when an IRA contains both nondeductible (after-tax) and deductible (pre-tax) funds, each dollar withdrawn (or converted) from the IRA must contain a percentage of tax-free and taxable funds. This ratio is based on the percentage of after-tax dollars in all of a person’s traditional IRAs, SEP and SIMPLE plans. You can’t target just the after-tax IRA dollars and only convert those. Additionally, once you have after-tax dollars (basis) in your IRA, getting it cleaned out could require some heavy lifting. For example, the entire account could be converted, but that might be a tax hill too steep to climb. Or, the pre-tax dollars could be segregated by rolling them into a 401(k). But this assumes access to a 401(k) that allows a rollover into the plan.

2. Multiple Tax Forms.Every Backdoor Roth transaction creates three or four tax forms. When a non-deductible contribution is made to an IRA, you must declare that there are after-tax dollars in the account. This is done on IRS Form 8606. Failure to file Form 8606 could result in double taxation. When dollars leave a traditional IRA via conversion, a 1099-R is generated the following year. Form 5498 is also created the next year to document the conversion. And when tax time comes around, the same Form 8606 is used to document the pro-rata math and how much of the conversion is taxable.

3. Crossing Tax Years. What if you make a prior-year (2023) non-deductible IRA contribution in January 2024, but then immediately convert? That will require a Form 8606 for the 2023 tax return to claim the basis. The conversion will generate a 1099-R and 5498 (issued in 2025) for the 2024 tax return, and a second Form 8606 must be filed with the 2024 return documenting the pro-rata math. Four forms. (Yes, good tax software can certainly help.)

Be aware that, until the after-tax dollars are cleared out of a traditional IRA, it’s your (the taxpayer’s) responsibility to track the basis. And, if you’re a high earner who continues to make (and convert) non-deductible contributions each year, the annual baggage of a Backdoor Roth IRA can pile up and follow you like an overloaded luggage cart with a wobbly wheel.

By Andy Ives, CFP®
IRA Analyst, Ed Slott, LLC

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Copyright ©2024, Ed Slott and Company, LLC Reprinted from The Slott Report, January 31, 2024 with permission. https://www.irahelp.com/slottreport/how-do-youreport-2023-roth-ira-contributions-your-tax-return-answer-may-surprise-you-0. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Raymond James is not affiliated and does not endorse Ed Slott and Company, LLC, The Slott Report, or Andy Ives.

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

Investment Committee Meeting Summary – November 2023

Nov 28, 2023 | Andrew Ulvestad, AAMS®, Financial Planning, Investment Management, Retirement Planning

Investment Committee Meeting Summary – November 2023

Investment Committee Meeting Summary:

Our advisors review fund performance by day, week, and month. And the Investment Committee meets at least quarterly to evaluate the portfolio construction of advisory accounts, proactively rebalance portfolio construction, watch for red flags and perform stress tests to gauge performance in various market environments.

Market Insights and Strategies

With the end of 2023 swiftly approaching, it’s a pivotal time to stay up to date on new developments. We’ve witnessed a year with its fair share of economic and market twists and turns. The journey from a rather challenging 2022 to the present has been a roller coaster ride, marked by recession fears, inflation concerns, rising interest rates, global unrest, and the ever-looming possibility of a federal government shutdown.

In reflecting on 2022, we remember it was a tough year for equities, with major market indexes like the S&P 500 ending in the red. However, stepping into 2023, we’ve observed a different story unfold. As of late September, equity markets have delivered positive returns. It’s a testament to the resilience of the market and the dynamism of investors.

Constantly Adapting

In response to the ongoing challenges, we’ve proactively adjusted our investment approach to better suit the changing landscape. During our investment committee meeting, we utilized our relationships with T. Rowe Price, as we carefully reviewed our investment strategies together to help ensure they are in sync with the present market conditions. One of our key observations was our favoritism of large-cap growth funds to small-cap positions. This strategic shift reflects our anticipation of potential rate hikes by the Federal Reserve and the subsequent impact on the market. Typically, larger companies are better equipped to weather the effects of such rate hikes.

