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Summer 2018  Volume 11, Number 2        

Convert a Roth IRA Once? Yes. Twice? No.

With the passage of the tax reform bill late last year, you can no longer undo Roth IRA conversions.

Roth IRAs were started 20 years ago to provide tax-free income during retirement. Roths are only available to investors below a certain income. Single tax filers in 2018 can use a Roth if their 2018 income is less than $120,000. Eligibility is phased out at $135,000. The phase-out range for married couples filing jointly is $189,000 to $199,000.

Investors can convert their traditional IRA into a Roth IRA. Contributions to a traditional IRA are not taxed until they are withdrawn at retirement. The benefit of conversion (or recharacterization) is any untaxed amounts rolled over or transferred to the Roth are subject to taxation. Investors who recharacterize often expect their tax will be lower based on lower values.

Your Investment Options Now

You can still do a Roth conversion and do it in increments, but you can no longer reverse the conversion. In that case, it pays to:

  • Think before you leap — Estimate how much tax you’ll owe on the conversion amount to see if it's affordable. Better, wait until year end so you’ll have a better idea of your overall finances.
  • Opt for smaller annual conversions — Instead of converting your money all at once, consider making smaller annual conversions over several years. That saves you from having to pay a lot of taxes one time.
  • Use a backdoor Roth IRA — If you make too much money to contribute to a Roth IRA, you can contribute to a traditional IRA and then move the funds to a Roth IRA. Called a backdoor Roth IRA, it is legal if you meet age and earned income requirements.

If you decide a Roth IRA conversion is right for you, please call us.


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In this issue:

This Just In...

Life Insurance for any Age — Especially During Retirement

Annuity Sales to Pick-Up in 2018

Insurance Terminology 101 — What You Don’t Know Could Cost You

Convert a Roth IRA Once? Yes. Twice? No.


The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2018 The Insurance 411. www.theinsurance411.com Tel. 877-762-7877.