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 i
As you might imagine, given that a Roth IRA is primarily a vehicle for saving for retirement, there are regulations for when and how you withdraw money from your Roth IRA account. Because you make contributions to a Roth IRA with after-tax money, there is not a penalty or tax consequence...
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 ...
Recharacterizations were mostly performed after a conversion from a traditionalIRAto a Roth IRA, though they could go the other way as well. A traditional-to-Roth conversion could result in a significant and unexpected tax burden, so much so that the individual who had done the conversion could...
, 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...
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...
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 ...
After the initial phase of planning, the project has finally kicked off. The first visualization, the first purchase, the first team: all this has been welcomed with great enthusiasm. Well, I'd like the company to continue to grow, of course, but also for the initial enthusiasm to ...
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...