Certain of Uncertainty

Inflation has seen a slight easing since its peak in January 2022 but continues to remain above the Federal Reserve’s targeted 2%. This lingering level below the threshold underscores the challenge of curbing spending, with the final leg of this journey proving to be the most difficult. Meanwhile, the Federal Reserve has recently hit the pause button on rate hikes, although the specter of future increases looms on the horizon with market expectations suggest a potential rate hike in December. It is worth noting that historical data indicates positive market performance after the conclusion of a hiking cycle. Conversations about a possible recession continue, reminding us that economic downturns are inherent phases of the business cycle. In the realm of global geopolitics, tensions such as the Russia-Ukraine conflict cast shadows of uncertainty over the market, prompting us to stay vigilant of potential international market volatility. While forecasting the future remains elusive, our preparation for various scenarios is unwavering.

Our Commitment to Your Financial Success

We are remaining focused on an informed, long-term planning and a diversified approach. The decisions we make are grounded in our commitment to our clients’ financial well-being. We anticipate further market volatility and continue to adapt our strategies accordingly.

As we look ahead, we’ll keep a vigilant eye on market movements and remain steadfast in our dedication to your financial success. We appreciate your trust in our team and are here to navigate the ever-changing financial landscape together.

As always, we’re here for you. Please feel free to reach out if you have any questions or need assistance with your financial planning. Thank you for your continued trust in our team.

Market corrections – even recessions – are part of normal market cycles so it’s important you work with a financial advisor who understands your risk tolerance and wants to help you protect and preserve wealth. We’re with you every step of the way, so you can focus on what matters most to you.

Are you confident your assets are invested and managed appropriately?

Get #CornerstoneConfident – book a financial planning strategy appointment today by

calling 605-357-8553 or emailing cfsteam@mycfsgroup.com.

Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herin will prove to be correct. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Past performance is no guarantee of future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. To determine what is appropriate for you, consult a qualified professional. Raymond James is not affiliated and does not endorse T. Rowe Price. CSP #339165 11/26/23

7 Rules for Inherited IRAs

Sep 11, 2023 | Estate Planning, Investment Management, Retirement Planning, Tax Planning Strategies

7 RULES FOR INHERITED IRAS

Cornerstone is pleased to bring you this article by Ed Slott and Company, LLC, an organization providing IRA education and analysis to financial advisors, institutions, consumers, and media across the country. Our association with this organization helps us stay up to date on the latest developments in IRA and tax law. As always, give us a call if you’d like to discuss!

By Sarah Brenner, JD
Director of Retirement Education, Ed Slott and Company, LLC

Many IRA assets will ultimately go to nonspouse beneficiaries. When these beneficiaries inherit the funds, special rules kick in. Inherited IRAs are not like your own personal IRA account.

Seven rules for inherited IRAs that may surprise you if you are a nonspouse beneficiary:

1. You cannot contribute to your inherited IRA. You cannot make contributions to an inherited IRA. If you do have your own IRA, you cannot add those funds to the Inherited IRA or vice versa.

2. You can move your inherited IRA. If you are unhappy with the investment choices or the custodian, you can move your inherited IRA to another custodian, and you can select different investment options. However, you must move the account by direct transfer, and the new account must be an inherited IRA as well. As a nonspouse beneficiary, you cannot take a distribution and then roll it over within 60 days.

3. You may be able to do a QCD. If you are charitably inclined, you may be able to take advantage of a qualified charitable distribution (QCD) and move up to $100,000 of your IRA funds (annually) directly to the charity of your choice in a tax-free transfer. To do a QCD you must be 70 ½ or older.

4. You cannot convert your inherited IRA. Many times nonspouse beneficiaries are interested in having a Roth IRA. Unfortunately, the rules do not allow nonspouse IRA beneficiaries to convert inherited IRAs to Roth IRAs.

5. You may be subject to annual required distributions, or the 10-year rule at a minimum. You can’t keep the funds in your inherited IRA forever. If you inherited the IRA funds in 2020 or later, as a nonspouse beneficiary you will most like be subject to a 10-year payout-period, possibly with annual RMDs during the 10 year period. Certain eligible designated beneficiaries who inherit in 2020 or later and those beneficiaries who inherited prior to 2020 may be still be able to stretch RMDs over life expectancy.

