Biden’s new Proposal is about to kill ROTH Conversion…

What does President Biden’s latest proposal on Roth conversion strategies mean? Let’s break down the proposed changes and how they might affect you…

A Proposal to Restrict Roth Conversions for High-Income Earners

President Biden’s latest proposal aims to eliminate the ability to convert traditional IRA or 401(k) funds to Roth accounts, particularly affecting high-income earners. This proposal, part of his 2025 budget, raises concerns for those looking to save and build for retirement.

Biden’s proposal would limit Roth conversions for individuals earning over $400,000 (single) or $450,000 (married). This restriction could significantly impact retirement planning strategies, particularly for those aiming for tax-free retirement income.

Considerations for Roth Conversion

Given the potential policy change, individuals may consider converting to Roth accounts now to lock in tax-free growth and withdrawals. This decision should be weighed against the potential tax implications in the year of conversion.

Steps to Convert to Roth

To convert to a Roth account, individuals must:

  • Make a written election to their IRA or 401(k) provider.
  • Have a Roth account ready to receive the converted funds.
  • Manage the tax implications, which will be reported on their 1040 tax return.

Considering the potential impact of President Biden’s proposal, individuals may benefit from evaluating their retirement accounts and considering a Roth conversion before any policy changes take effect.

Schedule a Free 15-minute new account phone appointment with one of our experienced Senior Account Executives regarding the best type of account for you.

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