Going forward, she will have another RMD due each subsequent December for as long as she has money in her traditional IRA
She rolls the entire amount into a traditional IRA
, maintaining the tax deferral.
Still, one would think it would follow on the coattails of the traditional IRA
At year-end 2015, 31% of these investors were under age 40, whereas only 16% of traditional IRA
investors were in that age bracket.
A report from NerdWallet argues that, for most savers, at largely all income levels, utilizing a Roth individual retirement account (IRA) can generate significantly more retirement wealth compared with a traditional IRA
2) Traditional IRA
-- Traditional IRAs
are designed to allow investors to save for their own retirement outside of employers' plans, and contributions are made on a pre-tax basis.
Roth IRA accounts are frequently recommended by advisers but sometimes in what seems a cookie-cutter fashion, assuming everyone should open a Roth account and that everyone with a traditional IRA
should convert it to a Roth at any time.
Can I convert my traditional IRA
funds into a Roth IRA?
There are similarities between a traditional IRA
and a Roth IRA.
Converting a traditional IRA
to a Roth IRA can offer powerful benefits, but it requires consideration of several factors.
The Roth conversion will be taxed at a lower rate than what heirs would pay if they decided to convert the account from a traditional IRA
to a Roth later on.
But remember that if the $5,500 had gone directly into a traditional IRA
, you would have reaped about $1,375 in tax savings each year at a 25 percent tax rate (more, with a higher tax rate).