Roth Conversions and Chunking Before Year End

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  • Опубликовано: 3 ноя 2024

Комментарии • 35

  • @nevido84
    @nevido84 7 месяцев назад +1

    God bless your mom Mark, as I watch this with my notebook in front of my laptop and hear you talk about opening a trust for your mom and fund Roth IRA and I looked down on my notebook for To Do Lists and I had it listed at the top. :) You made me laugh!

  • @mirzajoldic1395
    @mirzajoldic1395 Год назад +3

    i love this stuff. pure gold

  • @thomashowells6337
    @thomashowells6337 5 месяцев назад

    Thanks for the clarification that you cant take the taxout of the Roth. I heard it 100 times but...The subtlety is you loose the money from the Roth and there is the 10% penalty. Good catch.

  • @mhatcher1971
    @mhatcher1971 10 месяцев назад +2

    So we are kind of behind on the Roth IRAs and are 401ks are not that large with maybe 100,000 in them. We are currently making significantly more money about 60k than we had in the past few years 150k gross. I am 53 & wife 60 So what I'm thinking about doing this we both max out our 401ks and also do the Roth for 8k each. So my thought is to start chunking maybe 45k into Roths. Pay the tax now as I would if I didn't max the 401k. So each year what we put into the 401k will also go into a Roth. Plus adding to our Roth's

  • @ds94703
    @ds94703 10 месяцев назад +1

    Can you just move money from an existing traditional IRA to a ROTH IRA and pay the taxes (once)???

  • @PH-dm8ew
    @PH-dm8ew 27 дней назад +2

    pretty sure if you do a roth conversion you owe the taxes spread out quarterly over the current tax year. if you wait til April 15th you will pay a penalty.

    • @newtiger007
      @newtiger007 12 дней назад

      If you convert in Dec, would you have til Apr 15th??

    • @PH-dm8ew
      @PH-dm8ew 12 дней назад

      @@newtiger007 if you with-hold from the conversion. Pretty sure you would owe penalties for the first 3 quarters of the current year if waiting til April 15TH unless you meet the safe harbor rules. Is that not correct? Learning as i go here.

    • @newtiger007
      @newtiger007 12 дней назад

      @@PH-dm8ew I’m learning too. I’ve realized the learning process is never ending. My understanding on this is all over the place. I honestly thought paying quarterly was the expectation but not required as long as payment is made by year end.
      Conversions in Dec, I don’t fully understand yet for tax deadline. So that’s just my limited understanding which again could be wrong.

    • @ruthgirl
      @ruthgirl 9 дней назад

      ​@@newtiger007No. January 15.

  • @tomcat4321
    @tomcat4321 29 дней назад

    Can the tax on rolled over money from Traditional IRA to Roth IRA be written off against the losses in stock market in my brokerage account?

  • @PH-dm8ew
    @PH-dm8ew 27 дней назад

    so for someone with 1.3 million in deferred IRA and no or limited cash or brokereage funds retired at 62, does it pay to do roth conversions and pay the taxes out of the converted funds?

  • @michaellatta
    @michaellatta Год назад +3

    If you are not making more in retirement you are screwed by inflation.

  • @rulabula2259
    @rulabula2259 10 месяцев назад

    I recently moved $10K from my previous employer’s 401k account into a rollover IRA. I made no contributions neither I have invested. Would it make sense to open and move this amount to a Roth IRA? Should that be done by the end of the year?

  • @melissaschmit4394
    @melissaschmit4394 10 месяцев назад

    When converting a traditional IRA do you have the same max yearly limits that can be put into the Roth IRA or if it’s over $7500 can i convert the entire amount?

  • @MomIDidMakeit
    @MomIDidMakeit Год назад

    I "inherited" a Roth IRA, Traditional IRA and TOD account through a divorce settlement. Am I allowed to transfer the Tradtional IRA to the Roth IRA? You mentioned Inherited accounts from Grandma. Does this fit into that scenario? I'd like to begin moving money into the Roth asap.

  • @spcurrie
    @spcurrie Год назад +3

    I used to think that it was smart to convert to a Roth because I would be paying taxes on the "seed" in the beginning, which is a smaller amount rather than on the "harvest" at the end, which is a larger amount... having been invested for a while. However, the math does not support that. You'll pay the same amount in taxes either way. It just depends on whether the tax rate will be higher or lower at the time you pay them. Most people believe the taxes are going to go up, and that seems to be the more significant reason why to pay the taxes now rather than in the future.

    • @MatSorensen
      @MatSorensen  Год назад

      Thanks Sean for sharing your thoughts on this. Each person's situation is different. That's why I always suggest consulting with a CPA re: timing of doing a Roth Conversion.

    • @yossarianmnichols9641
      @yossarianmnichols9641 11 месяцев назад

      When you start RMDs do you have to spend that money at Vegas or can you invest it so inflation does not eat it away. If you re-invest it you will pay taxes on the capital gains. You won't in a Roth. Yes the tax rate is close to the same for each strategy at point 1, the distribution or conversion. It is the next decision that creates different tax payments.

  • @lmbarnes3
    @lmbarnes3 4 месяца назад

    Married filing seperate affect on roth conversion

  • @jgleigh
    @jgleigh Год назад

    Arizona tax brackets for 2022 are 2.55% and 2.98% (the top rate of 4.5% no longer exists). In 2023, there is a flat-tax of 2.5% on everyone.

