The kiddie tax is significantly revamped, so that unearned income of children under 18 is taxed at the ordinary income and capital gains rates
applicable to trusts and estates, and not at their parents’ marginal tax rate, as before. Generally, tax benefits for retirement savings haven’t been curtailed. There is an important change involving Roth IRA conversions, however. The new law bars IRA owners who convert their traditional IRAs to Roth IRAs from later undoing the conversion and recovering the income tax paid on the switch. 529 college savings plans are enhanced to allow annual distributions of up to $10,000 per student to pay tuition for elementary and secondary education. There are favorable changes to ABLE savings programs for the disabled. The new law allows limited tax-free rollovers from 529 plans to ABLE accounts. It also lets ABLE account beneficiaries make contributions to their accounts over the $15,000 annual payin limit. These payins are eligible for the saver’s credit.