What You Need to Know About Roth Conversions

[@swb3248]

Extremely straightforward and thorough explanation of Roth conversation

[@robertfield4103]

No nonsense, just the facts, ma'am (Dragnet reference). Great, direct, insightful. Better than other pedantic channels.

[@lakedays3708]

Outstanding comprehensive Roth Conversion video for retired folks. This is a must watch AND it’s only 12 minutes long!

[@RetirementPlanningEducation]

thank you!

[@irarosenberg]

Great summery and somewhat detailed considerations for Roth IRA conversions.

[@QGJohn]

At 2:54 you say, "like in a tax-deferred account, you don't have to pay tax on the gains, while they are still inside the Roth account". True. But this would have been a great place to add in that with a Roth, you NEVER have to pay tax on those investment gains. To me, that is probably the top, or at least 2nd great thing about a Roth.

[@RetirementPlanningEducation]

The gains could be taxable, depending when they’re taken out. So I’m reluctant to say they’re tax-free without caveating it

[@QGJohn]

@@RetirementPlanningEducation I assume you're talking about the age one takes it and the How Long Have You Had a Roth 5 Year Clock. But like for someone in my case, 65, had a Roth for over 20 years, when I take money out, the gains should not be taxable, is my understanding, correct?

[@RetirementPlanningEducation]

@@QGJohn In your case, all distributions from any of your Roth IRAs will be completely tax and penalty free for the rest of your life

[@Mikesadventures-m2q]

Thanks for sharing! You gave the best explanation soo far. I'm 56 and retired. All my money is in a roth or ira.

[@cjb6854]

Thanks, Andy! Just the facts...exactly what I wanted to hear.

[@lisapippinbt738]

Andy I love your approach and you are so right about the future. Thank you!

[@stevenobrien595]

Hi Andy, Fantastic and very thorough explanation on the Roth conversions. I just found your channel and looking forward to more straight forward professional info! Thanks, Steven

[@keithmachado-pp6fv]

Good video. You bring up good points. Some ate unlikely such as IRMAA surcharge being an issue due to RMDs. Unless you have significant income other than RMDs and SS you will not have an IRMAA surcharge issue. IRMAA limits increase annually for inflation. The tax time bomb catch phrase is stolen from Ed Slott and is a made up thing with no basis of fact. For most people taking advantage of the standard deduction and low tax brackets, both adjusted annually for inflation, RMDs can be paid slowly over many years at a lower effective tax rate. The expiration of the current tax brackets may or may not happen in 2026, no one knows for sure.

[@topplacetoLive]

Easy to follow and understand. Definitely worth watching if you're considering optimizing your retirement savings strategy

[@Green-jl9yh]

Great video Andy Question If person is over 59.5 and had open Roth IRA For 10 years No panelty No tax when withdraw on Contribution and earning even had couple of Roth convertion Even yesterday Did I understand you correctly ? Waiting for your answer thank you

[@RetirementPlanningEducation]

Yes, that's correct; if you are over 59 1/2 and your first Roth IRA was opened (and funded) at least five years ago, all distributions you take from any of your Roth IRAs at this point will be "qualified" such that there are no tax or penalties. And that applies even if you do a conversion yesterday and take all of that money out today.

[@Green-jl9yh]

I went to see CFA yesterday Didn’t get clear answer You’re the BEST !!! Really appreciated Thank you again and have a great day Looking for more of your video

[@michaelwoods4495]

We're both 75 and in really good health, with family histories of living past 90 to about 95. This looks like the right time to begin Roth conversions because when we contributed to IRAs there were no Roths yet. At one point in the presentation there was a written item saying that qualified withdrawals were after 591/2 OR after the account was open for five years. Then immediately after that he said that "The only other condition after 591/2 is that the account must have been open for at least five years." So which is it? Do we have to wait five years?

[@RetirementPlanningEducation]

Yes, sorry if I misspoke in the video. For earnings to come out tax-free, your first Roth IRA must be at least five years old AND you need to be at least 59 1/2. But even if it hasn’t yet been five years, your contributions and conversions can come out tax-free. It’s just earnings that will need to wait for five years.

[@michaelwoods4495]

@@RetirementPlanningEducation Thank you. That was a great help.

[@swb3248]

If I retire but my spouse keeps working should we consider filing separately to keep my taxes on conversation lower? I assume if the traditional IRA is in my name, the tax liability would only be assigned to me?

[@RetirementPlanningEducation]

There is no real way to know whether you'd be better off filing as joint or separate without actually running both scenarios through tax prep software or some sort of tax return calculator online. But, generally speaking, it's rare that married folks are better of filing single instead of joint. Where separately makes sense is in cases where each spouse wants his or her tax liability NOT shared with with the other, or if incomes across the two spouses are very different and one spouse has outstanding student loans where the need to repay them is based on that spouse's income, or where spouses may be divorcing and want to start to keep their tax situations separate from one another, etc.

[@swb3248]

@@RetirementPlanningEducation Thanks for sure a thorough explanation. I definitely agree that the US government provides a tax break for filing jointly. That is a good idea to run it through the tax planning software to see what the bottom line would be.

