Permalink Submitted by Alan Spross on Mon, 2009-10-26 23:40
Once vesting or other restrictions to distributions permit rollovers, a direct Roth conversion is one of the options. However, if the shares are highly appreciated and if the funds will be needed in the near future, then NUA should also be considered after requesting a cost basis quote.
Permalink Submitted by Brian Ahmad on Tue, 2009-10-27 17:41
Funds in this particular scenario would be to transfer money into a Roth for leaving a legacy for grandchildren. Wouldnt paying the tax thats due from ESOP, and converting to the roth be a good option??
Permalink Submitted by Alan Spross on Tue, 2009-10-27 19:12
It might be, depending on whether they limit their distributions to RMDs and also depending on what their tax bracket will be. If they will be in a low bracket, you might be paying tax on the conversion at a higher rate than they would be if they inherited a traditional IRA. But if they inherit a Roth IRA, they will probably be very happy that their distributions are tax free, and are not likely to think that if they inherited a TIRA of a higher value, their net distributions might be higher even after taxes. In summary, it depends…………
Permalink Submitted by Alan Spross on Mon, 2009-10-26 23:40
Once vesting or other restrictions to distributions permit rollovers, a direct Roth conversion is one of the options. However, if the shares are highly appreciated and if the funds will be needed in the near future, then NUA should also be considered after requesting a cost basis quote.
Permalink Submitted by Brian Ahmad on Tue, 2009-10-27 17:41
Funds in this particular scenario would be to transfer money into a Roth for leaving a legacy for grandchildren. Wouldnt paying the tax thats due from ESOP, and converting to the roth be a good option??
Permalink Submitted by Alan Spross on Tue, 2009-10-27 19:12
It might be, depending on whether they limit their distributions to RMDs and also depending on what their tax bracket will be. If they will be in a low bracket, you might be paying tax on the conversion at a higher rate than they would be if they inherited a traditional IRA. But if they inherit a Roth IRA, they will probably be very happy that their distributions are tax free, and are not likely to think that if they inherited a TIRA of a higher value, their net distributions might be higher even after taxes. In summary, it depends…………