December 20, 2014
What is a Roth IRA conversion? Why would you want to do it? When would you do it?
What is a Roth IRA conversion? Why would you want to do it? When would you do it?
A Roth IRA conversion is when you convert from a traditional IRA to a Roth IRA. You would do this so you can pay taxes now instead of later on your retirement savings. You would want to do it if you prefer to pay taxes now and let your savings grow untaxed. You might want to consider doing it over a number of years to pay a lower tax rate instead of doing it all at once.
A Roth IRA conversion is when you take the money help in a traditional IRA and convert it over to a Roth. You would want to do this because your gains will be growing tax free in a roth ira. However when you do a conversion you will have to pay income taxes on the amount of the conversion so you would want to do that on a year you have less than normal income taxes or are well prepairded for the taxes that are to come with that move. It is best to talk to a CPA before taking this on. You can also do partial conversions over a few years if you want to keep the partial under a income bracket.
Wonderful answers, gentlemen. I have nothing to add. Well done!