How To Convert A Roth IRA
Not sure if you should convert your regular IRA into a Roth IRA? Here are some advantages if you rollover to a Roth IRA.
A Roth IRA will be larger than your regular IRA even if they contain the same dollar amount. The reason for this is, the Roth IRA contains after tax dollars. With a regular IRA, the government will eventually get some of your money in the form of income taxes. With a Roth IRA, you get to keep everything. The bigger your Roth IRA, the bigger the tax benefits.
You can keep your money in a Roth IRA longer. There is no requirement for minimum distributions to begin at age 70 ½. By keeping your money in a Roth IRA for a longer period of time, means you are extending the period of tax free compounding.
An added benefit of rolling over to a Roth IRA, is if you made non-deductible contributions to your regular IRA. When you roll over your regular IRA to a Roth IRA, the portion you roll over is tax free. You are moving the money from a place where your money will be taxed to a place where your earnings will be completely tax free.
Before you roll over to a Roth IRA, take some time to think about how and when you will use your Roth IRA money. You want to make sure you leave your money in the Roth IRA long enough to avoid paying taxes or penalties when you are ready to take your distributions.