Hi, My brother recommended converting current Roth IRA moneys to Roths. We are currently not needing income from this, but have to take the Required Minimum Distribution each year. I would like to leave some money for my children when I die. I am wondering about the tax advantages. Last year was our first RMD. So we took it and bought a car, and saved the rest. Now what?? Thanks.
Keep in mind that you don't have to convert the whole IRA. You can convert part of it to a Roth. By appropriate use of beneficiaries it is possible to leave a fair bit to your children with long MRDs to their benefit. We just did this with the help of a financial planner who seemed to know all the correct moves for us. It is the "stretch IRA" concept. I checked everything in the Nolo Press Book on Getting your money out. It doesn't talk about the stretch concept although all the moves are in there, just scattered about.Good luck.
http://www.fool.com/money/allaboutiras/allaboutiras.htmThere is a lot of information on IRAs here at the Fool. Try the above link for a start.Remember that any amount you convert from Traditional to Roth IRA is taxable in the year you convert it along with the MRD for that year. The conversion amount doesn't include the MRD.Good luck in your planning.
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