Posts Tagged ‘roth conversion’
10. How Often Do Market Corrections Happen?
9 Variable Annuity Fees You Don’t Know You are Paying
8. Morgan Stanley Wealth Management Makes My Life Easy
7. Why Asset Class Diversification is Superior
6. Physicians: Qualified Retirement Plan for Asset Protection
5. Lessons learned from three prospective clients
4. The High Cost of Fee-based Financial Advisors
3. Profit from Harry Dent’s predictions? Think again
2. Be Careful When Buying a Condo as a Rental Property
Also see Top 10 in April.
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10. Why Asset Class Diversification is Superior
9. Are Financial Advisors Required to Disclose Fees?
8. Lessons learned from three prospective clients
7. How Often Do Market Corrections Happen?
6. Physicians: Qualified Retirement Plan for Asset Protection
5. Variable Annuity Fees You Don’t Know You are Paying
3. Profit from Harry Dent’s predictions? Think again
2. The High Cost of Fee-based Financial Advisors
1. Be Careful When Buying a Condo as a Rental Property
Also see Top 10 in February.
Get my white paper: The Informed Investor: 5 Key Concepts for Financial Success.
Share this:
10. January Barometer Effect: What Will the Stock Market Do for the Rest of 2013?
9. Email Scam Targets Financial Advisor Clients
8. Why Asset Class Diversification is Superior
7. How Often Do Market Corrections Happen?
6. Variable Annuity Fees You Don’t Know You are Paying
4. Profit from Harry Dent’s predictions? Think again
3. The High Cost of Fee-based Financial Advisors
1. Be Careful When Buying a Condo as a Rental Property
Also see Top 10 last month.
Get my white paper: The Informed Investor: 5 Key Concepts for Financial Success.
Share this:
10. How Often Do Market Corrections Happen?
9. Why Asset Class Diversification is Superior
8. Small Business 401k, Big Plan Fees
6. An Investment Rule for Young People
5. Fiscal Cliff Deal: What does it mean for high income/high net-worth families?
4. Roth Conversion Decision Framework
3. Profit from Harry Dent’s predictions? Think again
2. Be Careful When Buying a Condo as a Rental Property
1. The High Cost of Fee-based Financial Advisors
Also see Top 10 last month.
Get my white paper: The Informed Investor: 5 Key Concepts for Financial Success.
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Roth Conversion
As 2010 comes to a close, one time sensitive wealth management move affluent individuals and families should consider is converting an existing traditional IRA into a Roth IRA.
It is not a trivial decision, and there is no one-size-fits-all answer. What I hope to accomplish below is to give you a framework to help you make the best decision for you and your family.
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Roth IRA conversion examples
Posted on: January 17, 2010
There is one important rule to keep in mind when it comes to converting a traditional IRA to a Roth IRA – you need to pay federal income taxes on any portion of the conversion that you haven’t already paid taxes on.
Example 1
For example, let’s say you started to fund traditional IRAs in 2006 and by 2010 you’ve got $20,000 in your account. Furthermore, let’s say this account consisted of four years of $4,000 non-deductible contributions – a total of $16,000 in non-deductible contributions and $4,000 in account growth.
In this example, you’d need to pay income taxes on the $4,000 in fund growth when you convert to a Roth IRA. But the good news is you’ll never have to pay income taxes on this account again.
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Starting from tax year 2010, the Tax Reconciliation Act permits all taxpayers to make Roth IRA conversions, regardless of income level. Previously, taxpayers with a modified adjusted gross income of $100,000 (or more) were not permitted to make Roth IRA conversions.
With a stroke of the pen, many affluent Americans can increase their wealth by 10-20% in their lifetime. If circumstances are right, they may even double their wealth for their family.
