Permalink Submitted by Alan - IRA critic on Mon, 2020-10-05 21:01
Yes, you can convert to a Roth IRA from your IRA, or you can do a qualified rollover contribution from your pre tax employer plan directly to a Roth IRA, if you are eligible for distributions from the employer plan, which often means you have separated from service or reached a certain age.
Permalink Submitted by Todd Abrams on Tue, 2020-10-06 13:30
Is there a good ROTH conversion out there that I can determine whether it pays to convert a portion of all of my Traditional IRA to a Roth IRA? I am 55 years old and plan on retiring @ age 62. The balance is around $700,000 and given my time frame for retirement, I don’t have enough time on my side to recoup what I would have to pay out in taxes to do the conversion, even if spread, say over 5 years.
Permalink Submitted by Alan - IRA critic on Tue, 2020-10-06 13:54
Not sure what you mean by not enough time. Do you expect a short life expectancy period. RMDs do not start until 72, but if you expect a short LE you would take SS early right after retirement at 62. Recouping the taxes you pay is mostly done by conversions reducing RMDs, so your recoupment would not start until 72 unless you had to withdraw from your Roth prior to then. Otherwise, if you pass before 72, most of the benefit of these conversions would go to your beneficiaries who would inherit more Roth and less TIRA. There are no calculators that are truly comprehensive and for all the calculators out there assumptions must be made in several areas, including the amount of growth in your TIRA and how your marginal tax rate will change. Most people focus on changes in the tax laws, but the main factor is how your financial life proceeds personally, since no one is truly average. Finally, if you are married, your spouse’s assets and LE must also be considered. Spouses who inherit TIRAs pay higher taxes when filing single than would have been due while married.
Permalink Submitted by Alan - IRA critic on Mon, 2020-10-05 21:01
Yes, you can convert to a Roth IRA from your IRA, or you can do a qualified rollover contribution from your pre tax employer plan directly to a Roth IRA, if you are eligible for distributions from the employer plan, which often means you have separated from service or reached a certain age.
Permalink Submitted by Todd Abrams on Tue, 2020-10-06 13:30
Is there a good ROTH conversion out there that I can determine whether it pays to convert a portion of all of my Traditional IRA to a Roth IRA? I am 55 years old and plan on retiring @ age 62. The balance is around $700,000 and given my time frame for retirement, I don’t have enough time on my side to recoup what I would have to pay out in taxes to do the conversion, even if spread, say over 5 years.
Permalink Submitted by Alan - IRA critic on Tue, 2020-10-06 13:54
Not sure what you mean by not enough time. Do you expect a short life expectancy period. RMDs do not start until 72, but if you expect a short LE you would take SS early right after retirement at 62. Recouping the taxes you pay is mostly done by conversions reducing RMDs, so your recoupment would not start until 72 unless you had to withdraw from your Roth prior to then. Otherwise, if you pass before 72, most of the benefit of these conversions would go to your beneficiaries who would inherit more Roth and less TIRA. There are no calculators that are truly comprehensive and for all the calculators out there assumptions must be made in several areas, including the amount of growth in your TIRA and how your marginal tax rate will change. Most people focus on changes in the tax laws, but the main factor is how your financial life proceeds personally, since no one is truly average. Finally, if you are married, your spouse’s assets and LE must also be considered. Spouses who inherit TIRAs pay higher taxes when filing single than would have been due while married.