Roth Conversion Fully Explained
What is a Roth Conversion?
A Roth IRA Conversion is where you move money that is pre-taxed, like in your IRA or 401k, and you move those funds into your Roth IRA.
When you do the Roth IRA conversion, you will owe taxes on the amount that you transfer, but the growth will be tax free inside the Roth IRA.
A Roth IRA Conversion makes sense for individuals who believe that might be in a higher tax bracket once they get into retirement and want to eliminate taxes from their retirement income.
The biggest advantage to a Roth IRA conversion is the ability to take tax free withdrawals in the future. These tax free withdrawals can be use for retirement income once you are in retirement.
Also, there is no predicting where tax brackets will be when you retire, so having a large Roth IRA account can help eliminate any tax risk during your retirement.
Roth IRA’s are also not subject to required minimum distributions. Thus they can be left alone for the entirety of your retirement without any forced withdrawals.
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