- We’re 62 With $1.1 Million in 401(k)s. Should We Convert $100,000 Per Year to Avoid RMDs?
Converting 401(k) funds into Roth accounts can reduce or eliminate the need to take Required Minimum Distributions (RMDs) that can bump you into a higher tax bracket in retirement. Voluntary Roth withdrawals, meanwhile, are tax-free, potentially giving the conversion strategy twice the appeal. Converting 401(k) funds gradually, before you’re required to take RMDs at age… read more…
- I’m 63 and Make $125k, With $900k in an IRA. Should I Do a Roth Conversion on $90k per Year to Avoid RMDs?
Converting an IRA to a Roth IRA is a popular approach to avoiding mandatory required minimum distributions (RMDs) — and the associated taxes — in your 70s and beyond. Doing it gradually can stretch out and even reduce the tax bill compared to converting it all at once. In your case, the key question is… read more…
- I’m 67 With $1.2 Million in a 401(k). Is It Too Late for a Roth Conversion?
Converting funds in a traditional 401(k) into a Roth IRA can provide you with tax-free retirement income, and there are no rule prohibiting conversion at any age. However, converting when you are close to or at retirement age involves some additional considerations. For one thing, you may have to let converted funds age for five… read more…
- I’m 60 and Make $150k. Should I Convert $50k per Year From My IRA to a Roth to Avoid RMDs?
There are plenty of ways to analyze your retirement strategy. Sometimes, when we have lots of concrete information, we can start by running the numbers. If X, then Y, and the next steps are to decide what risks and outcomes you’re comfortable with. But sometimes, the place to start is with questions. As you build… read more…
- I’m 62 With $1.6 Million in My 401(k). Should I Convert $160,000 Per Year to a Roth IRA to Avoid RMDs?
Converting your 401(k) to a Roth portfolio will allow you to entirely avoid RMDs. This is a legitimate form of tax planning. However, often there’s a difference between whether you can do something and whether you should; whether it’s allowed, and whether it’s in your long-term best interest. For example, say that you’re 62 years… read more…
- Is It Wise to Convert 10% of My IRA into a Roth Each Year to Avoid Taxes and RMDs?
Roth IRAs are not subject to rules on required minimum distributions (RMDs), and qualifying withdrawals from Roth accounts in retirement are also free of federal income taxes. You can get those advantages for funds in your traditional IRA by transferring them into a Roth account. You’ll have to pay income taxes now on funds you… read more…
- I Want to Convert $865k to a Roth IRA. How Do I Avoid Paying Taxes?
Converting a large sum like $865,000 to a Roth IRA is a strategic move for long-term tax benefits – including tax-free retirement income and eliminating required minimum distributions (RMDs) – but it often comes with a hefty upfront tax bill. The transition from a traditional IRA or 401(k) to a Roth IRA means paying taxes… read more…
- I’m 60 With $1.5 Million in My 401(k). Should I Convert $120,000 per Year to Avoid RMDs?
It’s a wise move to plan ahead for the taxes you’ll pay on retirement income, including eventual required minimum distributions (RMDs). Instead of waiting until the RMD deadline to start thinking about tax planning, starting the process at age 60 gives you the luxury of time to weigh all of your options and adjust your… read more…
- I’m 64 With $650k in an IRA. Should I Start Converting to a Roth to Avoid RMDs?
You can reduce the impact that taxes have in retirement by converting pre-tax savings into Roth assets. Doing so not only unlocks future tax-free growth, but also helps you minimize or avoid required minimum distributions (RMDs). However, converting a large IRA balance like $650,000 all at once would trigger a significant tax bill in the… read more…
- I’m 65 With $800k in an IRA. Should I Convert $100,000 Per Year to a Roth to Avoid RMDs?
Converting to a Roth IRA can be tricky business. For the right household, this is an excellent way to save money on retirement taxes. A Roth portfolio generates untaxed income, letting you keep more of your portfolio and Social Security. It also has no required minimum distributions (RMDs), maximizing your financial flexibility. But remember that… read more…
- Is It Wise to Convert 20% of My 401(k) into a Roth IRA Each Year to Avoid Taxes and RMDs?
With retirement planning and taxes, there are often two ways to look at a question: First, can you do something, and then, should you do it? For example, let’s say we have a household planning for retirement. Would it be wise for them to convert their 401(k) into a Roth IRA 20% at a time… read more…
- Can I Roll Over the Employer Match in My 401(k) to a Roth IRA?
If you want to roll over money from your 401(k) into a Roth IRA, there’s good news: any employer matching funds in a 401(k) can be converted along with your own contributions and investment earnings. However, you’ll owe income taxes on all the converted funds, which can be a significant issue when converting large balances.… read more…
- I Am 58 With $1 Million in My 401(k). Should I Switch to Roth Contributions?
