Withdrawals must be taken after a five-year holding period. If you transfer your Traditional or Roth IRA at any age and request that the check be made payable to you, you have up to 60 days to deposit that check into another IRA without taxes or penalties. This is known as a "nontaxa...
Now you might say, “Yeah, but the Roth has the same $0 tax bill, automatically.” And you would be right. But I can use all of these dollarsnow, not after age 59.5. The value of access to earnings diminishes with time – it is more important to a 35 year old than a 55 year ...
Tracking Roth contribution and conversion basis is only for the off chance that you’ll withdraw from the Roth IRA before age 59-1/2. If you swear you won’t do that — Roth money should stay in a Roth account well past age 59-1/2 — you don’t need to track your Roth contributio...
If they have money in a Traditional IRA – money that they saved 20% in taxes on when contributing – they could use those low-income years to convert some or all of it to a Roth IRA. They would be taxed on the conversion, but because of their lack of other income they could potent...
But to avoid a 10% IRS penalty, you generally must be either at least age 59½ or wait at least five years after your conversion to make the withdrawal. 5. Your heirs may benefit from the conversion. During your lifetime, you don’t have to take money out of the Roth IRA because...
, such as making nondeductible IRA contributions followed by a “backdoor” Roth conversion to funnel those funds into an after-tax bucket. However, this approach has a significant caveat: If you have any assets in other IRA accounts, you could face pro-rata taxation on the co...
For years I've been an opponent of the Roth IRA. After the government came out with its tricky way to let us all do a “one-time”Roth IRA conversionfrom our traditional IRAs, I knew something was up. The government was so successful in getting people to pay huge sums of taxes on ...
Tax will apply only on the investment earnings after the conversion, until the Roth has been in place for five years. Reply Bob McCrary May 4, 2018 Wife died, 80 years old, and left Roth and Traditional IRA to son who is 56. Does the 5 years start over for him? After this ...
Another reason that a Roth conversion might make sense is that Roths, unlike traditional IRAs, are not subject to required minimum distributions (RMDs) after you reach age 73 (starting in 2023) or 75 (starting in 2033). So, if you're fortunate enough not to need to take money from your...
However, one drawback is that if your traditional IRA contains both deductible (pretax) and nondeductible (after-tax) amounts, you must treat the pretax portion as ordinary income for the year when the conversion occurs.2 In other words, since contributions to Roth IRAs are supposed to be...