While the pandemic has caused widespread worry about retirement, many people managed to continue to contribute to their defined-contribution plans such as 401(k)s throughout 2020. However, contributing too much to a tax-deferred retirement account could potentially become a problem later on if taxes are increased in the future. And a tax increase seems fairly likely as President Biden's tax plan outlines several changes. This recent InvestmentNews article takes a closer look at how advisors can prepare their wealthier clients for these potential changes. Covisum Founder and President Joe Elsasser, CFP® was quoted in the article.
“Clients who have over-saved in IRAs will eventually have minimum distributions that get taxed at a higher rate than necessary. “To solve this, most advisers should consider thinking about leveling out tax brackets earlier, either by taking IRA money to supplement the delay of a Social Security benefit or potentially by doing Roth conversions.”