Ask The Hammer – Biden tax changes

Key Takeaways

• Don't rush large IRA withdrawals based on speculative future tax increases—wait until Congress proposes specific legislation, likely effective in 2022 or later, before taking action
• If concerned about future taxes, consider Roth conversions instead of simple IRA withdrawals, since converted funds grow tax-free permanently rather than being subject to future taxation
• Timing of IRA withdrawals within a single tax year (January vs. December) has negligible impact on your tax bill—the key is waiting for clarity on actual tax law changes
• For long-term investors, focus on 'time in the market, not timing of the market'—stay invested despite political uncertainty, as historical evidence shows markets perform well even after unexpected election outcomes
• At modest income levels (under $400,000), the likelihood of significant tax rate increases under proposed legislation is low, making panic withdrawals counterproductive