4 Reasons to Switch Your IRA to a Roth
4 Reasons to Switch Your IRA to a Roth There are many reasons to consider moving IRA assets into a Roth account. Moving from an IRA to a Roth is called a Roth Conversion. Going through this process requires a bit of effort, but may be worth it so that you can…. 1. Lock in the income tax rate on the converted portion – and avoid future taxation at unknown future tax rates; 2. Enjoy tax-free withdrawals in retirement thus enhancing your lifestyle; 3. Have assets grow tax-free longer, as unlike an IRA, there is no Required Minimum Distribution associated with a Roth; and 4. Leave a tax-free inheritance to your beneficiaries as there are no taxes due on the residual balance at your death. There are several ways to do this: • • • • • •
You can request a distribution from your traditional IRA and then contribute it to your Roth IRA within 60 days after the distribution, or You can ask the trustee/custodian to transfer traditional IRA assets to your Roth IRA at the same or a different financial institution If properly rolled over within 60 days, assets are not subject to the 10 percent additional tax for early distributions However, part or all the distribution from the traditional IRA may be included in the investor’s gross income and subject to ordinary income tax If you are required to take an annual minimum distribution (after age 70½) from your traditional IRA, that amount may not be transferred to the Roth IRA.1 If you are thinking about converting your traditional IRA to a Roth, give us a call, and we can help you determine whether this is the right step for you. We also can assist you with the conversion process itself.
Individuals should consult with a qualified professional for guidance before making any purchasing decisions. IRS. June 13, 2016. “IRA FAQs – Rollovers and Roth Conversions.” https:// www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-rolloversand-roth-conversions. Accessed April 6, 2017. 1
“We invite you to visit our website to learn more about us. If you would like have a discussion about your particular circumstances and concerns, call us at 603-647-7166 to schedule a free, no-obligation consultation.” - Stephen Mathieu, Founder and President of Legacy Financial Solutions, and his wife, Jean Mathieu.
1361 Elm Street, Suite 100
●
Manchester, NH 03101
●
603-647-7166
●
[email protected]
You can request a distribution from your traditional IRA and then contribute it to your Roth IRA within 60 days after the distribution, or You can ask the trustee/custodian to transfer traditional IRA assets to your Roth IRA at the same or a different financial institution If properly rolled over within 60 days, assets are not subject to the 10 percent additional tax for early distributions However, part or all the distribution from the traditional IRA may be included in the investor’s gross income and subject to ordinary income tax If you are required to take an annual minimum distribution (after age 70½) from your traditional IRA, that amount may not be transferred to the Roth IRA.1 If you are thinking about converting your traditional IRA to a Roth, give us a call, and we can help you determine whether this is the right step for you. We also can assist you with the conversion process itself.
Individuals should consult with a qualified professional for guidance before making any purchasing decisions. IRS. June 13, 2016. “IRA FAQs – Rollovers and Roth Conversions.” https:// www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-rolloversand-roth-conversions. Accessed April 6, 2017. 1
“We invite you to visit our website to learn more about us. If you would like have a discussion about your particular circumstances and concerns, call us at 603-647-7166 to schedule a free, no-obligation consultation.” - Stephen Mathieu, Founder and President of Legacy Financial Solutions, and his wife, Jean Mathieu.
1361 Elm Street, Suite 100
●
Manchester, NH 03101
●
603-647-7166
●
[email protected]
