Roth IRA Conversion

If you are considering converting a pre-tax retirement account into an after-tax Roth IRA account, you must understand the pros and cons, as every situation is unique. Converting pre-tax retirement accounts, such as IRAs and 401(k)s, to after-tax Roth IRA, could allow you to keep growing funds tax-free and then make withdrawals in retirement without paying taxes on the distributions. Converting IRA and 401(k) accounts to a ROTH IRA is a taxable event.

The main reason to consider ROTH IRA Conversions is for tax-free income. This may be particularly true if you suspect you may be in a higher tax bracket during retirement than you are now. We apply careful consideration when evaluating the viability of a Roth Conversion. It is important to understand the tax liability of a Conversion. The tax liability could be lowered by spreading the conversion over more than one tax year. There is a 5 year rule applicable to each Conversion. The Back-Door Roth IRA Conversion is available for individuals whose income exceeds annual ROTH IRA Contribution limits. All the contributions plus any gains may be withdrawn 5 years after a Conversion. All distributions from the ROTH IRAs are penalty and income tax free. Unlike traditional IRAs, Roth IRAs do not have a Required Minimum Distribution ever.

We provide a detailed analysis for ROTH IRA Conversions based on individual circumstances that will help you decide if a Roth Conversion is right for you. Is this the right retirement savings strategy for you? To find out, it would be a good idea to contact Gary for a complimentary analysis.