Join us for one of our weekly webinars with Mike Zlotnik, CEO of Tempo Funding!

Finding the best tax saving method can be hard with all the different strategies! When considering the different ways to maximize your retirement funds, creating tax-free money with Roth IRAs is one of the best ways to do so. Not many people know that the conversion from Traditional to Roth IRAs can be done in cash or in an investment, nor are they familiar with the benefits associated with doing movements in these ways.

DISCLAIMER: Quest Trust Company does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.

Want to continue the education? Be sure to RSVP to our FREE weekly webinars and other events!

Ready to start using Self-Directed IRAs? Schedule a free consultation with a Certified IRA Specialist with a click of a button here!

Call us at 855-FUN-IRAS (386-4727) or email us at IRASpecialists@QuestTrust.com today!

Facebook:
LinkedIn: …(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA

As tax season approaches, many individuals begin to consider strategies to reduce their tax liability. One strategy that has gained popularity in recent years is the traditional IRA to Roth conversion, and Mike Zlotnik, a real estate investment expert, has valuable insights to offer on this topic.

Firstly, let’s understand what a traditional IRA and Roth IRA are. A traditional IRA is a retirement account where contributions are tax-deductible, and gains grow tax-deferred. Withdrawals are taxed at ordinary income tax rates when taken later in life. However, a Roth IRA is a retirement account where contributions are made with after-tax money, but gains grow tax-free. Withdrawals in the future are not taxed.

The goal of a traditional IRA to Roth conversion is to move funds from a traditional IRA to a Roth IRA and pay taxes on the converted amount now, with the aim to reduce the amount of taxes paid in the future. But why might this strategy be beneficial?

Mike Zlotnik suggests that there are two primary advantages to this approach. Firstly, by converting to a Roth IRA, investors can potentially reduce the impact of required minimum distributions (RMD). At age 72, the IRS requires individuals to withdraw a minimum amount from their traditional IRA each year, which counts as taxable income. With a Roth IRA, the account owner is exempt from RMDs, meaning they can leave the funds untouched for as long as they like, giving their money more time to grow.

Secondly, a Roth IRA can provide tax-free income in retirement. By paying taxes on the conversion today, investors could potentially lock in a lower tax rate on those funds than what they may face in retirement. Additionally, Roth IRA withdrawals in retirement are tax-free, which can help to minimize taxes owed and ultimately support a more comfortable retirement lifestyle.

But, like any tax strategy, there are some downsides to consider. The biggest downside of a traditional IRA to Roth conversion is the upfront tax liability that comes from converting funds that are currently tax-deferred to a Roth IRA. This tax bill could be substantial, depending on the amount of funds being converted.

To make a traditional IRA to Roth conversion work, Mike Zlotnik suggests working closely with a trusted accountant who can help to calculate the tax implications and determine whether it is a viable strategy for a particular individual’s circumstances. It is also crucial to have a solid understanding of the current tax laws and how they may change in the future.

In conclusion, a traditional IRA to Roth conversion is a strategy that can offer several potential benefits to investors, such as reducing the impact of RMDs and providing tax-free income in retirement. With the help of a knowledgeable accountant, investors can assess whether this strategy is appropriate for their unique financial circumstances and goals.