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Late-in-life Roth conversions can take some tricky math.
As you approach retirement, one of the most important questions will be how to manage the taxes on your retirement income. For households that rely on pre-tax portfolios, like a 401(k) or a traditional IRA, this means anticipating ordinary income taxes on all of your withdrawals. It also means anticipating the necessary withdrawals **** ociated with the IRS' Required Minimum Distributions (RMD) rule.
As a result, it's common for people in their 60s to at least consider converting their money to a Roth IRA. This can have significant upsides. It will eliminate your taxes in retirement, along with your RMD requirements, and will even improve the after-tax value of your estate.
The problem is that, as you close in on retirement, a Roth conversion can get very expensive. You will pay quite a lot of up-front conversion taxes in exchange for those long-term income tax savings.
#roth #income #means #finance
Late-in-life Roth conversions can take some tricky math.
As you approach retirement, one of the most important questions will be how to manage the taxes on your retirement income. For households that rely on pre-tax portfolios, like a 401(k) or a traditional IRA, this means anticipating ordinary income taxes on all of your withdrawals. It also means anticipating the necessary withdrawals **** ociated with the IRS' Required Minimum Distributions (RMD) rule.
As a result, it's common for people in their 60s to at least consider converting their money to a Roth IRA. This can have significant upsides. It will eliminate your taxes in retirement, along with your RMD requirements, and will even improve the after-tax value of your estate.
The problem is that, as you close in on retirement, a Roth conversion can get very expensive. You will pay quite a lot of up-front conversion taxes in exchange for those long-term income tax savings.
#roth #income #means #finance
22 hours ago
