{"id":22058,"date":"2025-02-19T00:52:37","date_gmt":"2025-02-19T07:52:37","guid":{"rendered":"https:\/\/woodriverweekly.com\/?p=22058"},"modified":"2025-02-18T19:55:03","modified_gmt":"2025-02-19T02:55:03","slug":"why-consider-a-roth-conversion-2","status":"publish","type":"post","link":"https:\/\/woodriverweekly.com\/index.php\/2025\/02\/19\/why-consider-a-roth-conversion-2\/","title":{"rendered":"WHY CONSIDER A ROTH CONVERSION?"},"content":{"rendered":"<p>BY SUZANE HAZLETT, MBA, CIMA\u00ae, CFP\u00ae<\/p>\n<p>Introduced under the Taxpayer Relief Act 1997, the Roth Individual Retirement Account (IRA) is named after U.S. Senator William Roth. Roth IRA contributions are made with after-tax money and are not tax-deductible. The key benefit is that earnings within the account accumulate tax-free, and qualified withdrawals after years of growth are also tax-free. The catch is that not everyone is eligible to contribute to a Roth IRA due to annual income limits.<\/p>\n<p>For those holding a traditional, pre-tax retirement account, a Roth conversion moves all or a part of your traditional pre-tax IRA to a Roth IRA. The conversion is a reportable and taxable transaction, and generally, amounts converted will be subject to your ordinary income tax bracket in the year converted.<\/p>\n<p>Here&#8217;s why it can still make sense to convert:<\/p>\n<ul>\n<li>Your taxable income or tax rates in the current year are lower than those expected in future years.<\/li>\n<li>You want to pay taxes now so that if qualifications are met, beneficiaries can inherit from the Roth IRA tax-free.<\/li>\n<li>Conversion can create tax diversification in your retirement as Roth IRA distributions are generally tax-free, whereas traditional IRA distributions are taxable. A mix of taxable and tax-free income may allow for greater flexibility in future tax environments.<\/li>\n<li>Roth IRAs are not subject to required minimum distributions (RMDs).<\/li>\n<li>Roth IRA distributions do not affect the counted income for Social Security or Medicare.<\/li>\n<li>Implementing a Roth conversion while asset values are depressed could result in a lower tax bill for the securities rolled over in a down market. Any resulting appreciation due to a market rebound will grow in the tax-free Roth IRA.<\/li>\n<li>Roth IRA conversions may be done \u201cin-kind\u201d without selling the assets.<\/li>\n<\/ul>\n<p>When implementing a Roth conversion, consider paying taxes from an outside source, allowing all of the converted funds to grow instead of withdrawing from the pre-tax account to pay taxes.<\/p>\n<p>For earnings to be tax-free, converted funds must be held in the Roth IRA for five years, and distributions must occur after age 59 \u00bd or due to death, disability, or put toward a first-time home purchase. During your next conversation with your tax and financial advisors ask whether a Roth conversion may benefit you.<\/p>\n<p><em>Suzanne Hazlett, MBA, CIMA\u00ae, CFP\u00ae is a Certified Financial Planner Professional and Certified Investment Management Analyst. HAZLETT WEALTH MANAGEMENT, LLC, is independent of Raymond James and is not a registered broker\/dealer. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA\/SIPC. 675 Sun Valley Road, Suite J1 + J2 Ketchum, Idaho 83340 208.726.0605. HazlettWealthManagement.com\u00a0<\/em><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>BY SUZANE HAZLETT, MBA, CIMA\u00ae, CFP\u00ae Introduced under the Taxpayer Relief Act 1997, the Roth Individual Retirement Account (IRA) is named after U.S. Senator William Roth. Roth IRA contributions are made with after-tax money and are not tax-deductible. The key benefit is that earnings within the account accumulate tax-free, and qualified withdrawals after years of [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":17718,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","_pvb_checkbox_block_on_post":false,"footnotes":""},"categories":[2,16],"tags":[],"class_list":{"0":"post-22058","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-commentary","8":"category-finance"},"_links":{"self":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/22058","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/comments?post=22058"}],"version-history":[{"count":1,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/22058\/revisions"}],"predecessor-version":[{"id":22059,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/22058\/revisions\/22059"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/media\/17718"}],"wp:attachment":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/media?parent=22058"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/categories?post=22058"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/tags?post=22058"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}