Articles & Alerts

Funding a Roth IRA offers the unique opportunity to accumulate tax-free (not tax-deferred) wealth for your retirement. It can also provide your heirs with tax-free income under the right circumstances.

It is possible to convert part or all of your “traditional” (non-Roth) IRA to a Roth IRA by paying a one-time tax on the conversion. With income tax rates predicted to rise in upcoming years, along with anticipated new restrictions on Roth conversions and asset accumulation, now is the time to evaluate whether this opportunity makes sense for you.

Prime candidates for a Roth IRA conversion include, but are not limited to:

• Persons currently in a low federal / state income tax bracket who anticipate being subject to higher tax rates in the future.
• Younger persons who have a lengthier timeline to recoup the conversion tax and accumulate tax-free wealth.
• Older persons with other sources of retirement income, who are interested in providing tax-free income to the next generation.
• Persons holding assets in their IRA that they expect to appreciate significantly in the future; the conversion tax will apply to the lower, current value, thereby avoiding tax on higher value assets upon distribution.

As with any tax planning strategy, there are many factors to consider. Please contact your Anchin Relationship Partner to discuss whether a Roth IRA conversion is a good opportunity for you.