@qwer1234 wrote:
Wow. Marginal tax of the total 401k account sounds a huge tax burden!
If I convert a traditional IRA to a Roth IRA on an annual basis, how will the tax be calculated?
Remember, a 401(k), and Traditional IRAs's are before tax money, meaning that you have not yet paid the tax, - you pay the tax when you take the money out, but Roth's are after-tax money, meaning there is no tax when you take the money out after retirement, so when you convert before tax money to after tax money you pay the tax at the time of conversion.
Converting a Traditional IRA to a Roth is taxed the same way - at your margional tax rate.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