6. Your distributions may be taxable, but there will be no penalty. Inherited IRAs are never subject to the 10% early distribution penalty. However, if you inherit a traditional IRA, it is likely that the distributions you take will be taxable. If you inherit a Roth IRA, you are more fortunate from a tax perspective. Distributions from an inherited Roth IRA will most likely be tax-free.

7. You should name a successor beneficiary. When you inherit an IRA, it makes sense to name a beneficiary. If you don’t, the default provisions in the IRA document are likely to apply. In many cases this would mean the funds would go to your estate which can mean more taxes and the time and expense of probate.

Gordon Wollman, Founder and President of Cornerstone Financial Solutions, and Raymond James Wealth Advisor, with Ed Slott at the 2023 Spring workshop for members of Ed Slott’s Elite and Master Elite IRA Advisor Group℠.

Membership in Ed Slott’s Elite IRA Advisor Group(TM) is one of the tools our advisors use to help you avoid unnecessary taxes and fees on your retirement dollars. Gordon attends in-depth technical training on advanced retirement account planning strategies and estate planning techniques. And semiannual workshops analyzing the most recent tax law changes, case studies, private letter rulings, Congressional action and Supreme Court rulings help keep attendees on the cutting-edge of retirement, tax law and IRA distribution planning. Through his membership, Gordon is immediately notified of changes to the tax code and updates on retirement planning, and he has 24/7 access to Ed Slott and Company LLC to confer with on complex cases.

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. Changes in tax laws or regulations may occur at any time and could substantially impact your situation.

ACKNOWLEDGMENT: This article was published in The Slott Report on irahelp.com by Ed Slott and Company, LLC, an organization providing timely IRA information and analysis to financial advisors, institutions, consumers, and media across the country and is distributed with its permission. Copyright ©2023, Ed Slott and Company, LLC Reprinted from The Slott Report, September 06, 2023, with permission https://www.irahelp.com/slottreport/rules-inherited-iras-may-surprise-nonspouse-beneficiaries. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Raymond James is not affiliated with and does not endorse the opinions or services of of Sarah Brenner, JD, The Slott Report, ED Slott, Ed Slott and Company, LLC, IRA Help, LLC, irahelp.com, or Ed Slott’s Master Elite IRA Advisor Group. Members of Ed Slott’s Elite IRA Advisor Group(SM) train with Ed Slott and his team of IRA Experts on a continuous basis. These advisors passed a background check, complete requisite training, attend semiannual workshops, webinars, and complete mandatory exams. They are immediately notified of changes to the tax laws.

Avoiding Spousal Beneficiary Mistakes

Jul 6, 2023 | Estate Planning, Investment Management, Retirement Planning, Tax Planning Strategies

AVOIDING SPOUSAL BENEFICIARY MISTAKES

5 Easy Steps

Cornerstone is pleased to bring you this article by Ed Slott and Company, LLC, an organization providing IRA education and analysis to financial advisors, institutions, consumers, and media across the country. Our association with this organization helps us stay up to date on the latest developments in IRA and tax law. As always, give us a call if you’d like to discuss!

Who is a spouse beneficiary?

A spouse beneficiary:

Must be married to the account owner at the time of the account owner’s death, and

Must be named on the beneficiary form (or inherit directly through the document default provisions).

As a spouse beneficiary you have unique options:

1. Split the inherited account if necessary. As a spouse beneficiary, you can take advantage of the special spousal rules if you are the sole beneficiary of an IRA account.

If other beneficiaries have been named, the spouse can still take advantage of these special provisions by transferring their portion of the inherited IRA to a separate account by December 31st of the year following the year of the IRA owner’s death.

2. Will you need money prior to age 59½. If so, you will likely want to remain a beneficiary of the inherited account. Death is an exception to the 10% early distribution penalty. So, by staying as a beneficiary you can avoid paying the 10% penalty.

The account should be retitled as a properly titled inherited IRA. As a spouse that remains a beneficiary you do not need to take RMDs from the account until the year the deceased spouse would have turned 73.