  • @markherron6139
    @markherron6139 Год назад

    You mentioned opening a Roth IRA for your parents, funding it, and putting yourself as the beneficiary. Assuming your parents are retired and don’t have earned income, how would this work?

    • @MatSorensen
      @MatSorensen  Год назад

      Your parents could roll over an old 401k or IRA. However, I don't know the details of your situation. You are welcome to speak with one of our account specialists to confirm what is possible for your parents: directedira.com/appointment/

  • @donlandis1100
    @donlandis1100 11 месяцев назад

    We have our Roth IRA's and these were completely funded with periodic Roth conversions from Traditional IRA's. I pay the taxes on the estimated conversion each quarter so that our annual tax rate is maintained at below the 24% IRMA trigger ceiling. We are 75. My question is about the 5 year rule. Do I start the amount allowed to withdraw w/o taxes timed from each conversion date plus 5 years or do I have to wait until I am done based on the last conversion? That is, no withdraws for 5 year period from the last conversion.
    I manage my portfolio in stock trades daily and have had most excellent growth since I retired at age 59.

    • @ds94703
      @ds94703 10 месяцев назад

      Good question. I have the same problem. I'm a newbie here, but want to do the exact same thing: periodic conversions up to the bottom of the next higher bracket. I've been contributing the maximum every year ($7500/yr now, over 52). Some years are better than others and only one time did I hit the limit. If I knew about the Roth Conversion, I would have done that during my last period of semi-retirement when my income dropped. Now it looks like the RMD nightmare is about to happen, so I want to convert up to the 24% bracket every year. Trouble is I dont know what my MAGI income is going to be until December, and you need to do the conversion in the same year. (not so with straight contribution of post tax money, you can contribute up to April 15th of the next year). The estimated taxes are part of the deal, but you can double up on the withholding (up to say 28%) when you do the conversion and not have to worry about AMT, right?

    • @Hilke88
      @Hilke88 16 дней назад

      If I have a Roth IRA currently and a Traditional IRA too. If I convert my Trad IRA to Roth does it go into my already existing Roth IRA account or does it create a second Roth IRA and then every time you convert you get a new IRA and have like 10 Roth IRA's?

    • @donlandis1100
      @donlandis1100 11 дней назад +1

      @@Hilke88 My bank allows specifying which Roth account I wish to move the shares or cash to. Both IRA and Roth are with the same bank. There is no reason to create a new Roth account for each conversion. You will owe taxes and can have that withheld at the conversion. The only reason I know of to have more than one IRA and one Roth has to do with SPIC FDIC insurance that have limits. How much you convert each year is best determined by a tax professional.

  • @SOM-inc.
    @SOM-inc. Год назад +1

    👏 👏 👏 yes yes yes

  • @keithmachado-pp6fv
    @keithmachado-pp6fv 6 месяцев назад +1

    The Roth does not work every time. It only works if you are in a lower tax rate when you pay the tax PERIOD. There is no argument. Rate of return is irrelevant. You can self direct any account. The rate of return does not matter. If you pay the tax up front aka Roth, you have less to invest so whether zero or 10% per year you end up with the same after tax if you are in the same tax rate when you pay the tax. Only reason for a Roth is if your tax rate will be higher in retirement and don’t forget if you retire at 63 (I did) there are 12 years before RMDs kick in. So that means at least 12 years before I am even close to my working life tax rate. Oh year 1 at 75 RMD is 4%. So for $5m balance that is $200k. If married that is the 22% tax bracket. Add SS and that is 24% bracket. And I will be living in Florida by then with no state tax. When I got my deductions and deferrals I was in the 35% federal plus 5% state. Let me check. 24% vs 40%. Hmmmm.

    • @ruthgirl
      @ruthgirl 9 дней назад

      You are neglecting to include IRMAA, which could kick in when you take RMDs. Also, taxation on SS income could be reduced in retirement because you don't get taxed on Roth withdrawals. These are among the hidden taxes that people don't figure in when only comparing tax rates now versus tax rates in retirement. It is not a one to one corelation.

    • @keithmachado-pp6fv
      @keithmachado-pp6fv 9 дней назад

      I am not neglecting IRMAA or SS. As it relates to SS, in my case, 85% will always be taxable whether I convert to Roth or not. Given the low income thresholds are not increased for inflation that will be the case for more people every year. As for IRMAA, RMDs will not cause an IRMAA issue. If you are 60 today, your first RMD is 15 years away. The year one RMD on $2m is $80k which added to SS is well below the first IRMAA surcharge limit and leaves room for some additional income as well. Since IRMAA limits do increase for inflation, increases in RMDs will be offset as well. If the argument is that you have “other” income so the RMD puts you over the limit then the counter argument would be the conversion would do the same so if you converted for 10 years from age 65 to 75 to avoid IRMAA from 75 to 85 it would be a wash.

  • @sung-sooksmith7705
    @sung-sooksmith7705 11 месяцев назад

    what if i don't have cash on hand?

  • @randallcotner1258
    @randallcotner1258 Год назад +1

    Tell us how you really feel Mark? hahaha