Traditional IRA to Roth
Client is 72 years old. She has three IRA’s. One with Allianz life in an annuity with a value of $100,000. Another worth $50,000 with an investment and cash. Another worth $50,000 with an investment she wishes to change a to a Roth. Can she do this? Will there be any unusual tax penalties or will she just owe the tax on the converted portion?
Permalink Submitted by Alan - IRA critic on Fri, 2013-03-15 18:13
Client must first take out the annual RMD before converting. Then an additional amount can be converted and will be fully taxable unless client has basis in the IRA from non deductible contributions. There are no penalties as long as the RMD is distributed first.