No. of Recommendations: 0
Situation: retired this July. While working, didn't qualify for Roth. This year (due to loss of half-year earnings), may qualify for Roth (haven't got the numbers together yet). Have several traditional IRA's and rollover IRA's, established over the years.

Question: if I don't mind/can afford the related taxes, can I recharacterize (or convert?) some or all of the IRA's to Roths?

Thanks in advance.
jtr
Print the post Back To Top
No. of Recommendations: 1
Question: if I don't mind/can afford the related taxes, can I recharacterize (or convert?) some or all of the IRA's to Roths?

As long as you meet the AGI requirements, you can convert your traditional IRA to a Roth. You can convert any amount you wish. However, in the year you turn 70 1/2, you must take your Required Minimum Distribution before you can convert any of your traditional IRA.

One thing to watch out for is ending up with all of your retirement income being tax-free. Then you will end up wasting your personal exmptions and deductions, effectively paying taxes early that were not necessary to pay at all.

--Peter
Print the post Back To Top
No. of Recommendations: 0
Thanks for the quick reply, ptheland.

Am I correct in that a rollover IRA (from previous 401K) cannot be converted to a Roth?

And can any traditional IRA (such as one or more established several years ago) be converted?

jtr--old enough to be retired but still learning.
Print the post Back To Top
No. of Recommendations: 2
Am I correct in that a rollover IRA (from previous 401K) cannot be converted to a Roth?

No.

A "rollover IRA" is a Traditional IRA, but just happens to be funded with money rolled over from a 401(k). But since it is a Traditional IRA, it may be converted to Roth, either totally or in part, as long as you meet the other requirements (e.g., AGI test and filing status).

And can any traditional IRA (such as one or more established several years ago) be converted?

Yes. Whether it was established years ago, or just seconds ago, it can be converted to Roth as long as you meet the other requirements.

(For those reading along: remember that any amounts converted to Roth will be taxed at ordinary income tax rates, and taxed for the year in which the conversion took place. Actually, it is untaxed money or deductable contributions that would be taxed by the conversion, so any after-tax money or non-deductable contributions in the IRA will not be taxed again when it is converted to Roth. Furthermore, one should have non-IRA money available, such as regular savings or wages, for paying income taxes on the converted amount when one files one's tax returns for the tax year in which the conversion took place.)
Print the post Back To Top
No. of Recommendations: 0
Thanks, Peter and Mark. Every time I think I understand IRS rules (my taxes really shouldn't be very complicated), they change them on me and I get a nasty headache!

jtr
Print the post Back To Top
Advertisement