[@RetirementPlanningEducation]

@@swb3248 The other wrinkle here is how the filing status impacts your state return (assuming you live in a state that DOES have income tax). Because even if you may be better off filing jointly on the federal return, it might make you worse off on the state return, and vice versa. Plus, some states require the filing status of your state return to match that of your federal return. The only way to know what's best is running it both ways. But don't be surprised if the result is you should just stick to filing jointly.

[@swb3248]

@@RetirementPlanningEducation speaking of state income tax, if I hold Treasury bonds in a Traditional IRA that are exempt from state in a taxable account in my state, I assume I still pay state tax on that income when doing a Roth conversion since that Traditional IRA is just seen as one large bucket of cash?

[@RetirementPlanningEducation]

@@swb3248 That's correct. Once something is inside an IRA, the tax implications of that investment don't really matter in terms of whether it pays interest or dividends, or whether you sell it for a gain with the IRA, etc. Because with IRAs, from a tax perspective, it doesn't matter what goes on inside the IRA. You're taxed on however much you take out, regardless of what happened inside the IRA to get to that point.

[@joannabusinessaccount7293]

Hi Andy - wondering if... Can a person do two conversions, each maxing at $7,000 each? Do a conversion from the IRA to a Roth IRA AND do a conversion from 401K to a Roth 401K?

[@RetirementPlanningEducation]

If your 401(k) allows in-plan conversions, yes, you should be able to do that conversion. Just check to see if they put any size or frequency restrictions on the ability to convert. But unrelated to whether you do or don't do in-plan conversions within your 401(k), you could separately do traditional IRA to Roth IRA conversions. In both cases, just be aware that your conversions are going to be partially if not fully-taxable. So be sure to pay taxes accordingly.

[@larryjones9773]

There's no dollar limit on conversions to Roth IRAs.

[@gregstowe4595]

I am 60 yrs old and single and currently employed ($165k salary) but plan to retire later this year. I have about $500k in a regular IRA and about $1.0 mm in 401k accounts. I also have about $1.4mm in other investment accounts. I would like to convert as much as possible, perhaps $150k per year, to a Roth IRA beginning next year before I start collecting SS at age 70. I understand that you pay tax on the conversions but nobody explains the pro-rata rule. How does this impact any conversions?

[@PH-dm8ew]

How damaging is it to pay Roth conversion taxes through converted money and not other cash?😊

[@RetirementPlanningEducation]

Depends. If you’re under 59 1/2, in addition to paying tax on the amount of distribution not converted, you’ll also have to pay the 10% early withdrawal penalty on it. And that’s far from ideal. Otherwise, it’s not terrible like some folks like to say it is.

[@Lazee_Dreamah]

Hi Andy, can a person do partial conversion from a regular 401k to a Roth IRA? Let's say there's 100k in the old 401k now can spread the conversion out over 5 years so they don't have to pay all the taxes at once?

[@RetirementPlanningEducation]

You have to check with the 401(k) and see what distribution options they allow. It sounds like it's from a previous employer (you say it's an "old" 401(k))? If that's the case, it's possible they may not allow you to do any kind of partial distributions or conversions; they may only allow you to either 1) leave the whole thing there or 2) take the whole thing out in one shot.

[@sibaroochi]

I am interested in rolling over my traditional to a roth and then pay the resulting taxes from the roth monies a few months later. Is this possible? Example: I rollover $50,000 to the roth, and then withdraw $10,000 from the roth a few months later to pay the tax payment. I figured since i'm over 72 I won't have any penalties/restrictions to do this. My theory behind this strategy is that I expect the roth assets to grow significantly over the next 3 months so I'd like to keep as much in there until I have to pay the estimated tax payment by the sept. 15th deadline.

[@kohort1]

It just sounds too good to be true. What am I missing? You just transfer money into a traditional IRA then convert it to tooth and pay taxes on it? Of you're over the income limits you would've paid taxes on that money even if you stick it into a traditional IRA... So you pay taxes again when you convert it? But don't pay taxes when you retire?

[@klausgersdorf8315]

Can I consider the Roth Conversion as RMD?

[@RetirementPlanningEducation]

Unfortunately no. If you are of an age that you need to take RMDs, RMDs will need to come out before you do any Roth conversions. Or in other words, Roth conversions cannot take the place of RMDs.

[@kenwang1193]

@@RetirementPlanningEducation Say I need to do RMD of $10k this year. I have to withdraw $10k from my pretax IRA and transfer it to my saving account. Then I can do Roth conversion. Am I right?

[@RetirementPlanningEducation]

@@kenwang1193 yes, you can do conversions after taking your RMD. But the conversion can’t take the place of the RMD.

[@kenwang1193]

@@RetirementPlanningEducation Thank you for your response.

[@1lonestar471]

Hi Andy, I have $6000 in Ira, I want to convert to roth ira. How much do i need to pay back? And where/when can i pay? Please help.

[@wdeemarwdeemar8739]

Always assume a 20% tax as that is what the federal govt withholds but contact who you have the IRA and tell then you would like to convert. To a Roth IRA and if they charge a fee. Then go from there.

[@mdenbaly]

How my I obtain your consultation?

[@RetirementPlanningEducation]

Thank you for your consideration, but I’m no longer taking on any new clients.