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The Slott Report

The Top 10 Roth Conversion Mistakes

We end Roth Conversion Week with a list you never want to be on. Roth conversions are powerful, tax-free retirement vehicles if handled correctly, but if a mistake is made, you may owe a good portion of your hard-earned savings to taxes and penalties. Here's a list of the Top 10 Roth IRA (and conversion) mistakes you must avoid.

Slott Report Mailbag: All About Roth IRA Conversions

ed slott roth conversion week
This special edition of The Slott Report Mailbag answers several of the common Roth conversion questions we receive - from the beginning "conversion conversation" to the actual conversion process. Click to read this week's Q&A with our IRA Technical Expert.

Where Should You Convert? Roth IRA or Roth 401(k)?

You’ve had "the conversion talk" and have decided that a Roth conversion is in your best interest. Now you have a choice ... should you convert your existing 401(k) money to a Roth 401(k) – your plan must have adopted this voluntary feature in order for you to do so – or should you make a conversion to a Roth IRA? While on the surface these two types of accounts are very similar – they both, for example, offer the prospects of tax-free growth and future distributions – there are a number of subtle, and not so subtle, differences that may make one type of conversion far more beneficial for you than the other. With that in mind, here is a summary of some of the most important factors to consider when making this decision:

The BEST Way to Convert Your IRA to a Roth IRA

If you're thinking about converting some or all of your IRAs to a Roth IRA, there are two ways to do it. The two ways are by taking an IRA distribution or by direct transfer. Regardless of which method you choose, it will be treated and reported as a distribution from your IRA and a conversion deposit into your Roth IRA. IRA-to-Roth IRA conversions are taxable to you as ordinary income, but no 10% penalty applies, even if you’re under age 59 ½. Click to learn more about the best way to convert your IRA to a Roth IRA.

Ruling to Remember: Math Issue Leads to 60-Day IRA Rollver Problem

A taxpayer we will call "Rebecca" represented that she received a distribution from her IRA on December 4, 2009. It was always her intent to rollover that distribution back into the IRA by the 60-day rollover deadline. She was informed in writing by her financial institution that the redeposit deadline was February 4, 2010 (a date which was actually after the deadline). She followed that procedure and gave her financial advisor a check for the entire rollover amount for redeposit on the specified deadline date (February 4, 2010). Unfortunately, Rebecca's rollover actually happened on day 62.

The 3 Categories of IRA Beneficiaries You Must Know

There are three categories of beneficiaries that might want to stretch distributions from their inherited IRAs. A beneficiary's options will depend on which category they find themselves in. We detail these 3 categories below.

Slott Report Mailbag: Are Beneficiary IRAs Treated Separately for Pro-Rata Rule?

This week's Slott Report Mailbag includes a couple of detailed questions about the handling of retirement accounts after death. Click to read a Q&A with our IRA Technical Expert.

Knowing the Answers in an Ever-Changing Tax and IRA Landscape

How do you become an IRA expert? You must devote substantial time and resources to a topic you are passionate about and never stop learning. That's what separates experts from those with foundational knowledge. Tax rules governing IRAs are always changing, and we make sure we know these updates and how they affect the IRA landscape as soon as possible. Here's a few of the questions we get from financial advisors and consumers about our methods for staying on top of the IRA world.

Move IRA Funds Using Transfers to Avoid Problems

Whenever you move IRA money into another IRA at a different financial institution, it can be done in one of two ways. First, you could take a distribution from your IRA that is payable to you and roll over the money to another IRA. The second way is to transfer the funds directly from one IRA to another IRA. We recommend that you move IRA money using the direct transfer method to avoid problems. Click to find out why.

Slott Report Mailbag: The Effects of IRA Contributions on Social Security Benefits

ed slott IRA questions
This week's Slott Report Mailbag includes questions about the effects from contributions and rules on retirement plans. Click to read a Q&A with our IRA Technical Expert.
 

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