Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: caretaker2 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121596  
Subject: IRA conversion / inherited IRA Date: 3/1/2013 1:22 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
When I started taking care of my (now 93 year old) uncle back in 2001, I thought it would be a good idea to convert, over time, his traditional IRA into a Roth IRA. I was told it wouldn't be cost effective.

Every year since, the RMD puts him in a higher tax bracket. One year it even made him pay more for his Medicare. The interest, dividends, and capital gains he earns increase the size of his RMD and his taxbill.

I still think that gradually moving his money into a ROTH is the way to go. He will be leaving his IRA to me and I'd prefer to inherit a ROTH IRA. (An inherited ROTH IRA is still tax free, isn't it? And doesn't require minimum distributions?)

Does the 5 year holding period apply to people older than 59 1/2? -- If my uncle starts converting his traditional IRA to a ROTH but dies before 5 years -- will the monies he has converted to a ROTH be converted back to a traditional IRA? and if it is, what becomes of the extra taxes paid due to the earlier conversions -- are they just lost?

If the IRA is not converted (or not completely converted)in my uncle's lifetime, can an inherited traditional IRA be converted to an inherited ROTH IRA?

Thanks.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement