If you expect to be in a higher tax bracket in the future, you may be able to proactively avoid higher taxes on retirement funds by converting part or all of your traditional IRA to a Roth IRA. There’s no income-based limit on who can convert. But the converted amount is taxable in the year of the conversion. So be sure not to convert so much that you push yourself into a higher tax bracket this year. After the conversion is complete, all qualified withdrawals are free from federal tax. To be qualified, withdrawals generally must be taken after the Roth account has been open for at least five years and you’ve reached age 59½ or become disabled. Contact us for additional details.
