How To Take Advantage Of Losses With Roth IRAs
- Converting to a Roth IRA allows you to make lemonade out of a lemon year.
If your income is down or your retirement accounts are at a loss this year, you may be overlooking a potential benefit.
Consider converting your regular IRA's, SEP-IRA's, etc. into a Roth IRA this year.
Here's how it can benefit you.
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If your income is lower, you may be under the $100,000 threshold required to allow you to make a Roth IRA conversion.
The lower the better, because converting to a Roth IRA is a taxable event. The lower your tax bracket, the less it costs you in taxes to make the conversion.
Additionally, if your retirement account assets are in the tank because of market declines, that means the cost to convert is greatly reduced. That's because you have fewer assets to be converted and taxed.
In short, what this means is you may be able to do some long-term retirement planning for the lowest tax cost in years.
Hmmm, maybe there's some truth to the saying that adversity breeds opportunity.
Sure, it may be a pain to lose money in your retirement accounts, and it's always a drag to watch your income decline. However, these also happen to be ideal conditions for long-term tax planning and retirement planning by opening the door to efficiently convert existing retirement accounts to Roth IRA's for minimum tax burden.
With that said, you should consult with your personal tax and financial advisor before taking any action to fully understand all the rules and implications.
Everyone's individual situation is unique and requires personalized financial advice to make the correct decision.
I just wanted to plant the seed with this quick retirement planning strategy in case it applies to you or someone you know.
Hope it helps.
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