Author: pauleckler | Date: 12/10/04 2:20 PM | Number: 43506 For those who are retired and still have traditional IRAs, its a good idea to check your tax situation before the end of the year. If you still have some of the 15% tax bracket un-utilized, doing a Roth conversion to consume the rest of that bracket can be a good idea.Very good idea!One caveat for people over the age of 55: If you establish a Roth by doing a conversion from a Traditional IRA, you have to wait 5 years before you can make penalty-free withdrawals of any of that money, even if that means you will be over 59.5..Example: You are 59 when you establish your Roth with a partial conversion from a traditional IRA. You can't make penalty-free withdrawals until you are 64 from this new Roth IRA. However, if you had left this money in your Traditional IRA, you can withdraw it at any time after 59.5 without penalty (of course you always pay ordinary income tax).If you roll money from a Traditional IRA into a Roth IRA that has been previously established, there is no 5 year waiting period. The waiting period is only from the time the Roth is established. So, the message is, establish a Roth as soon as possible.Russ
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