The new tax code makes a big change to the individual retirement account landscape, according to financial advisor Winnie Sun.
People are no longer allowed to go back and recharacterize their individual retirement accounts — if, for example, they realize they paid more taxes than they needed to, she said.
"This is critical, because if you are converting your traditional IRA at this point, it is permanent from 2018 and going forward," said Sun, founder of Sun Group Wealth Partners. "So make sure you understand your options and get it right the first time."
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However, she added, if you converted your IRA in 2017, you have until Oct. 15 to still make changes, she said.
One of the best features of the tax cut is that you're likely to have more disposable income, Sun said.
"You don't want to just go spend it, you want to go ahead and save it. But not just save it, put it in vehicles which really would give you more bang for your buck," Sun said.
It's always important to consider the tax ramifications of converting your IRAs, she said, because the contributions for a Roth IRA are after-tax, and pretax for a traditional IRA.
Before you make any changes, Sun said, "speak with your tax professional as well as your financial advisor."
Even if you have a 401(k) at work, you should still have an IRA, Sun said. "It's a wonderful thing to piggyback on top of your 401(k) to really supplement your retirement savings," she said. "And it is much better than a savings account, because it's tax-sheltered."