Unless you’ve been hiding under a rock somewhere, you probably know all about the benefits of converting a traditional IRA to a Roth IRA. But you might not realize that there’s a sense of urgency.
Alert:are going up in 2013. For example, the top 35% tax rate is being replaced by a top rate of 39.6%. What’s more, a new 3.8% Medicare surtax applies to certain high-income taxpayers. Thus, a Roth conversion could effectively be taxed at a combined rate as high as 43.4%.
But you may reduce your tax burden by converting to a Roth in 2012 instead of waiting. And an alternative approach for some taxpayers is to arrange a series of Roth conversions. It doesn’t have to be all-or-nothing.
Here’s the whole story: “Qualified distributions” from a Roth in existence at least five years are completely exempt from federal income tax. Qualified distributions include those made after reaching age 59½, on account of death or d...(register to read more)