Every year, it will be harder to pay the income tax bill that comes with a Roth conversion. But the biggest attraction of a Roth is that you should owe no money on the account ever again. When you start taking
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...
Scenario 2 (no conversion): If you do not do a conversion now, A and B are in your tax-sheltered traditional IRA. You also start with amount B(taxable) in your taxable account, because you don’t need to send it to the government because you did not do a conversion. After y years...
The clincher is that when you do a Roth conversion, that money only counts as a contribution to the IRS after it sits and bakes for 5 years. So, we can convert the money at any time, but each conversion will take 5 years until we can withdraw it without being penalized. And with th...
A conversion may not make sense if you plan to use the Roth IRA money soon after the conversion. You could face a 10% penalty if you withdraw funds from a Roth IRA within five years of funding it, whether you contributed directly to the Roth IRA or you put money into it through a ...
You want to pay less tax on any amount you convert to a Roth this year than the amount you would pay if you waited until later to withdraw it. The exact amount depends on your annual taxable income, age, value of your IRA and how much it appreciates after conversion but before you ha...
Are IRA Contributions Allowed After You Are 65? Personal Finance What Is a 408(b) Annuity? Personal Finance What Is a Roth 403(B)? Rollover and Conversion The IRS doesn't limit your ability to take one qualified account and directly roll it into a Roth IRA — the conversion can be reco...
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 ...
1: HR block said you must have the conversion done before Dec. 31, 2022 for year 2022. What’s your opinion? 2: If you contribute and convert after Dec. 31, 2022, you will not get 1099-R form from the broker (in my case, Vanguard) in time. 1099-R is needed in order to get...
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...