3. Transfer the inherited IRA into a spouse beneficiary’s account. As a spouse beneficiary you should generally roll the inherited IRA into your name. Once a younger spouse beneficiary reaches age 59½, there’s no advantage to remaining a beneficiary, and a spousal rollover or transfer should be done.

NO other beneficiary has this option. By doing this rollover or transfer, a surviving spouse ensures that eligible designated beneficiaries will be able to stretch distributions over their own life expectancies.

4. Name new beneficiaries. As the surviving spouse you should name your own beneficiaries. If no beneficiaries have been named and the surviving spouse dies, the remaining assets will pass according to the default provisions in the custodial document. This is frequently the estate of the now deceased spouse, which could require a shorter payout period for beneficiaries or add unnecessary time and expenses by tying the assets up in probate.

5. Consider a disclaimer. Before taking any action regarding an inherited IRA, as a surviving spouse you should evaluate whether a full or partial disclaimer would be advantageous. By using a disclaimer, some or all of the inherited IRA can be passed to contingent beneficiaries, potentially extending the stretch IRA and reducing the future impact of estate taxes for eligible designated beneficiaries.

Gordon Wollman, Founder and President of Cornerstone Financial Solutions, and Raymond James Wealth Advisor, with Ed Slott at the 2023 Spring workshop for members of Ed Slott’s Elite and Master Elite IRA Advisor Group℠.

Membership in Ed Slott’s Elite IRA Advisor Group(T) is one of the tools our advisors use to help you avoid unnecessary taxes and fees on your retirement dollars. Gordon attends in-depth technical training on advanced retirement account planning strategies and estate planning techniques. And semiannual workshops analyzing the most recent tax law changes, case studies, private letter rulings, Congressional action and Supreme Court rulings help keep attendees on the cutting-edge of retirement, tax law and IRA distribution planning. Through his membership, Gordon is immediately notified of changes to the tax code and updates on retirement planning, and he has 24/7 access to Ed Slott and Company LLC to confer with on complex cases.

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. ACKNOWLEDGMENT: This article was published by Ed Slott and Company, LLC, an organization providing timely IRA information and analysis to financial advisors, institutions, consumers, and media across the country and is distributed with its permission. Copyright 2023, Ed Slott and Company, LLC. Raymond James is not affiliated with and does not endorse the opinions or services of Ed Slott or Ed Slott and Company, LLC.

Raymond James is not affiliated with and does not endorse the opinions or services of ED Slott, Ed Slott and Company, LLC, IRA Help, LLC, or Ed Slott’s Master Elite IRA Advisor Group. Members of Ed Slott’s Elite IRA Advisor Group^SM train with Ed Slott and his team of IRA Experts on a continuous basis. These advisors passed a background check, complete requisite training, attend semiannual workshops, webinars, and complete mandatory exams. They are immediately notified of changes to the tax laws.

Quiz – Market Volatility vs Risk

Jun 23, 2023 | Investment Management, Market Volatility, Risk

What’s the Difference Between Market Volatility and Risk?

While volatility is not the same as risk, the chances of incurring a loss may increase during periods of market volatility, in large part, that’s because investors become anxious about falling share prices and sell when they might be better off holding.

See what you know about the difference between risk and volatility by taking this brief quiz.

1. What is market volatility?

a. Asset prices rising over a period of time.

b. Asset prices falling over a period of time.

c. The frequency and size of asset price swings, higher and lower.

d. A measure of how easy it is to buy and sell stock.

2. What is risk?

a. The chance of losing some or all of an investment.

b. The chance that actual investment returns will be different from anticipated investment returns.

c. A vulnerability that can be managed through asset allocation and diversification.

d. All of the above.

3. How can the effects of stock market volatility be limited?

a. By timing the market

b. By avoiding bonds

c. Through asset allocation and investment diversification

d. By avoiding stocks

4. Which famous investor said, “When people are desperately trying to sell, I buy. When people are desperately trying to buy, I sell. It has worked out very well over the years.”

a. Warren Buffett

b. Abby Joseph Cohen

c. Sir John Templeton

d. Abigail Johnson

Answers: 1) c¹; 2) d²; 3) c³; 4) c⁴

If you feel overwhelmed and uncertain because of volatile markets, give us a call. You don’t have to go it alone! We can help you make sound decisions during difficult times.

