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Why a Roth Conversion can be a Smart Retirement Strategy

By Lineweaver Financial Group
June 08, 2017 Category: Roth, IRA, Retirement

There are many options when it comes to retirement, and it can be hard to know which is right for you. One of those options a ROTH IRA conversion, can be a great strategy for some people. First, aquick refresher on how a ROTH IRA differs from a Traditional IRA. With a Traditional IRA: 1. You receive an upfront tax deduction on your annual contributions 2. Growth is tax-deferred growth until its withdrawn 3. Withdrawals are taxable as ordinary income 4. There are penalties if you take withdrawals before the age of 59 5. You have required minimum distributions (RMDs) that begin at age 70 With a ROTH IRA 1. Your contributions are front loaded meaning you use after-tax dollars for your contributions 2. Growth is tax-free 3. Withdrawals are never taxed 4. Earnings can be taken income-tax-free if you are at least 59 and have had the ROTH IRA for at least 5 years 5. There are no required minimum distributions ever! If you currently have a Traditional IRA, but some of the