CONGRESS OPENS DOOR FOR TAX-FREE RETIREMENT INCOME

At the beginning of the year, as part of the American Taxpayer Relief Act, Congress passed a change in pension law to allow 401(k) participants to convert their assets in these accounts into Roth accounts – accounts that distribute retirement payments on a tax-free basis. So what exactly does this mean for you as you build a retirement nest egg? It means that once you reach retirement age, money earmarked for taxes goes back into your coffers to be spent how you want.

Even though the conversion requires savers to pay income taxes upfront when switching over to the Roth accounts, the government believes that thousands of 401(k) participants will find the conversion beneficial because they will not be on the hook for taxes at a time when they can least afford it.

It is important to consult with a tax and/or investment advisors about whether a Roth conversion is right for you.  If you are looking at a conversion to a Roth account, you may also want to consider doubling down with a fixed indexed annuity.  By including a fixed indexed annuity in your 401(k) Roth account, you can protect against loss of your initial investment and guarantee a minimum annual tax-free return.

And, if you decide a Roth conversion may not be right for you, don’t forget to ask about how a fixed indexed annuity might otherwise fit into your retirement planning. This product can ensure that you do not outlive your retirement assets and get the most out of the money you put in.

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