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Subject:  Re: Roth IRA transfer Date:  4/24/1998  8:46 PM
Author:  JeanDavid Number:  3013 of 95822

<I am considering moving a 6 figure IRA to a Roth IRA, paying income taxes on gains now vs. 14 years from now when I access money. Reason for this is I expect minimum income tax rate in 98. Sooo, what say you fools. I dont know whether to pay Uncle Sam now at 15 percent tax on gains or pay in 14 years at who knows what! Input is much appreciated.>

Subject to correction by TMFPixy or KATfromChicagoland,
I think it will go like this. Let's assume your 6-figure account is $160,000. If it is more, things will merely get worse.

If your adjusted gross income is less than $100K, or whatever it is, you roll over the $160K. To your adjusted gross income for this year (not including the amount of the rollover) you add 1/4 of the $160K and figure out your taxes. Making a lot of assumptions, this will put you into the 31% or 36% incremental tax bracket, not the 15% bracket, and will do so for the next three years as well. Of course If your adjusted gross income this year is over the $100K, or whatever it is, then you will not be allowed the rollover at all. This is probably NOT your situation, because if it were, you would not be talking about the 15% tax rate.

You may want to keep your regular income low for the next three years as well as this year because, although it will not affect your eligibility to make this rollover, if you start making $90,000 a year, adding the $40K to that will put you (still making lots of assumptions) in the 39.6% federal tax bracket. Worse, BTY, if you have a state income tax too.
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