ROTH-IRA CONVERSIONS
What is a Roth-IRA?
A retirement account that creates a Tax Free Income for participants and beneficiaries.
How does a Roth-IRA compare to a Traditional IRA? (pdf)
- Annual Contributions
- Roth-IRA
- Roth-401(k)/Roth-403(b)
- Conversion from IRA, SEP-IRA, Simple-IRA (after 2 year hold), 401(k) to Roth-IRA
Caution: Simple-IRA’s opened less than two years are not eligible for a Roth-Conversion and are subject to a 25% penalty tax.
| Current Owner | IRA | Qualified Plans (if plan allows) |
| Original Owner | Yes | Yes |
| Inherited by Spouse | Yes | Yes |
| Inherited by Non-spouse | No | Yes |
|
ROTH-IRA Conversions
- Benefits for conversion (pdf)
- Who should not convert (pdf)
- Qualified Distributions – free of all tax & penalty (pdf)
- Ordering Rules for distributions
- Roth-IRA Five-Year Rules – You Can Have More Than One - Pro-Rata Rule for IRAs, SEP-IRAs and Simple IRAs.
If you have after-tax contributions in an IRA, the balance of all your IRAs are used in calculating the percentage of after-tax dollars converted, if only one of several IRAs are converted or a partial conversion is made. You cannot just convert only the after tax amounts.
Caution: Age 70 1/2 Required Minimum Distribution must be taken before converting to a Roth-IRA
For a Roth-IRA Conversion analysis or questions email Harry Rubins.
General information only – review with your tax advisor before taking action.
