Tax Cuts and Jobs Act Impact on Retirement Savings and Benefits

couple enjoying their retirement

The Tax Cuts and Jobs Act (TCJA) rolled out significant changes for American taxpayers and businesses for 2018. While only small adjustments were made in regard to retirement planning, they are still important to any individuals saving for their future.

What Changed?

Here are three of the main alterations within the TCJA:

  • Roth Conversion Recharacterizations: In the past, taxpayers could“recharacterize” contributions to traditional or Roth IRAs when they deemed it convenient or financially smarter. However, the ability to “unwind” a Roth IRA conversion to a traditional IRA is no longer available.
  • Qualified Loan Repayments: Before the new law, individuals with an outstanding balance in a 403(b) or 457(b) at the time of plan termination had only 60 days to come up with the additional funds to avoid paying taxes on it. Taxpayers who need more time to pay back the loan now have until their tax return date plus any qualified extensions.
  • Disaster Relief Distributions: Individuals who took money from their retirement plans in 2016 and 2017 to recover from losses on their main home in legally-declared disaster areas (wildfires, floods, hurricanes, etc.) now have some relief. A new rule allows for distributions of up to $100,000. This money is exempt from the 10% early withdrawal tax and can be recontributed as a trustee-to-trustee rollover.

For other ways the TCJA impacts retirement plans, check out this article from Investment News. Get box-by-box details about Form 1099-R from TaxSlayer Pro.