Roth IRA Conversion

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Roth IRA Conversion

The rollover of assets from a SIMPLE plan, traditional IRA, or other retirement savings plan into a Roth IRA. A Roth IRA receives post-tax contributions and gives out tax-free distributions. This is a different structure from most retirement plans; because they are taxed differently, a Roth IRA conversion may be taxable.
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For those who are retiring at their full retirement age (FRA) of 66 or 67 but may be waiting to collect until age 70, a Roth conversion is an attractive way to help stretch retirement dollars by smoothing out tax rates.
Let's say our couple did a Roth conversion in 2013, substantially increasing their 2013 income.
GOETZ is a member of Ed Slott's Elite IRA Advisor Group(SM), a group of the nation's top financial professionals committed to expert education on Roth conversion planning, estate planning and leveraging current tax law in an effort to ensure their clients' retirement accounts are set up and maintained correctly.
The tax liability on such a distribution can sometimes lead a taxpayer to improperly conclude his or her best option is to recover the nontaxable portion ratably as distributions are received, without considering a Roth conversion.
Accordingly, triggering the income in 2012 at this year's lower tax rates may make a Roth conversion more compelling.
In the case of a Roth conversion, you'll pay income taxes this year on converted amounts.
The current $250,000 income threshold established by the Obama administration might very well change in the future so, therefore, a client can do a partial Roth conversion now, understand and absorb the immediate tax liability, and retain a portion of the account to potentially convert at a later date if the rules change again.
Then again, if you think that appreciation will start occurring sooner rather than later, you're within the income limit and you can forgo the tax deferral, you might consider a Roth conversion this year.
com/tvr), which explains the differences between Roth and Traditional IRAs; a Roth Conversion Evaluator (www.
If you initiated a Roth conversion earlier in 2011 and that Roth account has declined in value since then, you should consider a Roth reconversion," Luscombe added.
1, 2010, when the income limit on Roth conversions is permanently eliminated, the only taxpayers eligible for a Roth conversion are those whose modified adjusted gross income is $100,000 or less, whether they file "married/joint" or "single.