When you convert after-tax money to a Roth individual retirement account (Roth IRA), the principal is tax-free, but you must pay taxes on the earnings of that money. Before you convert to a Roth, calculate the tax liability. Make sure that you have enough funds on hand to pay any tax...
If you contributed more than the maximum deductible amount to your 401(k), you have some post-tax money in there. You may be able to avoid some immediate taxes by allocating the after-tax funds in your retirement plan to a Roth IRA and the pretax funds to atraditional IRA. You should...
WHEN TO SWITCH TO A ROTH IRA: Converting to a Roth makes sense-if you can take the tax hit CONVERSIONS ARE A HOT topic these days-and we're not talking about the religious kind. Many readers want to know whether they should convert their traditional IRAs to Roth IRAs-and pay tax on ...
RothIRA. Youcanconvertassetsintraditional IRAs,SEPIRAsandSIMPLEIRAs(those thathaveexisted oratleasttwoyears)to aRothIRA.Inaddition,anindividualcan directlyconvertassets romaqualifed employerretirementplan,suchasa 401(k)or403(b),toaRothIRA,bypassing ...