Roth IRA Conversion Review

Retirement

If you have existing retirement assets in a traditional IRA, you may want to consider converting those assets to a Roth IRA. Possible benefits of converting include tax-free distributions at retirement, no required minimum distributions at age 70 ½, and leaving income tax-free assets to your heirs in the event of your death.

While Roth conversions are not subject to early distribution penalties, they are subject to income tax.

Any earnings distributed prior to age 59 1/2 would be subject to penalty and tax.

Your tax-free potential is maximized if you pay the taxes from your current income or personal savings, not your IRA. Make sure you have the cash to pay the taxes required to convert to a Roth IRA.

Assets converted to a Roth IRA must be invested for at least five years before taking distributions or a significant income tax penalty may apply.

For tax years starting in 2010, the $100,000 modified AGI limit for conversions to Roth IRAs was eliminated and married tax payers filing a seperate return can now convert amounts to a Roth IRA

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice.


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