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After the passage of recent legislation, investors with a traditional investment retirement account (IRA) are able to roll over the funds in that account into a Roth IRA, if certain requirements are met. In a Roth conversion, an investor withdraws money from a traditional IRA and moves the funds into a Roth IRA (after paying all of the federal and state taxes that are due). The future withdraws from the new Roth IRA are tax-free. Investors may want to convert their traditional IRA to a Roth IRA for a variety of reasons. There are fewer restrictions on Roth IRAs than some of the other types of retirement savings accounts. They are also flexible in that contributions can be withdrawn tax-free at any time if you are 59 ½ and have had the account for at least five years.
The benefits professionals at Savage & Associates can explain the tax incentives and benefits of the different types of IRAs. For more information on the wide variety of accounts available, contact Savage & Associates. We can explain the process of rolling over your IRA to a more flexible Roth IRA.
This opportunity may not be right for everyone. Paying taxes now may outweigh the benefit of tax free retirement income in the future. Please note that the taxable amount converted from a traditional IRA to a Roth IRA will be taxed as ordinary income. The taxable amount converted will be taxed in the year of the conversion, payable at your personal income tax rate. In general, the taxable amount consists of pre-tax contributions and tax deferred earnings. However, for conversions involving annuity contracts, the taxable amount may be greater than your account balance. While Roth IRAs are subject to the lifetime required minimum distribution rules, Roth IRAs must still comply with the after-death required minimum distribution rules. This tax information is provided for information purposes only and should be construed as legal or tax advice. Walnut Street Securities and its representatives do not provide legal or tax advice. Before converting consult an independent tax advisor regarding your specific legal or tax situation.
Call 419-475-8665 or fill out our on-line request form for more information or to schedule an exploratory appointment with our experienced professionals at Savage & Associates.
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