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If you have a traditional IRA, you might benefit from converting some or all of it to a Roth IRA. A conversion can allow you to turn tax-deferred future growth into tax-free growth. It also can provide estate planning advantages: Roth IRAs do not require you to take distributions during your life, so you can let the entire balance grow tax-free over your lifetime for the benefit of your heirs.
There is no income-based limit on who can convert to a Roth IRA. But the converted amount is taxable in the year of the conversion. Whether a conversion makes sense for you depends on factors such as:
- Your age
- Whether the conversion would push you into a higher income tax bracket or trigger the 3.8% net investment income tax
- Whether you can afford to pay the tax on the conversion
- Your tax bracket now and expected tax bracket in retirement
- Whether you will need the IRA funds in retirement
We can run the numbers and help you decide if a conversion is right for you this year. Contact us: information@keitercpa.com | 804.747.0000
Source: PDI Global, Image Source: Getty Images
About the Author
Keiter CPAs is a certified public accounting firm serving the audit, tax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial services, construction, real estate, manufacturing, retail & distribution industries and nonprofits. We also provide business valuations and forensic accounting services, family office services, and inbound international services.