CARES Act: Roth IRA Conversions
By Krupa Patel
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides tax relief to individuals and businesses in an effort to support the economy. Included in the numerous provisions is the ability to convert a traditional IRA to a Roth IRA without first having to take a required minimum distribution (RMD). That rule, combined with the recent decline in the values of most IRAs, makes this an opportune time to convert a traditional IRA. With the conversion to a Roth IRA, the value of the assets on the day of conversion must still be included in taxable income but since the market is low right now, you will be paying lower taxes to convert and any further withdrawal will be tax-free.
In addition, if you happen fall under one of the following criteria, you will especially benefit from the conversion to a Roth IRA:
- Individuals considering substantial cash contribution to public charities other than donor-advised funds, supporting organizations, or private foundations
- Individuals who have a net operating loss in 2020
- Individuals who have significant business losses in 2020
With all the uncertainty affecting so much of our everyday lives, the CARES Act gives investors an opportunity to make smart planning decisions that may lower or defer tax liability, so here at Hoffman & Associates, we recommend clients take the time now to review their profile and determine if they benefit from a Roth IRA conversion.
For more questions regarding this or any other tax matter, please contact us at 404-255-7400 or info@hoffmanestatelaw.com.
