Year-end Tax Planning, 2020 - Retirement Savings
Another important adjustment to income is a contribution to a traditional IRA. Up to $6,000 may be set aside ($7,000 for those 50 and older). If your income is too high to permit a deduction for a traditional IRA, the Roth IRA may be a good alternative. No current tax savings are created, but there is a potential for tax-free income in retirement.
If the coronavirus pandemic has put you into a lower tax bracket than usual, this may be a good year to consider a conversion of your traditional IRAs to Roth IRAs. The conversion will be a taxable event this tax year, but the tax-free income in future years may be most welcome, especially if tax rates go higher so as to pay for the government deficits being run up in response to the pandemic.
See your tax advisors before making any final decisions on this year’s tax strategies.
The information contained herein does not constitute legal, tax or investment advice by Country Club Trust Company. For legal, tax or investment advice, the services of a competent professional person or professional organization should be sought. Trust services and investments are not FDIC insured, are not guaranteed by the Trust Company or any Trust Company affiliate, and may lose value. Past performance is no guarantee of future results.