Roth Conversion

Convert something today. Convert because the markets are down, or maybe convert just because you likely won’t regret it in 30 years when the markets will likely be up a lot more than they are now.

This person has an IRA balance, but is about to empty it with a reverse Rollover. So the question is one of timing: can they do the IRA Rollover before the nondeductible contribution so that their cream and coffee never mix?

If you inherit a traditional IRA from a person who had a basis in the IRA because of nondeductible contributions, that basis remains with the IRA assets as they come into your ownership.

Luckily for the charitably-inclined individuals with nondeductible balances, QCDs are excluded from your Form 8606 taxable and nontaxable calculations.

There are several ways that a Roth conversion benefits people regardless of their filing or marriage status.

Kudos to you for noticing the value of Roth conversions! We have three ways we can help.

Thirty years of interest, dividends, and capital gains tax is a significant savings.

This person has no IRA balance, but is about to get one with an IRA Rollover. So the question is one of timing: can they do the IRA Rollover after the nondeductible contribution has already been converted so that their cream and coffee never mix?

Federal AGIs between $75,000 and $99,000 of couples over age 65 begin to lose this age-based special treatment and lose the tax savings they had at lower income levels.

These are two simple but effective strategies to help calculate a very good conversion target for this year.

Even the most Roth-loving individuals may have hidden Traditional assets that they do not know they can convert to Roth. Here are just a few places to look.

Be brave. Fund your Roth. Convert your IRA. Pay your tax bill. Your future self will thank you.

Luckily for Roth lovers like us, you don’t have to choose between Roth conversions or Roth contributions.

“A conventional wisdom withdrawal strategy will almost always leave a lot of money on the table.”

Under the Tax Cuts and Jobs Act, you are still allowed to make nondeductible contributions and still allowed to convert IRA assets to Roth IRA.

On January 18, 2018, the IRS updated their Frequently Asked Questions page to come into line with the new Tax Cuts and Jobs Act.

Putting money in your Roth without delay is valuable.

It is an inconvenience during the holiday season to say the least, but Roth conversions are worth the effort.

At our firm, tax planning is our priority. We hope to maximize after-tax net worth over your lifetime, even if it is at the expense of this one year.

To avoid the 10% penalty, do I have to satisfy the 5-year holding period for my Roth conversions if I’m over age 59 1/2? The IRS is not very clear when it comes to when you need to pay penalties on Roth IRA withdrawals, but I think I know the answer.

While most investment advisors do one total conversion or partial conversion here or there, we have a dedicated Roth segregation strategy, which adds real value to our clients accounts.

Like how diner coffee gets more bitter as the waitress tops off your cup with more coffee from the pot, so too the growth on your nondeductible assets increases your tax owed by decreasing the percent post-tax assets in your cup.

Yikes! This is a costly mistake.

I have learned there are so many more wise plans than just “top of the bracket” conversions.

The legal answer to this question is: there is no limit. The practical answer is: it depends on a number of things.

A Roth recharacterization is a true undo; it is as though you never converted those assets in the eyes of the IRS. This includes recalculating your RMD had you not converted the assets.

A simple summary of how to meet your Required Minimum Distribution in the same year as you perform a Roth Conversion is the axiom: RMD dollars must come out first.

There is an obscure tax rule that allows a one-time Traditional IRA-to-HSA conversion called a Qualified HSA Funding Distribution (QHFD).

If you don’t have retirement savings in Roth IRAs, it’s time you considered their benefits. Assets in traditional IRAs can be rolled into Roth IRAs without a withdrawal penalty.

The Internal Revenue Service (IRS) is notorious for misunderstanding the recharacterizations of Roth conversions.

Any tax which is ultimately going to be owed is owed by April 15th. Otherwise it may be subject to interest and penalties.

Even over the income threshold, you may still be able to add funds to your Roth IRA with what is called a backdoor Roth.

My wife and I are 65 years old and I am newly retired. Is there any advantage in doing a Roth conversion this year?

Roth conversions are a great way to save money and if you have a good financial planner, they need not be a headache.

Roth accounts have several advantages over traditional retirement accounts.

A complete guide to using Roth IRAs to build lasting wealth.

A backdoor Roth IRA contribution requires some extra steps but allows high-income earners equal access to the tax-free benefits of a Roth IRA.

There is a backdoor way to contribute to a Roth IRA for those who are not income eligible. This method requires the following steps:

Currently the IRS is sending notices to anyone who did a Roth Recharacterization in 2010 asking them to pay as though they kept the entire conversion amount.

Nearly everyone is an excellent candidate for a Roth conversion this year. You can always undo part or all of a Roth conversion with what’s called a recharacterization, so you can’t convert too much.

Who would have thought that someone earning $10,700 might want to purposefully push their taxable income up to $217,450 this year in order to pay $47,595 more in taxes at these lower 2012 tax rates?

Who would have thought that someone in the 33% tax bracket now who will be in a lower 28% tax bracket in the future might want to do a Roth conversion at his higher rates now?

Who would have thought that someone earning $400,000 might want to purposefully push their taxable income up to $1.2M this year in order to pay $280,000 more in taxes at these lower 2012 tax rates?

Who would have thought that someone earning $75,000 might want to purposefully push their taxable income up to $275,000 this year in order to pay as much as possible at these lower 2012 tax rates!

Nearly everyone is an excellent candidate for executing a Roth conversion this year. But it is helpful to have a target amount in mind before you begin.

You may be a good candidate for a Roth conversion in 2012 if you can answer “yes” to any of these statements.

A tax tsunami is coming at the end of this year. This will be your last opportunity to safeguard your assets in a lifeboat and avoid getting swamped with taxes.

There are three IRA tax requirements and saving techniques which collided recently for a client. I found a solution.

David John Marotta was featured in a Wall Street Journal article about the upcoming Roth recharacterization deadline.

Marotta’s Roth segregation technique of conversion and recharacterization was featured in InvestmentNews magazine.