There was another little-noticed aspect of the Fiscal Cliff that passed on New Year's Day that could have a great effect on many people's retirement planning. It will now be much easier for people to transfer assets from a traditional 401(k) into a Roth IRA. Formerly, you couldn't do that until you reached age 59 and a half or when you changed employers, but those restrictions will now be lifted.
Remember, you can put money into a 401(k) tax-free, but that money is taxed when you withdraw it. A Roth IRA is the opposite: You are taxed on the money you put into one, but the withdrawals in your retirement are tax-free.
Of course, if you're making the switch, you pay tax on the money that was in your 401(k) when you move it into a Roth; you don't get to avoid taxes on both ends. If you'd like to discuss how this strategy might fit into your retirement plans, feel free to give me a call.
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