IRA TO ROTH IRA
MY NIECE is 62 year single wants to convert 150k IRA to ROTH IRA TO pay off house. her 2024 income will be 30 k how much income tax and any advise?
MY NIECE is 62 year single wants to convert 150k IRA to ROTH IRA TO pay off house. her 2024 income will be 30 k how much income tax and any advise?
Permalink Submitted by Alan - IRA critic on Tue, 2024-02-27 19:42
How does a conversion pay off a loan balance? The tax on the conversion of this amount will be based on a higher marginal rate which leaves even less money to pay off a loan. The total tax due will be evident when all income and deductions are entered into a tax program.
Permalink Submitted by gautam shah on Wed, 2024-02-28 01:31
Thank you. if needed i can loan her money either to pay off loan or pay tax for conversion. is there amount of conversion ideal in one lum sump or over 3 years.
Permalink Submitted by Alan - IRA critic on Wed, 2024-02-28 02:14
You would want your taxable income to be roughly the same for the 3 years, if not longer. Therefore, a lump sum conversion in a single year will probably increase your taxes in that year more than if you converted over 3 years in equal amounts keeping you out of higher tax brackets.
Permalink Submitted by gautam shah on Wed, 2024-02-28 09:46
thank you. she wants to pay up loan and free from loan payment and wants to retire next year and start early social security. I do not agree with her but she is determined. If i can make her convert her IRA to ROTH next year with zero income pay her equal amount to her IRA account so she can pay income tax to convert and pay mortage with remaining and names converted ROTH beneficiary to my daughter can she do it? can her kids challenge in event of her passing? I understand my daughter has 10 years to withdraw upon inheriting that ROTH
Permalink Submitted by Alan - IRA critic on Wed, 2024-02-28 14:48
Her kids could contest the beneficiary if they think she was manipulated into naming other beneficiaries than them, particularly if they do not understand the reason why while she is still alive. Or she might just change the beneficiary at any point in the future, particularly if she pays off the loan.
Permalink Submitted by gautam shah on Wed, 2024-02-28 19:20
THANK you. agree with you. i prefer she decides with her kids she and kids are honest. i do not want to take advantage of them we will discuss as family togather first option she can take help from us keep her home loan and IRA. next her kids pay loan and take IRA. aS LAST RESORT it will be nice to get 100k plus ROTH for future as she will be in lowest bracket.