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Roth conversion

More Clarification on Rollovers and Transfers

I’m compelled to provide an additional update to the posts I’ve provided in the past in the article Running Afoul of One Rollover Per Year Rule and its follow-up More on the One-Rollover-Per-Year Rule. This is primarily to provide clarity to a portion of this rule that I personally was unclear on when the articles were originally written. The rule is that you are restricted to one IRA rollover in a 12-month period. So let’s define a few things for the purpose of this discussion: Rollover – this is when you move money from one IRA to another, first taking possession of the funds prior to depositing the funds into the new (or the same old) IRA account. You have 60 days to complete this process. At the end of the tax year you’ll receive a 1099R from the original custodian, with a distribution code of 1 or 7 (this […]

Roth Conversion While Receiving 72t Payments

Can you do a Roth conversion while you are taking 72t payments from the traditional IRA? Yes, with some complications.

Tax Diversification for Investments

Reviewing the benefits of tax diversification among your retirement and other investment accounts. Timing along with your lifetime taxation.

Staging Your Roth IRA Conversion

You can benefit in the long run by staging your Roth IRA conversions. This can reduce taxes and potentially eliminate RMDs.

A Good Reason to Not Convert to Roth

Another facet that you might want to think about as you consider whether to convert traditional IRA monies to Roth IRA.

Running Afoul of the One-Rollover-Per-Year Rule (and How to Fix It)

In case you’re not aware of it, there is a strict rule that the IRS applies with regard to IRA rollovers: you are allowed to roll funds over from an IRA using the 60-day rule only once during each 12-month period. FYI: Trustee-to-trustee transfers are not considered rollovers for this rule. Here’s an example of what could happen: Early in the year, you withdraw some money from your IRA to help you catch up on some bills. Then, you receive a bonus within the 60-day period after your withdrawal, so you deposit those funds back into the same (or any other) IRA. Later in the year, you want to take another short-term distribution from your IRA, and once again circumstances present the opportunity to put the funds back into the first IRA… but now you’re stuck. You can’t roll the distribution back into the original IRA (or any IRA), since […]

3 Ways of Dealing Without Recharacterization

Recharacterization of a Roth conversion has been gone for quite a while now. Risk reduction is more complicated now, but still possible.

Valuation for Roth IRA Conversions

How does valuation work for Roth IRA conversions? When are the assets valued to determine what is taxable and what is tax-free?

Using Capital Gains and Losses to Help With a Roth Conversion

Using capital gains and losses to help offset your cost when doing a Roth conversion. This income offset can really help keep the cost down.

Roth Conversion Timing Where After-Tax Contributions Are Involved

The timing of your Roth conversion can make a huge difference, especially if you have after-tax contributions in your IRAs.

5 Tactics for Required Minimum Distributions

If you’ve got to take required minimum distributions, here are several options for how you should plan them.

Roth Conversion Planning for a Small Business Owner or Farmer

Small business owners (including farmers) may have a unique opportunity for Roth conversions if they have significant Net Operating Losses on the books.

Three Reasons You May Not Want to Convert to a Roth IRA

In today’s historically-low tax rate environment, converting money from traditional IRAs to Roth can make sense, but not always. Keep your eyes open.

Options For a Spousal Inherited IRA

What options do you have if you have a spousal inherited IRA? There are three, much better options than other non-spouse beneficiaries.

Turns Out You CAN Be A Little Bit Pregnant

Remember back in junior high (or whenever it was) during health class (or sex ed, or whatever they called it for you) – how it was explained that pregnancy is a black or white thing: “nobody gets just a little bit pregnant” was the story my health teacher gave us to remember. As it turns out, there are many other absolutes in life that are similar. However, in a totally characteristic move, the IRS gives us a way that takes something that you think would be absolute, and twists it so that you can, in fact, be a little bit pregnant (or rather, a little bit taxable, a little bit tax free, in this case). Confused yet? Sorry, that wasn’t my intent… some people refer to this as the “cream in the coffee” rule. With this analogy, it is explained that once you put cream in your coffee, you can’t […]

Roth Conversions for Inherited Retirement Plans

If you have an IRA or a 401(k) that you’ve inherited, you may wonder if it is possible to convert that account over into a Roth IRA. After all, you’ve got to take RMD (Required Minimum Distributions) from the account since it’s inherited, why couldn’t you just pay all the tax upfront and roll it over? Well, there are two answers to this question, one for inherited IRAs, and one for inherited qualified retirement plans (QRPs, such as 401(k) or 403(b) plans). And like many other things in this wonderful tax code of ours, the two kinds of plans are treated differently today, but may be subject to change in the future. It should be noted that we’re talking about non-spouse beneficiaries here. A spouse has pretty much the same rights as the decedent (original owner, now deceased) had, so if the decedent was eligible for a Roth conversion, the […]