Category: Roth
Why a Roth Conversion can be a Smart Retirement Strategy
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, a quick 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 Growth is tax-deferred growth until it’s withdrawn 3. Withdrawals are taxable as ordinary income 4. There are penalties if you take withdrawals before the age of 59 ½ 5. You have required minimum distributions (RMDs) that begin at age 70 ½ 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 ½ 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 benefits of a ROTH IRA sound appealing to you, there is a way to “convert” your traditional IRA into a ROTH IRA – this is
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