Not a Cornerstone client?

Discover what’s possible when our 140 years of combined team experience and 30 years in business goes to work for you! Call 605-352-9490 or email cfsteam@mycfsgroup.com.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Sources

1 https://www.forbes.com/advisor/investing/what-is-volatility/

2 https://www.investopedia.com/terms/r/risk.asp

3 https://www.investopedia.com/articles/active-trading/121014/protect-retirement-money-market-volatility.asp

4 https://novelinvestor.com/quote-author/john-templeton/

CSP #242150 07.18.23

Five New Opportunities for Tax-Free Growth and Withdrawals

May 30, 2023 | Financial Planning, Investment Management, Retirement Planning, Tax Planning Strategies

Cornerstone is pleased to bring you this article by Ed Slott and Company, LLC, an organization providing IRA education and analysis to financial advisors, institutions, consumers, and media across the country. Our association with this organization helps us stay up to date on the latest developments in IRA and tax law updates. As always, give us a call if you’d like to discuss!

Twenty-five years ago, Roth IRAs first became available, offering the promise of tax-free earnings and withdrawals. Since then, Roth options have exploded. Employer plans can now offer Roth options and income limits on Roth conversions are long gone. The recently enacted SECURE 2.0 has made it clear that the trend toward more Roth accounts becoming available for retirement savings is accelerating. Roth-O-Mania has arrived!

Here are five new Roth savings opportunities introduced by SECURE 2.0:

Roth Employer Plan Contributions

Most 401(k) (and other workplace retirement savings plans) provide for employer contributions. These contributions are either matching contributions for participants who make salary deferrals, or across-the-board nonelective contributions for all eligible participants.

Until now, employer contributions, including matches on Roth salary deferrals, have been required to be made to a pre-tax account within the plan. However, beginning in 2023, SECURE 2.0 allows for employer contributions to be made to Roth accounts.

Roth employer contributions are allowed in 401(k), 403(b) and governmental 457(b) plans. SECURE 2.0 makes clear that employers are not required to make their contributions on a Roth basis. It is optional, not mandatory. SECURE 2.0 also provides that only vested matching or nonelective contributions can qualify for Roth treatment. For tax purposes, Roth employer contributions will be treated the same as Roth employee contributions. That is, employees will be taxed on the amount of the Roth contribution.

Roth employer contributions are allowed in 401(k), 403(b) and governmental 457(b)

Roth SEPs and SIMPLEs

Many small business owners offer SEP or SIMPLE IRA plans for their employees. SEP IRAs provide only employer contributions. SIMPLE IRAs provide both employer contributions and employee contributions. Employers with SEP or SIMPLE plans have always been required to make contributions on a pre-tax basis. However, beginning in 2023, SECURE 2.0 permits both SIMPLE and SEP Roth IRA contributions.

Employees can now make SIMPLE Roth IRA salary deferrals similarly to the way participants in an employer plan can make Roth contributions (if the plan allows). SIMPLE Roth contributions made by employees are includible in taxable income for the year of the contribution.

SEP and SIMPLE Roth employer contributions may also be offered. If the Roth option is offered, employees can choose to treat employer SEP and SIMPLE contributions as Roth.

No Lifetime RMDs for Roth Plans

Beginning in 2024, SECURE 2.0 eliminates the need to take lifetime required minimum distributions (RMDs) on Roth plan dollars. This brings Roth plan RMD rules more in line with Roth IRA RMD rules.

Participants in workplace plans — like a 401(k) or 403(b) — will no longer have to factor their Roth plan dollars into their lifetime RMD calculation. This could result in a significant reduction in the plan RMD from 2023 to 2024.

Additionally, plan participants will no longer be forced to roll over Roth plan dollars to a Roth IRA to avoid taking an RMD on those Roth assets. Does this mean that rolling a plan to a Roth IRA is no longer a good option? Not necessarily. Rolling over the funds to a Roth IRA may still be the best choice due to a multitude of other factors – such as more favorable Roth IRA distribution ordering rules, investment options, easier access, etc.

