Roth IRA Conversions by Maryland Annuity Resource in Maryland, Washington D.C. and Virginia.
When you think about Roth IRA’s I think about Tax Free Retirement Income. They have a lot of features going for them including the feature of no required minimum distributions. There are some serious considerations before converting your traditional IRA to a Roth IRA. You can choose a partial or full conversion option but lets go over a few things first.
Considerations for Conversion to Roth IRA
Weather you do a full conversion or partial conversion, any funds that are taken from a pre tax account like your Traditional IRA and deposited into a Roth IRA account would be taxable as ordinary income. We suggest taking a close look at our Roth Conversion report to see if it makes sense.
By having both a Traditional IRA and Roth IRA, you actually diversify your tax liability. The Traditional IRA income is taxed as ordinary income while the Roth IRA income is tax free. By using this strategy, you could lower your tax burden significantly when receiving income during retirement.
If you think that you will need money from the new Roth IRA within 5 years, you could be accessed tax penalties for withdrawals if prior to age 59.5. If you are 5 years or more away from retirement then a conversion could be a diversified choice for you. With a Traditional IRA, upon your death the assets are passed to your heirs with a tax burden, on the other hand if those assets were in a Roth IRA, those assets would pass to your heirs tax free.
If you expect your future tax rate to be lower than it currently is, then we suggest doing a careful consideration of our Roth Conversion Report to actually see where you would land. If the opposite holds true, then we would strongly suggest a conversion to a Roth.
Some important things to consider is do you think your tax rate will be higher when you retire, if so a Roth Conversion could be your answer for reducing your taxes. Also if you plan on keeping the converted assets at least 5 years with no withdrawals, then a Roth Conversion would be a smart choice. Lastly, if you expect to pay taxes on the conversion with money outside of your full or partial rollover then a Roth Ira Conversion could be your answer to a tax free retirement income stream.
We have to see your whole situation and gather all of the necessary information. Once we have it, we will run a Roth Ira Conversion report and present it to you so you see the whole picture. Click above and see if you are eligible.