quick question about IRA to ROTH conversion
I understand that if I convert some or all of a traditional IRA to aROTH this year I can spread the tax burden over two years.
Question: I have already contributed the $6000/year after tax moneylimit to a ROTH for 2010. Does an IRA to ROTH conversion have anylimits or can I convert as much as I want to?
I am 65. I don’t need to use my 401k or IRA monies at the moment, buteven if I did tomorrow I would have enough none ROTH money to use sothat the ROTH money could be untouched for at least 5 years. I don’tknow how much I might convert, but I wanted to know my options.
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There are a couple of things that are important to consider when making this decision. One of them is are you going to pay the taxes from the assets you are converting or from after tax savings as this will have a material impact on the usefulness of the conversion. Another factor to consider is your tax bracket and income needs when you do begin to draw down your accounts for income. If your needs are moderate and you are in a lower tax bracket at retirement, the roth conversion of all of your assets may not make sense. I have not heard of any limits on the amounts to convert but in my experienceif you are thinking about doing the conversion the longer you have before you need to draw down the assets the more substantial the difference in what your ending values will be. Consult with your advisor so that they can run an analysis based on your individual situation. I hope this helps.
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