Roth Conversions

What is a Roth-IRA?

A retirement account that can create Tax Free Income for participants and beneficiaries.

How does a Roth-IRA compare to a Traditional IRA? (pdf)

Two Types of Roth-IRAs

  1. Annual Contributions
    • Roth-IRA
    • Roth-401(k)/Roth-403(b)
  2. Conversion from IRA or 401(k) to Roth-IRA. Amount converted is subject to Income Taxes
Current Owner IRA 401(k)
Original Owner Yes Yes
Inherited by Spouse Yes Yes
Inherited by Non-spouse No Yes

ROTH-IRA Conversions

  • Ordering Rules for distributions
  • Roth-IRA Five-Year Rules – You Can Have More Than One
  • Pro-Rata Rule for IRAs:
    If you have after-tax contributions in an IRA, the IRS looks at the balance of all your IRAs in calculating the percentage of after-tax dollars converted for a partial conversion

Caution: Age 70 1/2 Required Minimum Distribution must be taken before converting to a Roth-IRA

For a Roth-IRA Conversion analysis or questions email Harry Rubins.
General information only – review with your tax advisor before taking action.

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