Roth Conversions in Germantown & Memphis, TN
A Roth conversion moves money from a tax-deferred retirement account into a Roth IRA. You pay income tax on the amount you convert now, in exchange for the potential for tax-free qualified withdrawals later.
This page explains how it works and what to weigh before you decide.
What is a Roth conversion?
When you convert, the amount you move from a traditional IRA or other pre-tax account is added to your taxable income for that year.
After the conversion, qualified withdrawals from the Roth IRA are generally free of federal income tax, and the original owner has no required minimum distributions.
You do not have to convert everything. Partial conversions spread over several years are common.
Why people consider one
To manage future required minimum distributions
Because they are concerned tax rates could be higher later
To reduce how much of their Social Security may be taxed down the road
To leave heirs an account with different tax treatment
What to weigh first
The tax bill
A conversion is a taxable event. It is generally better to pay the tax from money outside the IRA.
The ripple effects
Extra income in the year you convert can affect the taxes on your Social Security benefits and your Medicare premiums.
It cannot be undone
Under current law, a conversion can no longer be reversed after the fact.
Timing rules
Converted amounts and earnings have holding-period rules, including a five-year clock and age 59½.
How Our Office Works With You
1. Who will I work with?
Renee' Kennedy focuses on education, retirement income, insurance and annuity strategies, and coordinating your estate planning with the right professionals. Adam Blain, Investment Advisor, provides investment advisory services through Brookstone Wealth Advisors, LLC. Together they help you build one plan instead of a collection of separate accounts.
2. What does the first meeting look like?
It is a conversation. We listen to your goals, review where you are today, and explain your options in plain language. There is no obligation to purchase anything.
Common questions
Do Roth IRAs have required minimum distributions?
Not for the original owner. Different rules apply to inherited accounts.
Do I have to convert my whole IRA?
No. Many people convert a portion at a time.
What does "filling up a tax bracket" mean?
It means choosing to convert only enough to reach the top of your current tax bracket, rather than pushing income into a higher one.
Is a Roth conversion right for everyone?
No. It depends on your tax situation, your time horizon and how you would pay the tax.
Next step
Have a question about your own situation? Book a free retirement review or call our Germantown office at 901-508-2433.
This page is general education, not advice for your situation. AAA Life Solutions is not a CPA firm or a law firm and does not provide tax or legal advice. Please consult a qualified professional about your own circumstances.
Some of the companies we utilize for various client needs include:
Investment advisory services offered through Brookstone Wealth Advisors, LLC (BWA), a registered investment advisor and an affiliate of Brookstone Capital Management, LLC. BWA and AAA Life Solutions are independent of each other. Insurance products and services are not offered through BWA but are offered and sold through individually licensed and appointed agents.
The content of this website is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. Investments and/or investment strategies involve risk including the possible loss of principal. There is no assurance that any investment strategy will achieve its objectives.
