Retirement And Pensions Update

Fiscal Cliff Deal Includes Provisions on Charitable Contributions and Roth Roll Overs

As part of the deal reached to avert the fiscal cliff, Congress extended tax-free distributions from individual retirement plan for charitable purposes and provisions related to roll over into Roth plans. The compromise bill extends for two years the provision that permits tax-free distributions to charity from an Individual Retirement Arrangement (IRA) held by someone age 70½ or older of up to $100,000 per taxpayer, per taxable year. Additionally, the deal allows participants in 401(k)-style retirement plans to roll over assets into Roth individual retirement accounts, allowing them to make after-tax contributions to the plan and all the principal and earnings are tax-free when distributed. Currently, plans may allow participants to convert their pre-tax accounts to Roth accounts, but only with respect to money they have a right to take out of the plan.