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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
If you’re nearing or in retirement and concerned that income tax rates will rise, you may want to convert a portion or all of your taxable retirement plan assets to a tax-free Roth IRA*. Here’s how it works.
If you’re nearing retirement but still working, the extra income can also cause you to become ineligible for current contributions to an existing Roth IRA. In 2018, income limits begin at $189,000 and phase out at $199,000 for taxpayers who are married and filing jointly or heads of households, with limits for single filers phasing out between $120,000 and $135,000.** But you do have alternatives if that’s the case.
Qualified Roth IRA distributions are tax-free after age 59 1/2 if you have owned the IRA at least five years. Unlike traditional retirement accounts, the Roth IRA is not subject to what’s known as required minimum distributions (RMDs), which must begin at age 70 1/2. In fact, you needn’t take a distribution from a Roth in your lifetime. Your financial professional can tell you more.
* Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 1/2 or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.
** https://www.irs.gov/retirement-plans/plan-participantemployee/amount-of-roth-ira-contributions-that-you-canmake-for-2018
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