40% will be after-tax contributions, and therefore non-taxable, and 60% will be considered taxable. Hi, Great article. Youll have call Healthcare.gov to see if theres any different way that they classify it, but I doubt theyll recognize it as earned income. I am 62 and lost my job last year, Andy may not get back to work. I also have 300K in an aftertax IRA which was rolled over from past 401Ks. Thanks. Will 401K account accept rollovers from traditional IRA even if non deductible contributions have been made to the Traditional IRA account? are all worthwhile issues to resolve, but I have yet to see a definitive calculation of how to optimize the conversion of a pot of money (say $1 million) over a time period (say 10 years from age 62 to 72) assuming a given life expectancy (say 100 years old to be on the safe side). Thanks! -Cal. Can You Open a Roth IRA for Someone Else? Our AGI is under 90K When you convert a traditional IRA to a Roth IRA, you pay taxes on the money you convert in order to secure tax-free withdrawals as well as several other benefits, including no required minimum distributions, in the future. Very helpful. This is especially helpful if youre in a lower tax bracket in the year you convert than you expect to be in later years. A Roth IRA is an IRA that, except as explained below, is subject to the rules that apply to a traditional IRA. I will be 49 at the end of this year. Thank You, Jim D. Hi Jim The answer is yes on both counts. That usually prevent high earners from contributing to a Roth IRA. Now, in Dec. 2014 I want to convert that money in the traditional IRA to a Roth IRA for the 2014 tax year. If youll have $360k in income in retirement from the rentals youll need a source of tax-free income the Roth will provide. That kind of transfer eliminates taxes that might result from a delayed transfer (beyond 60 days) or one that incurs withholding, which itself could result in a tax on the withholding amount itself. I have the dividends put into a money market fund so that i dont lose the gain. For example I just left a job and had my pre-tax 401K rolled over trustee to trustee into my ROTH IRA. Any ideas? It seems there is sort of a tipping point where the combination of RMDs, pension income, investment income and Social Security income put relatively wealthier folks into higher tax brackets and make more of their Social Security income taxable. At the moment you should have no issue with the $20k conversion. "Topic No. Can I convert now (January 2017) but apply the income to my 2016 return, similar to making a contribution for 2016 prior to April? Are there any tax implications for doing this? Overall, the Roth conversion rules for 2023 are relatively straightforward. You should, No wonder more and more people are converting their traditional IRA and other retirement plans to a Roth IRA.
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