roth conversion

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When is the best time if year to do a conversion

AnjulAuthor

New Member

And how to avoid penalties

NCperson

Level 15

there is no “best time of year” to do a Roth Conversion. However, it must occur by December 31 to get reported in the current tax year. Unlike traditional IRA contributions you can not delay the transaction beyond December 31.

There are no penalties when you do a Roth Conversion. However, you are subject to INCOME TAX on the conversion. Also, if you subsequently withdraw the money out of the Roth IRA, you may be subject to a 10% penalty for early withdrawal.

If you are under 59.5 years old, the penalty on the conversion dollars is avoided if the money has been in the Roth for at last 5 calendar years; the penalty on the earnding can not be avoided.

If you are over 59.5 years old and the Roth account has been open for at least 5 calendar years, there is no 10% penalty if the conversion dollars or the earnings are withdrawn from the Roth IRA.