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Is Now A Good Time to Convert to a Roth IRA? – Season 7: Episode 8

Congress passed a law a few years ago that temporarily lowered tax rates across the board for most individuals. With these laws set to expire after 2025, you might be wondering: is now a good time to convert my traditional IRA to a Roth IRA?

It might be, but you should be aware of the consequences of adding extra income to your tax return. While tax rates might be favorable right now, if you decide you want to convert a large sum — that is, extend yourself up another bracket or two — you may be subjecting yourself to more than just extra taxation on that conversion.

What should you be aware of if you decide to convert to a Roth?  Get more information from podcast host Johnny Dean and “Professor” Rick Plum, CFP®  on this week’s episode of Managing Your Financial Future!

Important Information:

The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.

No client or prospective client should assume that the presentation (or any component thereof) serves as the receipt of, or a substitute for, personalized advice from Lucia Capital Group or from any other investment professional.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

IRA withdrawals will be taxed at ordinary income rates. Withdrawals prior to age 59½ may also be subject to a 10% penalty tax.

Roth IRA distributions of principal from a Roth IRA are tax-free; however, any earnings will be taxed at ordinary income rates and a 10% penalty tax will apply if withdrawn prior to age 59½ or within five years of the date the Roth IRA was established, whichever is longer.

Rick Plum is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the name Lucia Capital Group, a separate entity from LPL Financial.

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