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I'm 74 years old...can I still convert a regular IRA to a Roth IRA?

Jan 08, 2012 by William from Auburn, IN in  |  Flag
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William, great question! There actually isn't an age limit on the Traditional IRA to Roth IRA conversion. There are a few benefits to the conversion but also a few things to think about before doing it. First, the benefits: 1. Converted funds are no longer counted towards your Required Minimum Distribution (RMD) the years following the conversion.
2. Future growth is tax-free. 3. As taxes go up, which most economics say will happen due to huge deficit US is running, you will pay less because of smaller RMD and how have a large tax-free source to draw from. 4. If you leave money in your Roth IRA when you pass, your heirs will get to keep the tax-free status of the account. There are RMD rules that apply to this, but it's still tax-free.

The downside: 1. If your taxable income goes down in the future, you may hurt yourself by doing the conversion and paying taxes now versus in the future. 2. If your account loses value, it may have been better to wait to convert.

These two downside risks of it are just things to consider. As always, please consult an independent investment advisor and tax accountant before you make any decisions.

I hope this information was helpful, Nick

Comment   |  Flag   |  Jan 08, 2012 from King of Prussia, PA

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Sean McClay Level 13

William,

Please remember that you can convert your IRA to a Roth IRA at anytime but that conversion will be a taxable event. If your IRA has a significant amount in it then and you convert the whole thing your tax obligation may be substantial and defeat the purpose of your conversion. If you are working part time you may be able to contribute to a Roth IRA / 401k if that is what you desire. I feel that converting to avoid RMD's may do you more harm than good because of the tax ramifications. I would tell you just like Nicholas did before that the best thing to do would be to seek out an investment advisor and CPA / tax accountant.

Health & Happiness,

Sean

Comment   |  Flag   |  Feb 10, 2015 from Daphne, AL

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William,

If you have a sizable estate and anticipate a significant portion of your IRA will ultimately be left to non-spousal beneficiaries, in some circumstances a Roth conversion may be an effective estate planning tool despite the triggering of a near term taxable event. As with any advanced estate planning measures, you should proceed only with the advice and counsel of a qualified tax and estate practitioner.

Mike

Comment   |  Flag   |  Mar 10, 2015

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Steve Casull Level 13

William,

Others have outlined the tax ramifications of conversion of IRA to Roth, but I'd like to know what compels the desire to convert. Is it the RMD's? The RMD's are the only small downside to the tax free contributions made into the account. If you were in a high tax bracket when making those contributions, and had a good Financial Advisor that kept you invested during the downturns, you made out great. Now maybe find a hobby that you and or your wife can manifest a small business out of, thus giving you something to do that you also enjoy, and that provides an income greater than what the tax on the RMD is, and a source for potential write offs. Just a respectful 'shot in the dark'. BUT, like I always add to these comments, giving advice to people you know nothing about is very difficult, and can be very harmful too. Maybe you have no desire to start a little business, no matter if your past career could provide a basis for consulting or not.

Steve Casull

Comment   |  Flag   |  Apr 06, 2015 from South Jordan, UT

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