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Roth Conversion "Back Door Roth"

What is a Roth conversion?

You may have heard of a ROTH conversion also known as a "Back Door Roth". A ROTH conversion could be a powerful tool in your overall retirement plan. 

A Roth conversion refers to taking all or part of the balance of an existing traditional IRA and moving it into a Roth IRA. 

Benefits of ROTH conversion:

The people who inherit your Roth IRA will have to take RMDs, but they won't have to pay any federal income tax on their withdrawals as long as the account's been open for at least 5 years.   

For taxpayers whose income is too high for them to qualify for opening or contributing to a Roth IRA, executing a conversion is one way to fund a Roth

Moving retirement funds into a Roth IRA enables you to pay taxes on the assets now rather than in the future, when you may be in a higher tax bracket (and therefore, must pay higher taxes on that money).

You don’t need to take required minimum distributions from a Roth IRA after reaching age 72; the money can continue growing tax free and be withdrawn tax free when the account owner needs it later since taxes are paid on the money going into the account.

It's best to talk with a tax advisor before you make your decision. 

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