Get the Facts on IRA Conversion
2010 not only ushered in the death of the estate tax, it also gave us the opportunity to take tax-free withdrawals on IRA investments by converting traditional IRA assets to Roth IRAs.
This year, income limits on conversions were lifted to allow anyone to convert from a traditional IRA to a Roth IRA and spread the associated taxes over two years (2011-12).
The benefits to converting:
You can take tax-free withdrawals in retirement from a Roth IRA; withdrawals from a traditional IRA are taxed as ordinary income;
You are not required to take retirement distributions with a Roth, and can let the money accumulate for your heirs.
Generally, the younger you are, the more it makes sense to make the conversion. Seniors who are already in retirement need to examine if they will have enough time and resources to recover from the tax hit.
You can roll your 401(k) into a Roth IRA as long as you are no longer employed by the company where your 401(k) resides. You will owe taxes on the deductible contributions and investment earnings when you convert.
To get all the facts and understand the tax consequences of converting from a traditional to a Roth IRA, you should speak with an estate planning attorney.
Need to learn more about protecting your assets through careful estate planning? Contact our Jacksonville Florida estate planning law firm.
