(k) that has been converted to a Roth IRA will be taxed and penalized if withdrawals are taken within five years of the conversion and before age 59 1/2. However, thisfive-year ruledoes not apply if you’re taking a withdrawal from a conversion after age 59 1/2. Moreover, if you ...
Roth conversions increase adjusted gross income (AGI). Added Roth conversion income triggers stealth taxes and loss of tax benefits that get phased out including itemized deductions, credits and other tax benefits based on AGI,but that only happens in the year of the Roth conversion. Tax on Soc...
–In January I made a $6k backdoor Roth IRA contribution & conversion. –In June 2022 I was laid off. I had a traditional 401k with this employer worth about $20k. I didn’t do proper research about the IRS’s pro-rata rule, and – here’s the error – rolled over the 401k bala...
there are many scenarios where a Roth IRA conversion can make sense. For example, let’s say you’re not earning a lot of money in a specific year and you want to convert to a Roth IRA while paying an extremely low tax rate. You could fork over the taxes now and avoid paying income...
Because traditional IRAs don’t have income limits, you can make your desired contributions up to the contribution limit and later on move your money to a Roth IRA through a Roth conversion. However, this strategy has its risk and tax consequences, which is why you should consult with a tax...
The backdoor Roth has two parts, the contribution and the conversion, as you see in this post. When the contribution is for the same year as the conversion, the conversion picks up the basis from the contribution. No basis is carried over from one year to the next. When you add another...
Emmeline wants todelay filing until age 70. She has $1.6 million of retirement assets in a tax-deferred 401(k), but she would like more flexibility in retirement by having some assets in a Roth account. Before any Roth conversion, a comprehensive financial plan projected that her withdrawals...
4) Do I need to complete a Form 8606 for this in-plan conversion to Roth in my 401k? Thanks so much! Quyen L. Reply Harry Sitsays July 17, 2023 at 8:51 pm 1) No, you don’t need to consider the pro-rata rule that factors in your pre-tax IRA funds into the calculation. ...
Another reason that a Roth conversion might make sense is that Roths, unlike traditional IRAs, are not subject torequired 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 Ro...
Yes, someoneunder the age of 18can contribute to a Roth IRA or a traditional IRA, provided they meet the earned income requirements and do not earn over the income limits. However, opening the account will require a parent or guardian to be the custodian of the account.17 ...