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Retirement-related Provisions in the Bipartisan Budget Act of 2018

On Friday February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018 (the “Act”). While the Act is best known for ending the nine-hour government shut down that took place on February 9, 2018, it also contained some tax-related provisions.

The Rule of 55 – An Exception to the Early Withdrawal Rules

If you have a 401(k) account or other employer sponsored retirement plan, you probably already know that a distribution before you reach age 59½ is going to be subject to a 10% penalty. One exception to the 10% early withdrawal penalty allows participants in a qualified plan to take a distribution from the plan after leaving the job as long as they are age 55 or older. This rule, sometimes called “The Rule of 55,” is an exception to the early withdrawal rules that generally levy a 10% penalty on amounts withdrawn before age 59 ½. This exception does not apply to IRA distributions.

Roth IRAs - Favored for Annual Contributions, Neglected for Rollovers from Company Plans

Roth IRAs become 20 years old in January of 2018 and now hold more than $660 billion in retirement wealth, reports the Investment Company Institute. Yet while Roth IRAs have become very popular among individuals who make annual contributions to IRAs, they are near totally avoided by persons who roll over big-dollar distributions from company retirement plans into their IRAs, with these funds going overwhelmingly into Traditional IRAs.

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