8/21/2023 0 Comments Keep it podcast iraSo how does this work? How does the money get from the IRA to a Roth? And how do you get a Roth IRA? It's a good time to check and see if it makes sense. So it's not that you should do a Roth IRA conversion now but you shouldn't forget about one. Laura Saunders: I think we need to be clear that it's not always a great idea to do Roth conversion, but when the market is lower you are moving assets that have potential for appreciation, assuming the market goes up into a tax free account. And so why would some financial experts recommend that people explore converting their traditional IRA to a Roth IRA in this market environment? So if you make some great investments and it builds up over a long period of time, that's a nice bunch of tax free withdrawals you're looking at. What happens with a Roth IRA is that the money goes in after tax, but the growth is tax free and the withdrawals can be tax free as well. And then when you take money out of the account in retirement, it's taxable at ordinary income rates like wages. However, with a traditional IRA you get a deduction on the money when it goes into the account. A traditional IRA and a Roth IRA have one important thing in common which is that the assets inside of them grow tax free year to year. Laura Saunders: Well, that's a good question to start with. What's the difference between a regular or traditional IRA, and a Roth IRA? Whalen : So Laura, first of all help us understand this. Let's call on WSJ tax reporter, Laura Saunders to sort out some questions for us. It can give your savings a boost but it's tricky. So how can you protect the money you'll need later in life? One option that's often overlooked is moving funds from your traditional IRA into a Roth IRA. Watching your retirement savings take hit after a hit from the stock market this year might make your stomach churn. And we'll talk with her about that, after the break. Whalen : So how does that work? And is it really outside the reach of Uncle Sam? WSJ tax reporter Laura Saunders has been making a list of the pros and cons of converting traditional IRA funds into a Roth IRA. If you've got a traditional IRA you might be worrying about the risky retirement savings you are facing, converting your savings to a Roth IRA might be an option.Īudio: When the market is lower, you are moving assets that have potential for appreciation assuming the market goes up, into a tax free account. ![]() This year's stock market selloffs have not been kind to many investor portfolios. ![]() Whalen : Here's your money briefing for Monday, June 27th. ![]() This version may not be in its final form and may be updated. This transcript was prepared by a transcription service.
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