The Budget Ceiling & Tax Reform May Affect Your Plan Bookmark

Retirement plan industry expert speakers have been talking about how potential tax reform may affect employer sponsored retirement plans, such as 401(k) plans, for the last many years. However, there are now a number of converging factors that increase the likelihood of major tax reform actually happening. Given this, it makes sense to take a brief look at what’s driving the discussions on Capitol Hill and highlight several of the key proposals.

New Roth Opportunity for 401(k) Plans per Fiscal Cliff Deal Bookmark

The recently passed fiscal cliff deal (officially known as the American Taxpayer Relief Act of 2012) includes a new rule that allows more people to convert money in their traditional 401(k) plan to a Roth 401(k) account. Doing so is called an "in-plan Roth rollover."  Until now, only individuals eligible for a distribution (over the age of 59½ or terminated from employment, etc.) could elect a Roth rollover. The new provision expands eligibility to everyone. The Roth plan feature gives participants the option of paying taxes now on their retirement savings instead of when they withdraw money later from their accounts.