Financial PlanningRetirementTo Convert or Not to Convert

September 1, 2022by Bailey Wealth Services

Converting your traditional IRA to a Roth IRA can come with many benefits, including eliminating the uncertainty of how future tax rates will impact your income in retirement.

Plus, say goodbye to required minimum distributions (RMDs) during your lifetime, putting you in control (instead of the government!) of when you want to access your money.

Despite the advantages, converting to a Roth IRA isn’t necessarily for everyone. There are several questions you should ask yourself to determine whether or not a Roth conversion is right for you.

For items to consider prior to converting, click here to download “To Convert or NOT to Convert in 5 Easy Steps.”

To learn more about ways to reduce your tax burden in retirement, contact our office at 425-252-4032 to schedule a time to visit.

This material was prepared by Ed Slott. Ed Slott is not affiliated with Bailey Wealth Services or LPL Financial.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 1/2 or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply. 

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
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