Conversion to Roth IRA
Roth IRA is a
retirement account not linked to any of the employer based accounts. The
benefits associated with this plan are enticing making it one of the most
favorite retirement plans for many.
There are several advantages with Roth IRA compared to other traditional IRAs. Therefore, it gained more popularity with the public. For this very reason, a majority of the people choose to convert their traditional IRAs into Roth IRA. Presently, the main noteworthy advantage with it is that money saved for retirement with Roth IRAis free from all the future state as well as federal taxes. This also proves to be very beneficial in circumstances wherein there is a growth in the tax rates in the time to come.
Now, who is eligible for conversion? An individual or a married couple whose Adjusted Gross Income is less than $ 100,000 are eligible for it. One point worth mentioning is that one can plan for conversions at any age as unlike in other IRAs there isn’t a 10% penalty in case of early withdrawals in Roth IRA.
Here is how the conversion process takes place. In the process named ‘conversion’, money is transferred from one account of the custodian to another account of him. Individuals with more than one IRA accounts too can plan to convert one or all of their IRA Accounts.
The individual who has converted one of his IRA accounts into Roth IRA shall however, have to wait for five whole years to be able to withdraw the converted amount without having to pay a 10% penalty. This penalty is not applicable to an individual above 59.5.
Finally, individuals with present less income, who are certain of earning more in future, shall be most benefited by Roth IRA .
There are several advantages with Roth IRA compared to other traditional IRAs. Therefore, it gained more popularity with the public. For this very reason, a majority of the people choose to convert their traditional IRAs into Roth IRA. Presently, the main noteworthy advantage with it is that money saved for retirement with Roth IRAis free from all the future state as well as federal taxes. This also proves to be very beneficial in circumstances wherein there is a growth in the tax rates in the time to come.
Now, who is eligible for conversion? An individual or a married couple whose Adjusted Gross Income is less than $ 100,000 are eligible for it. One point worth mentioning is that one can plan for conversions at any age as unlike in other IRAs there isn’t a 10% penalty in case of early withdrawals in Roth IRA.
Here is how the conversion process takes place. In the process named ‘conversion’, money is transferred from one account of the custodian to another account of him. Individuals with more than one IRA accounts too can plan to convert one or all of their IRA Accounts.
The individual who has converted one of his IRA accounts into Roth IRA shall however, have to wait for five whole years to be able to withdraw the converted amount without having to pay a 10% penalty. This penalty is not applicable to an individual above 59.5.
Finally, individuals with present less income, who are certain of earning more in future, shall be most benefited by Roth IRA .
