Hi Reader,
There's another reason Roth conversions have become an important planning strategy, and it has nothing to do with your own retirement taxes.
It has to do with your children.
Under current rules, most non spouse beneficiaries must withdraw an inherited IRA within 10 years, paying ordinary income tax on every dollar.
If those withdrawals occur during their peak earning years, the added income can push them into much higher tax brackets.
A Roth IRA changes that outcome. While inherited Roth IRAs are also subject to the 10 year rule, qualified distributions are generally tax free.
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For many families, thoughtful Roth conversions can help reduce the lifetime tax burden for both parents and the next generation.
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David N. Waldrop, CFP®
Owner of Bridgeview Capital Advisors, Inc. a Registered Investment Advisor.
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