I Am 58 With $1 Million in My 401(k). Should I Switch to Roth Contributions? Whether to make the move from contributing to a tax-deferred workplace plan or switch to a Roth isn’t a question of “should” but a question of, “What works best for you?” Just a few of the considerations are: You can… read more…
- My RMDs Start Soon So I Want to Convert $900k to a Roth, but I’m Getting Conflicting Info About Having to Wait 5 Years to Use the Money
People with Roth IRAs generally have to wait five years before withdrawing earnings from their account. But the devil is in the details, and for this particular rule, getting those details can be surprisingly difficult. For starters, the IRS has three different five-year rules that apply to Roth IRAs. One of them, the conversion rule,… read more…
- I’m 59 With $1.3 Million in a 401(k). Should I Convert $130,000 Per Year to a Roth to Avoid RMDs?
Converting a 401(k) into a Roth IRA can be appealing for several reasons. Not only can you make qualified withdrawals from Roth accounts tax-free, but Roth accounts are also exempt from required minimum distributions (RMDs.) That can give you more flexibility when withdrawing from your account in retirement and potentially save you money on taxes. If… read more…
- Is it Wise to Convert 10% of My 401(k) into a Roth IRA Each Year to Avoid Taxes and RMDs?
A Roth IRA has a couple of significant advantages. Most notably, they allow your retirement savings to grow tax-free (as opposed to tax-deferred) and they have no required minimum distributions (RMDs). If your priority is to control your retirement savings, then a Roth IRA might be the right choice. However, Roth IRAs have their disadvantages… read more…
- I Want to Convert $920k from a 401(k) to a Roth IRA. How Can I Reduce Taxes?
Transferring funds from a 401(k) into a Roth IRA lets you make tax-free free withdrawals in retirement, avoids rules on mandatory distributions and adds flexibility for estate planning. However, when converting a large amount of money, the potential tax bill becomes a major issue. Fortunately, strategies exist that can reduce the tax bill significantly and… read more…
- I’m 70 Years Old With $1.2 Million in an IRA. Is It Too Late to Convert to a Roth IRA?
In retirement, it’s not too late to convert your money into a Roth IRA. The IRS will let you convert qualified funds at any time, as long as you pay the associated taxes. It might, however, be too late to get real benefit from that decision. A Roth IRA works best when it has time… read more…
- What Is a Mega Backdoor Roth Conversion?
Retirement savers typically use a mega backdoor Roth conversion, in addition to a backdoor Roth 401k, when they have already maximized their contributions and want to continue saving for retirement beyond those annual limits. With a backdoor Roth 401(k), you will pay taxes upfront on contributions with the goal of making tax-free withdrawals in retirement. And… read more…
- What Is an Indirect Rollover?
When it comes to managing your retirement savings, an indirect rollover is one of the tools available to you. This financial transaction involves you – the account holder – personally receiving and moving funds from one retirement account to another within a specific timeframe. However, it’s crucial to understand the tax implications of this maneuver… read more…
- What Are the IRA Rollover Limits?
Understanding the limits imposed by the Internal Revenue Service (IRS) on IRA rollovers might be a crucial aspect of financial planning if you rely heavily on IRA funds for retirement. An IRA rollover limit refers to the maximum amount of money that one can transfer from a 401(k) or other employer-sponsored retirement plan into an… read more…
- IRA Rollovers and Transfers: Reportable vs. ‘Non-Reportable’
An IRA transfer refers to the movement of tax-deferred money that is not required to be reported to the IRS on your tax return. This typically occurs when you complete a direct trustee-to-trustee, or account-to-account, transfer between two similar types of retirement accounts. This type of IRA transfer is sometimes referred to as a “non-reportable… read more…
- IRA Transfer vs. Rollover: What’s the Difference?
Anyone who’s ever put together furniture or hung a picture on a wall knows the difference between a screw and a nail. While they may look alike, they have distinct purposes and applications. The same can be said for an… read more…
- Want to Leave Assets to Your Heirs? Consider Using a Taxable Account to Pay for a Roth Conversion
A Roth conversion is one of the many tools in the financial toolbox to reduce taxes in retirement and maximize income. But not all retirees or those planning their retirement consider converting their savings into Roth assets, mainly because it… read more…
- IRA Rollover vs. IRA Conversion
Do you have money in a 401(k) from a previous job or an old IRA? Performing an IRA rollover or conversion can be smart depending on your situation. You might also opt for an IRA transfer, where you move money… read more…