Roth plan participants will join Roth IRA owners in not being subject to lifetime RMDs. However, beneficiaries of a Roth plan, like Roth IRA beneficiaries, are subject to the RMD rules. With either a Roth plan account or a Roth IRA, any distribution to a beneficiary will likely be income tax free. However, after the SECURE Act, most non-spouse beneficiaries will be subject to the 10-year rule that requires the inherited Roth funds to be fully withdrawn by the end of the 10^th year after death.

Rollovers from 529 Plans to Roth IRAs

SECURE 2.0 allows rollovers from 529 plans to Roth IRAs beginning in 2024. For those who have concerns about what to do with funds “left over” in a 529 plan, this may be a good opportunity. Leftover 529 funds can now be rolled over to a Roth IRA in the name of the 529 beneficiary.

These rollovers from 529 plans to Roth IRAs would not be subject to the income restrictions that normally apply to Roth IRA contributions. However, there are many restrictions. The 529 plan must have been in place for at least 15 years. Rollover amounts cannot include any 529 contributions (and earnings on those contributions) made in the preceding five-year period. Annual rollovers cannot exceed the annual Roth IRA contribution limit, and total lifetime rollovers cannot exceed $35,000.

Required Roth Catch-Up Contributions

Beginning in 2024, SECURE 2.0 requires any age 50-and-older catch-up contributions made to 401(k), 403(b) or 457(b) plans by certain higher-paid participants to be made as Roth contributions. This includes a participant whose wages received from the plan sponsor for the preceding calendar year exceeded $145,000 (as indexed). Individuals who are not in this group can choose to make catch-up contributions as Roth contributions (if the plan allows) but are not required to do so.

The Future is Roth

In the past several years, we have seen several legislative proposals put forward that would have limited the availability of Roth accounts. For example, there were proposals to do away with back-door Roth conversions and proposals that would have added income limits for Roth conversions.

None of these proposals that would have cut back on Roth accounts found their way into SECURE 2.0. The reason is clear: Congress is desperate for revenue, and Roth accounts raise immediate tax dollars. In fact, four of the five new Roth rule changes discussed in this article can be found in “Title VI — Revenue Provisions” in the SECURE 2.0 law. Roth-O-Mania is likely here to stay, and with it comes more opportunities for tax-free growth and withdrawals for savvy retirement savers.

Gordon Wollman, Founder and President of Cornerstone Financial Solutions, and Raymond James Wealth Advisor, with Ed Slott at the 2023 Spring workshop for members of Ed Slott’s Elite and Master Elite IRA Advisor Group℠.

Membership in Ed Slott’s Elite IRA Advisor Group(T) is one of the tools our advisors use to help you avoid unnecessary taxes and fees on your retirement dollars. Gordon attends in-depth technical training on advanced retirement account planning strategies and estate planning techniques. And semiannual workshops analyzing the most recent tax law changes, case studies, private letter rulings, Congressional action and Supreme Court rulings help keep attendees on the cutting-edge of retirement, tax law and IRA distribution planning. Through his membership, Gordon is immediately notified of changes to the tax code and updates on retirement planning, and he has 24/7 access to Ed Slott and Company LLC to confer with on complex cases.

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. ACKNOWLEDGMENT: This article was published by Ed Slott and Company, LLC, an organization providing timely IRA information and analysis to financial advisors, institutions, consumers, and media across the country and is distributed with its permission. Copyright 2023, Ed Slott and Company, LLC. Raymond James is not affiliated with and does not endorse the opinions or services of Ed Slott or Ed Slott and Company, LLC.

Raymond James is not affiliated with and does not endorse the opinions or services of ED Slott, Ed Slott and Company, LLC, IRA Help, LLC, or Ed Slott’s Master Elite IRA Advisor Group. Members of Ed Slott’s Elite IRA Advisor Group^SM train with Ed Slott and his team of IRA Experts on a continuous basis. These advisors passed a background check, complete requisite training, attend semiannual workshops, webinars, and complete mandatory exams. They are immediately notified of changes to the tax laws.