Roth Conversion 5 Year Rule Explained #shorts #retirement #financialfreedom
Roth Conversion 5 Year Rule Explained #shorts #retirement #financialfreedom Full Video Here: • Should I Convert My IRA to A Roth IRA... How Do I Convert My IRA to a Roth IRA? That is the question of this week's video blog. In Part 1 ( • Should I Convert My IRA to A Roth IRA... ) we discussed, Who Should Convert their IRA to a Roth IRA. Click the link above if you missed that video. This week we are going to dive into the subject of HOW do I actually convert my IRA to a Roth IRA. Ready? Let's go! How Do I Convert My IRA to a Roth IRA: When you are converting your IRA to a Roth IRA there are essentially two ways to accomplish the conversion: Lump Sum and Bits & Pieces. Remember, before making any decisions on converting your IRA to a Roth IRA, please discuss the tax implications with your CPA, Accountant, Financial Advisor, or Call our office. Lump Sum Roth IRA Conversion When you complete a lump sum Roth IRA conversion you basically take your entire IRA and convert it to a Roth IRA. Depending on the custodian that holds your IRA (Fidelity, Vanguard, TD Ameritrade, etc.) you simply fill out a form and the IRA is converted to Roth IRA. This is by far the easiest way to convert your IRA to a Roth IRA BUT it is also the most tax inefficient for those individuals with large IRA's because you will owe the taxes due on that Roth IRA conversion for the year you completed the Roth IRA conversion. Sound confusing? Let me give you an example: If you have a $100,000 IRA and you decide to convert it to a Roth IRA in a lump sum, you take your entire $100,000 IRA and convert it to a Roth IRA. Now your $100,000 is in Roth IRA but you owe taxes on the $100,000 in the form of ordinary income. Depending on your tax bracket and deductions, you could possibly owe upwards of $20,000 in taxes. Ouch! That is why you want to contact your CPA, Accountant, Financial Advisor, or our office before you do any type of Roth IRA conversions. Bits & Pieces: This is my preferred method of Roth Conversions and I call it, "Bits & Pieces." Basically, every year you take a portion of your IRA and depending on your taxes, income, and assumed income, you convert a BIT or PIECE of your IRA to Roth IRA. I do this for myself every year. I look back at the income I have made, calculate where my tax bracket will be based on income and deductions and I convert a portion of my IRA to Roth IRA. Every year it is a different amount based on where my income falls and the tax code. This is a more tedious process, but in the end, it will save you tax dollars and accomplish your goal of converting your IRA to a Roth IRA. So, if you want to convert your IRA to a Roth IRA, you have two choices. Lump sum and Bits and pieces. My preferred method, bits and pieces. Your preferred method is based on your individual situation. Here at Pearl Wealth Group we run a Roth Conversion analysis for clients to see if it makes sense for them to convert from IRA to Roth IRA. If you would like us to run that analysis for you, please see the links below. Thank you so much for reading and watching! *Free Retirement Download: The Roadmap to Retirement:* https://pearlwealthgroup.com/#download **To schedule your virtual retirement and investment consultation with Drew, please select a day & time that works best for you: https://calendly.com/pearlwealthgroup... ** **Visit our Website: https://pearlwealthgroup.com/ ** *Please make sure you talk with your CPA, Financial Advisor, Retirement Planner, or Investment Advisor Representative, before implementing any content from this channel. Please call me at 813-807-5060 to go through your Retirement Income, Retirement Investments, or Retirement Plan in more detail.* Retirement & Financial Planning Resources: -Have You Ever Been Bitten by an Elephant?: The Definitive Guide for Retiring Well by David & Drew Blackston: https://amzn.to/3pnm62l -Retirement Planning Guidebook by Wade Pfau: https://amzn.to/3FqxMpI -Common Sense Investing by Jack Bogle: https://amzn.to/3H1Gn3p -The Intelligent Investor by Benjamin Graham: https://amzn.to/3mpNDyd -A Beginner's Guide to the Stock Market: Everything You Need to Start Making Money Today by Matthew Kratter: https://amzn.to/3qmkHtk Pearl Wealth Group Drew Blackston, CRC® & RFC® Office: 813-807-5060 [email protected] https://pearlwealthgroup.com/ Getting you to Retirement, through Retirement, & protecting YOUR ability to stay in Retirement! Tools Used To Create Video: -TubeBuddy Keyword Research: https://www.tubebuddy.com/YourFinanci... -Camera: https://amzn.to/3FkmIey #retirementplanning #retirement #financialfreedom **More Retirement Information Here: https://pearlwealthgroup.com/blog/ ** 🧐 **Meet Your Retirement Planning Team: https://pearlwealthgroup.com/about/ ** 😎 **Worried That Your Retirement Strategy Is Missing Something: https://pearlwealthgroup.com/services/ ** 🤔
