Roth conversion test cases Graham said he just had this discussion with a recently retired wealthy client in his mid-60s who was thinking about his coming RMDs. Theprime time frame to begin these types of conversionsis usually before age 63...
A Roth conversion makes sense in specific situations. For example, say you have a traditional IRA that you've been paying into for years. You've finally retired and have more income from your savings and investment account withdrawals than you believed you would have. You and your spouse will...
Although that might sound aggressive and unnecessary, 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 co...
Since most people are eligible to take a tax deduction on their IRA contribution, this involvespaying taxes on the conversion amount, then transferring the remainder to their Roth account. However, many factors can determine how beneficial Roth conversions can be. In a previouscase study article, ...
She converts $100,000 from a traditional IRA to a Roth IRA, thinking she’ll owe only the 12% federal income tax on the conversion. But this new income pushes her into the 24% tax bracket and causes her to owe taxes on her Social Security, “not to mention any state tax,” Rogers...
We’re not a retired public safety officer. Rollover Destination The Roth 401k account is officially a “designated Roth account” in the plan. Choose “Designated Roth account” if you converted within the plan. Choose “Roth IRA” if you took the money out of the plan to your Roth IRA....
A Roth IRA is a type of individual retirement account that a holder funds with no tax deduction and makes tax-free withdrawals while being retired.
was established in 2014, a Schwab 401k ROTH rollover added in 2017, and funds added from a linked bank account after that while I was working. In retirement, I did a ROTH conversion in 2020, 2021, 2022. Also in 2021, I moved the entire ROTH balance to Personal Capital (now Empowerment...
On the other hand, if you're heading to a low- or no-tax state and are considering a Roth conversion, it might make sense to wait until after the move. The "widow penalty" Even for retired couples with more modest income, a Roth rollover can make sense if it's anticipated that one...
It might be a little painful, but it may be worthwhile to check on your pre-tax IRAs during this dip. If you have been thinking of converting your “Traditional” IRAs over to Roth IRAs, your shrunken gains will lead to a smaller tax bill now, while your (hopefully) future gains from...