Roth Conversion Planning

Roth Conversion Planning

Converting qualified 401(k) assets to a Roth IRA can be a risk free and cost free way to raise your annual discretionary spending.  However, every individual's financial, income tax, and wealth situation is different.  A CPA financial planner can help you develop a plan that optimizes conversion options to lower household discretionary spending and taxes.

Specifically your CPA financial planner can determine the "optimum" conversion amount considering tax consequences of alternate conversion amounts.  There are many other income tax considerations that your CPA planner can work through.  They include:

  • Partial conversions generally provide a better quantitative result than 100% conversion.

  • Converting while married (before the first death) to take advantage of married brackets.

  • Tax rates are historically very low.

  • Post death distributions to beneficiaries are tax-free.

  • Tax payers who can pay the income tax on IRA from non-IRA funds benefit greatly from the Roth IRA because of the ability to enjoy greater tax-free yields.

  • Suspension of the minimum distribution rules at age 72 (70 1/2 if you reach 70 1/2 before January 1, 2020) provides  a considerably advantage to the Roth IRA holder.

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